In capital-intensive sectors, cost excellence is increasingly recognised as a key driver of competitiveness, resilience, and sustainable value creation, Alexander Shvets and Renat Akimbitov, Managing Directors, Infrastructure and Capital Projects – Metals and Mining, Alvarez & Marsal Middle East, tell OGN

Industrial growth in Saudi Arabia and the UAE is gathering momentum under national diversification strategies.

Saudi Arabia’s mining sector is accelerating toward becoming the third pillar of the Kingdom’s diversified economy, supported by untapped resources valued at an estimated $2.5 trillion, according to the Ministry of Industry and Mineral Resources.

Similarly, the UAE is also advancing its industrial diversification through Operation 300bn, targeting growth in manufacturing, materials, and downstream processing.

These developments are central to long-term economic diversification strategies.

However, sustained growth depends not only on expanding capacity, but also on embedding disciplined cost control and financial transparency across operations.

In capital-intensive sectors such as mining, metals, and advanced manufacturing, cost excellence is increasingly recognised as a key driver of competitiveness, resilience, and sustainable value creation.

THE NEED FOR COST EXCELLENCE

Commodity price volatility, supply–demand imbalances, and evolving trade policies create a dynamic global operating environment.

Alexander Shvets

This is particularly relevant for industries in the Middle East that rely on resource-based value chains.

Fluctuations in commodity prices, combined with capital-heavy infrastructure requirements, mean that operational margins can be quickly eroded without robust cost control measures.

In Saudi Arabia, regulatory reforms and institutions, such as the Saudi Geological Survey and Industrial Center, have created an enabling environment for investment in exploration, processing, and downstream industries.

In the UAE, initiatives such as the Make it in the Emirates campaign and the In-Country Value (ICV) program are incentivising domestic production and supply chain localisation.

These frameworks provide strong foundations for growth, but operational resilience requires equally strong cost governance mechanisms at a business level.

STRUCTURED APPROACH TO COST MANAGEMENT

An effective cost management process integrates planning, control, cost-saving initiatives, and capability building.

The approach outlined in Alvarez and Marsal’s Optimising Cost Control in the Industrial Sector whitepaper is based on four core components: The first is activity-based budgeting in which budgets are tied directly to operational drivers, rather than relying on top-down estimates.

This method links target costs to the specific activities, resources, and frequencies required to achieve operational goals, creating a single source of truth for financial planning.

The second component is real-time cost visibility platforms, where digital dashboards consolidate multiple cost data sources into a unified, user-friendly system.

Information is tailored to different levels of the organisation, including strategic summaries for leadership, category-level breakdowns for middle management, and transaction-level details for operational teams to enable timely and informed decision-making.

Complementing this, structured cost review meetings use standardised processes to ensure regular monitoring, root-cause analysis of variances, and the identification of cost-saving opportunities.

A clear cascade of reporting and accountability supports consistent follow-through.

Equally important is cost capability building, where training programs, competency frameworks, and on-the-job coaching give employees at all levels the skills and tools needed to manage costs effectively, fostering a culture of cost ownership across the organisation.

ADDRESSING COMMON CHALLENGES

Renat Akimbitov

Without these elements in place, cost control efforts often face recurring challenges. Top-down budgeting approaches, where last year’s figures are inflated or current actuals are simply rolled forward, can result in unrealistic forecasts and misaligned spending.

In the absence of a single source of truth, disparate budget versions across teams lead to inconsistent performance tracking.

Cost structures that are not aligned with the actual activities generating expenses hinder accurate attribution, while the lack of a unified review process can make performance checks infrequent or incomplete.

Finally, limited cost ownership, where awareness and engagement among teams are low, reduces the overall effectiveness of cost management measures.

By replacing fragmented practices with standardised frameworks and tools, companies can improve cost accuracy, enhance operational decision-making, and identify sustainable savings.

KSA: SCALING MINING WITH FINANCIAL DISCIPLINE

The Kingdom’s mining sector is set to play a pivotal role in achieving Vision 2030 objectives.

Expansion into gold, uranium, lithium and rare earths is being matched by investments in smelting, refining, and processing facilities.

This vertical integration is designed to reduce import dependency and enhance industrial self-sufficiency.

As demand rises from giga-projects, mining companies will need to balance growth with financial discipline.

Activity-Based Budgeting allows operators to align spending with production goals, while real-time cost visibility platforms ensure that performance data is available to guide operational decisions.

Structured review meetings and capability development programs further strengthen accountability and readiness to adapt to market changes.

UAE: BUILDING AN INTEGRATED INDUSTRIAL BASE

The UAE’s industrial strategy prioritises high-value, globally competitive production capacity.

Sectors including advanced manufacturing, metals, and energy-linked industries are expanding to serve both domestic and export markets.

However, the success of these initiatives requires cost control at every stage, from sourcing and production to logistics and delivery.

Embedding real-time cost monitoring and structured review processes ensures that operational decisions are based on accurate, current information.

This helps companies respond quickly to shifts in demand, manage resources efficiently, and maintain competitive pricing.

As in Saudi Arabia, capability building is critical to sustaining these improvements over the long term.

FROM POLICY TO PRACTICE

Both Saudi Arabia and the UAE have established policy frameworks that encourage investment and industrial growth.

To translate these opportunities into lasting competitive advantage, companies must seek to embed cost excellence into their operational models.

This includes implementing activity-based budgeting to create precise, operationally linked financial plans, deploying real-time cost visibility platforms to support dynamic management and establishing a structured cascade of cost review meetings for accountability.

It is also vital to build cost management capabilities across all organisational levels.

ENABLING LONG-TERM RESILIENCE

When consistently applied, these measures can improve cost transparency, reduce operating expenses, and strengthen financial resilience.

Our experience highlights that cost-avoidance measures informed by structured reviews can reduce operating costs by up to twenty per cent, while increasing management engagement with cost data from 20 per cent to over 80 per cent.

And importantly, the benefits extend beyond immediate savings. Organisations with strong cost governance are better positioned to invest in innovation, adapt to market volatility, and meet the evolving expectations of stakeholders.

PREPARING FOR THE NEXT PHASE OF GROWTH

The industrial and mining sectors in Saudi Arabia and the UAE are entering a period of sustained expansion.

To support the ambitions of Vision 2030 and Operation 300bn, organisations must seek to develop and adopt operational models that prioritise cost visibility, accountability, and continuous improvement.

By adopting structured budgeting, real-time monitoring, systematic review processes, and comprehensive training, companies can build the resilience needed to thrive in a competitive global market.

Cost excellence is not an isolated initiative; it is a fundamental enabler of industrial growth and long-term value creation in the Middle East.

By Abdulaziz Khattak