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Why It Matters

Decision time for building firms

As high technology transforms the construction industry, there will inevitably be those left in the dust. These are mostly smaller construction companies resistant to the national push for prefabricated building and virtual building design technologies, which do not come cheap.

But, as Second Minister for National Development Desmond Lee stressed during an interview last week, the Government hopes that all firms, big and small, can be a part of the transformation.

Around $450 million of the Building and Construction Authority's (BCA) $800 million construction productivity and capability fund has been pledged to this end, with 90 per cent going to small and medium-sized enterprises. To help defray some of the costs of adopting virtual design and construction methods, firms can also apply to a separate BCA fund, capped at $30,000 per applicant.

Mr Lee, known for his ability to bring groups together, said he wants to reach out to more small firms to help shape the rules along the way. It is an outstretched hand to some 8,000 small and medium-sized contractors, which have traditionally adopted a wait-and-see attitude to big changes.

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Firms here recognise that the industry is changing even without the technology push. In a property downcycle, desperate construction firms have been cutting their fees to secure the dwindling number of jobs. In the first quarter of this year, the BCA tender price index fell to its lowest point since 2007.

As it is, staying put is not tenable because a price war hurts all parties. Neither is enacting protectionist policies to safeguard local firms at the expense of their long-term competitiveness.

Many successful American, European and Chinese construction companies adopted these technologies years ago, due in part to rising labour costs. Like Mr Lee said, it makes more sense to upgrade workers' capabilities than to protect jobs that are turning obsolete with technology.

Stick to their ways and hope for the best, or embrace change now?

It is decision time for these firms.

A version of this article appeared in the print edition of The Straits Times on June 28, 2017, with the headline 'Decision time for building firms'. Print Edition | Subscribe