Critical to communicate, standardise, review if S’pore wants to raise construction productivity

SINGAPORE – In September,

The Straits Times reported

that high-tech factories meant to boost construction productivity by producing precast components quickly were operating at a loss.

This is despite efforts by the Government to foster automation in the construction industry in Singapore, which has long been reliant on migrant labour.

Operators of these factories – known as integrated construction and prefabrication hubs (ICPHs) – told ST the sticking points were storage issues, competition from Malaysia and changes to government policies.

Their struggles reveal the challenges behind raising productivity in construction.

This is not just an industry issue – construction productivity affects everything from housing prices to how soon people get their flats.

The ICPHs’ costly experience signals three crucial lessons about the conditions that need to be in place for automation to take off:

Keep communication and conversation lines between Government and industry open

The bulk of a typical Housing Board project today is built with precast components. These are concrete parts – walls, facades, bathrooms and other building parts – that are made in precast yards or factories, before they are assembled at construction sites, Lego-style.

High-tech precast factories or ICPHs have automated systems that can build these components two to three times faster than open precast yards, where workers manually pour concrete into moulds.

ICPHs were launched in 2012 and the Government had planned to have 10 of these by 2020, but only six have been built so far. Construction firms that said they each ploughed at least $100 million into building these facilities noted that it has been difficult to turn a profit.

Firms that set up ICPHs said they were confident about investing hefty sums to build these factories because government policies at the time seemed favourable to their development. This came amid the authorities’ drive to transform the construction sector into a more productive and technologically advanced one.

But some official policies changed after the ICPHs began operations, and several precast firms say this scuppered their original production output and profit targets. This played out in 2024 when the Government appeared to be phasing out a particular type of 3D precast component. ICPH operators that had invested in more costly facilities specially designed to make such components said the move hit them hard.

Associate Professor Walter Theseira of the Singapore University of Social Sciences said: “It appears the firms thought policies that were favourable to them at the time would prevail for longer than they did, and policymakers may have believed that the ICPHs or certain components would be more cost-effective than they turned out to be.”

To be fair, government policies are never, and should never be, static – the authorities must continuously tweak them to respond to the country’s changing needs – and some of the losses ICPH operators have suffered might just be the cost of doing business.

This is the first lesson: Policymakers and industry players must work closely together on technological investment, which is costly and inherently risky.

This includes communicating policy changes early so that construction firms have sufficient lead time to change course or adapt. Likewise, companies must be proactive in flagging potential pain points, so that these can be addressed by policymakers.

Standardisation and harmonisation

Another factor crucial to the successful adoption of automation is the standardisation of the design of buildings and the type of components required to construct them.

Automation thrives on repeating consistent and predictable processes. When productive technologies repeat tasks on a large scale, output can increase such that the average cost of performing each task is reduced.

Standardisation is key to making construction processes as consistent as possible. For ICPHs, standardising precast components allows operators to use the same set of moulds to cast a fixed range of concrete components, instead of having to order custom moulds to cast an exhaustive variety of precast parts.

Construction and project management consultant Colin Bullock, former director at project management consultancy TBH, said greater standardisation will also mean precasters can use their products across more projects, which will likely incentivise more firms to invest in ICPHs.

Efforts by the Building and Construction Authority (BCA) to work with HDB to

further standardise precast components

like prefabricated bathroom units and household shelters are encouraging.

That is because the Government has an outsized role on this front. Public agencies like BCA and HDB – the largest housing developer here – can set standards in the sector by specifying requirements for public construction projects, like what type of precast components to use.

Industry experts say this could lead private developers to follow suit and also push construction firms to invest in technology that helps them meet such requirements.

In fact, some inroads have already been made in raising productivity as a result of the authorities introducing some requirements for more productive methods in construction.

The built environment sector, which includes the construction industry, is on track to meet official targets in digitalising various stages of building, and in shifting construction to safer and more productive settings like ICPHs.

To further nudge firms to take up productive technologies, the Government has provided a medley of grants and incentives over the years, including the Productivity Innovation Project scheme, which co-funded some of the qualifying costs incurred by firms in adopting productive technologies.

Some construction bosses, however, told ST that many firms, especially small and medium-sized enterprises, are still reluctant to invest in automated systems like construction robots. They said some kinks in these nascent technologies have yet to be ironed out, and upfront costs are high.

In the case of ICPHs, operators say they continue to be outcompeted by other precasters that rely on workers instead of advanced machinery to make precast components.

Better balance between foreign labour and automation needed

It seems more fundamental changes are necessary for automation to really stick.

These could include rethinking Singapore’s labour model, with less reliance on low-wage migrant workers.

The third factor crucial to the success of automation in construction is achieving a healthier balance between the nation’s longstanding reliance on foreign labour and the need for automation.

Despite repeated calls by the authorities for firms to reduce their reliance on foreign labour, the number of work permit holders in the construction, marine shipyard and process sectors has grown by 28.4 per cent since 2018, as at December 2024. This comes as construction demand has swelled in recent years, with mega projects like Changi Airport Terminal 5 on the way and

HDB projects being ramped up

.

Prof Theseira said employers have little incentive to invest in productive technologies as long as it remains cheaper for them to hire migrant workers to meet construction timelines.

There are wide-ranging implications to this. Economists Linda Lim and Pang Eng Fong argued in October 2024 that Singapore’s reliance on low-wage foreign labour is responsible for the country’s low productivity growth, which jeopardises its economic competitiveness. In an article on Academia.SG, they wrote that the Covid-19 pandemic showed how the dependence on foreign labour can also make Singapore more susceptible to unforeseen disruptions.

Prof Theseira pointed out that Singapore is in a conundrum – it has created conditions that made low-wage foreign manpower readily available, but it is also telling “the market that we don’t want to use this manpower as much as before”.

He said: “I don’t think there is a free lunch here, though. It comes down to being clear about what the priority is – is it providing homes and buildings at the lowest cost even though that means relying on labour-intensive practices, or improving productivity through automation and accepting that costs will rise in the short to medium term?”

In the end, some trade-offs may have to be made in the process of laying the groundwork for productive technologies to thrive.

But if Singapore wishes to have its homes, offices and malls built faster, and in ways that are safer and less manpower-intensive, it might be worth the growing pains.