Public sector projects worth up to $24b to boost construction sector this year

Artist’s impression of the Marymount Road section of the North-South Corridor, Singapore’s first integrated transport corridor that will have dedicated bus lanes and a cycling route.
Artist’s impression of the Marymount Road section of the North-South Corridor, Singapore’s first integrated transport corridor that will have dedicated bus lanes and a cycling route. PHOTO: LTA

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

Public sector construction demand is projected to grow to between S$20 billion and S$24 billion this year, up from about S$15.8 billion in 2016, said the Building and Construction Authority (BCA).

Public sector jobs this year include that of mega public sector infrastructure projects, such as various major contracts for the second phase of the Deep Tunnel Sewerage System, North-South Corridor and Circle Line 6.

At the BCA-Real Estate Developers' Association of Singapore seminar on Friday (Jan 6), Mr Desmond Lee, Senior Minister of State for Home Affairs and National Development, also announced measures by the government to boost the sector.

He announced the formation of a Built Environment cluster sub-committee under the Council for Skills, Innovation and Productivity.

The sub-committee, which will be chaired by him and CapitaLand chief executive Lim Ming Yan, will aim to develop an industry transformation map for the sector.

Mr Lee also urged firms to focus on two areas - developing Design for Manufacturing and Assembly (DfMA) capabilities, as well as to internationalise.

He called DfMA "a game changer" for the sector because of its productivity gains.

To ensure sustained DfMA demand, Mr Lee said that more government land sales sites will stipulate the adoption of DfMA technologies.

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

Last year, the total value of construction demand fell for a second consecutive year.

The BCA said that the preliminary estimate of total construction demand last year is S$26.1 billion, lower than the S$27 billion worth of contracts awarded in 2015.

The agency attributed last year's lower construction demand to the re-scheduling of a few major public sector projects to this year.

It said that "longer preparation times are needed to implement these large scale projects".

Private sector demand was subdued last year at S$10.3 billion, a fall from S$13.8 billion recorded in 2015.

BCA estimated that private sector construction demand is projected to be between S$8 billion and S$11 billion this year.

The silver lining in the cloud last year was public sector demand, which grew to S$15.8 billion last year, up from S$13.2 billion in 2015.

The agency estimates that overall construction demand for 2018 and 2019 will be between S$26 billion and S$35 billion per annum, growing slightly to between S$26 billion and S$37 billion per annum in 2020 and 2021.

Public sector demand over the next few years will include infrastructure projects such as the Jurong Regional Line, Cross Island Line and the development of Changi Airport Terminal 5.

"Although the year-to-year fluctuations in the total value of annual construction demand are influenced by the lumpy nature of major infrastructure projects, the overall on-site construction activities or construction output is expected to stay at a relatively high level," said Dr John Keung, chief executive of BCA.

"Companies that are prepared to change, innovate and transform to stay at the forefront of technological innovation, process re-engineering and productivity improvement are more likely to sustain their growth and competitiveness despite the headwinds under challenging economic conditions," he added.