A mediation centre that focuses on resolving disputes within the construction sector was launched yesterday to help firms avoid expensive and time-consuming court battles.
The Singapore Contractors Association (SCAL) set up the Singapore Construction Mediation Centre (SCMC) in response to demand from its members for mediation in resolving construction disputes.
According to SCAL, payment disputes, defects and liquidated damages are the most common causes of disputes between main contractors and sub-contractors.
Previously, the Singapore Mediation Centre (SMC) was the main avenue to amicably resolve construction disputes. More than 4,000 matters of various kinds have been mediated at the SMC since it was established in 1997. Construction disputes make up about 40 per cent of the cases each year.
Lengthy and costly court trials affect the profitability of the firms involved and may damage their reputation, said an SCAL spokesman.
SCAL second vice-president and SCMC chairman Wilson Wong said the inaugural panel of SCMC mediators comprises 24 individuals who hold high management positions in companies within the construction industry and have experience in mediating construction disputes.
The panel will serve the 3,000 SCAL member companies, which can opt for the SCMC or the SMC to resolve disputes.
Minister of State for Manpower and National Development Zaqy Mohamad, who was the guest of honour at the launch, said early and amicable resolution of potential disputes should be encouraged. In his speech, he gave an update on changes to the Building and Construction Industry Security of Payment Act, which Parliament passed last October. The Act establishes a fast and low-cost adjudication system for parties to resolve payment disputes.
The changes will be rolled out in the second half of this year, he said. These include raising the minimum interest rate for late payments to 5.33 per cent a year, up from as low as 1 per cent a year previously.
Mr Markus Tam, director of concrete works specialist CT Equipment, said it refers up to two disputes a year to the Small Claims Tribunals. Most are related to payment.
The new centre should make resolving disputes easier as the mediators understand construction industry norms, he said. "Mediation is better because we wouldn't sour the relationships between ourselves and the contractors, who are basically our customers."