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Or rather, do you have the project for it? The tech merely enables the project, you have to wait for it to be available to you, and then you have to research it (the lower slots in the tech tree). Once that is done, Saudi Arabia should get claims on a number of other regions, which should enable you to either conquer them militarily (which would annex them to you immediately), or declare them as allies, then federate them, and finaly, after a cooldown, unify peacefuly with them.
I also completed the Shia project, that worked right away but I was holding Iran.
I hope I didn't screw myself by completing it without having the Saudis.
I don't think so. The claims work for countries that the player does not control.
What I have been reading from other players, though, is that the caliphate is not a normal federation like the others, so my initial answer might not be correct (I apologize but, having never tried to form it, I just assumed).
Apparently the Caliphate is a new country, that needs to appear by ceeding territory from Saudi Arabia to it. So if you control Saudi Arabia, just send one of your councilours to set domestic policy there, give up Jeddah, and that should start the ball rolling.
EDIT; Also, remember to check on the nation screen that your agents can actually do that before wasting a phase sending them there.
To start a federation, the originating country needs to be allies with a country they have claims on, and both countries need to have no conflicting rivals (i.e one state being allied to a nation the other is rivaled with). There's a cooldown timer after allying, but once its done then you'll have the Federate option in the National Policy menu. After you federate, there's another cooldown timer and then the Unify option will be available from National Policy. Once you Unify, the originating country and the ally will merge into one state with the name of the federation (i.e. the Caliphate.)
Well, couing or purging those that have powerfull allies first...
1. Global tech -> Unity Movements
2. Faction project -> The Caliphate (30,000 pts)
3. (At any time) take and hold executive control of Saudi Arabia (180 days!)
4. Councilor on National Policy -> Grant Independence 'The Caliphate'
5. Use Caliphate to Ally w/ other nations (starts w/ 3 CP)
6. Use Caliphate to Federate with Allies
7. Use Caliphate to Unify with Federated Allies
Optional Steps:
8. Global Tech -> Great Nations
9. Faction project -> The Greater Caliphate (!)
10. and so on!