Public-sector work to give construction firms a boost

Public-sector construction demand - or the value of contracts expected to be awarded this year - is projected to grow to between $20 billion and $24 billion.
Public-sector construction demand - or the value of contracts expected to be awarded this year - is projected to grow to between $20 billion and $24 billion.PHOTO: ST FILE

Contracts expected to reach up to $24b; industry transformation map to be developed

The construction sector may have had a rocky 2016, but a surge in public-sector building jobs could help it get its groove back this year.

Public-sector construction demand - or the value of contracts expected to be awarded this year - is projected to grow to between $20 billion and $24 billion, said the Building and Construction Authority (BCA). This would be a significant increase from the $15.8 billion or so recorded last year.

Mr Desmond Lee, Senior Minister of State for Home Affairs and National Development, also announced measures yesterday to give the industry a shot in the arm.

At a BCA-Real Estate Developers' Association of Singapore seminar, he said that a sub-committee under the Council for Skills, Innovation and Productivity will be formed to develop an industry transformation map for the sector. The sub-committee will be chaired by him and CapitaLand chief executive Lim Ming Yan.

Mr Lee urged firms to internationalise and develop Design for Manufacturing and Assembly (DFMA) capabilities. DFMA, which involves moving as much on-site construction work to off-site prefabrication as possible, is a game changer for the sector because of its productivity gains, said Mr Lee.

 

Singapore's DFMA adoption rate is only about 10 per cent, but the government land sales sites should lift that, with more tenders stipulating that this approach be adopted.

The increase in public building jobs and government initiatives are much-needed boosts for the sector.

The construction sector shrank in the fourth quarter of last year, down 2.8 per cent compared with the same period in 2015, according to Trade and Industry Ministry advance estimates on Tuesday.

Last year's total value of construction demand also fell for a second consecutive year. The BCA said the estimate of total construction demand last year was $26.1 billion, compared with 2015's $27 billion.

Mr Kenneth Loo, president of the Singapore Contractors Association, said it was a "blessing" that there would be more public-sector jobs this year.

"Sentiment on the ground is that the market is very weak," he added, noting that for many contractors, "the prime focus is to survive".

Mr Loo said that "once there is work in the market, the whole ecosystem will be able to benefit".

Following the labour movement's call on Thursday for the Government to improve procurement practices to stamp out irresponsible outsourcing, contractors at the seminar yesterday raised the issue of whether the Government should use the price quality method (PQM). This ensures that both price and quality are considered in awarding public tenders.

Mr Silas Loh, joint managing partner of property consulting firm Rider Levett Bucknall, told contractors he believes the PQM system works.

However, he pointed out that in several cases last year, the winning tender was very much lower than both the second-lowest bid and the pre-tender estimates, which are the benchmarks of how much a project should cost.

Mr Loh said lower-tier contractors face a serious shortage of work and are cutting profits to offset increased labour and regulatory costs. He urged firms to adopt a "paradigm shift" to pursue expertise in new technology.

A version of this article appeared in the print edition of The Straits Times on January 07, 2017, with the headline 'Public-sector work to give construction firms a boost'. Print Edition | Subscribe