Parliament

Contractors to get universal 4-month extension to complete projects

A construction site for an HDB Build-To-Order project in Clementi. The universal four-month extension to construction project deadlines accounts for the delay in construction works due to Covid-19 restrictions in the first half of this year.
A construction site for an HDB Build-To-Order project in Clementi. The universal four-month extension to construction project deadlines accounts for the delay in construction works due to Covid-19 restrictions in the first half of this year. ST PHOTO: KELVIN CHNG
Minister for National Development Desmond Lee said in Parliament yesterday that the measures will provide further support to the construction industry and ensure the pains caused by the pandemic will be shared among contractors, developers and buyers
Minister for National Development Desmond Lee said in Parliament yesterday that the measures will provide further support to the construction industry and ensure the pains caused by the pandemic will be shared among contractors, developers and buyers. PHOTO: GOV.SG

A law passed in Parliament yesterday will provide a universal four-month extension for construction projects to be completed, including Build-To-Order flats.

It will also allow property buyers who incur out-of-pocket costs due to construction delays - like renting a place to stay - to seek reimbursement from developers, including the Housing Board.

Contractors will also have to co-share 50 per cent of additional non-manpower costs such as equipment rental and storage of materials with their subcontractors and suppliers, capped at a monthly value of 0.2 per cent of the contract sum.

The total claimable amount is capped at 1.8 per cent of the contract value.

Parliament passed these relief measures for the built environment sector under the third set of amendments to the Covid-19 (Temporary Measures) Act.

Minister for National Development Desmond Lee said the measures will provide further support to the construction industry and ensure the pains caused by the pandemic will be shared among contractors, developers and buyers.

The universal four-month extension to construction project deadlines accounts for the delay in construction works due to Covid-19 restrictions in the first half of this year, he added.

Construction works were first forced to stop between April 7 and June 1 during the circuit breaker period, and by at least another two months as dormitories housing migrant workers were cleared only in August, he noted during the debate on the amendment Bill.

"This universal extension of time will reduce the administrative burden for contractors, so that they can focus on restarting and ramping up work quickly and safely," said Mr Lee.

Contractors will also be able to avoid paying liquidated damages under their contracts for delays between Feb 1 this year and March 31 next year, by serving a notification of relief on the developer.

Developers, including HDB, would also have a similar four-month extension to the date of delivery of housing, commercial and industrial property under the measures, said Mr Lee.

This extension would cover only contracts that were entered into before March 25, and where the developer was required to deliver the property to the buyer on or after Feb 1.

The first permit to carry out structural works by the Commissioner of Building Control for the property must also have been issued before April 7, and the Temporary Occupation Permit must not have been granted as at April 7.

Developers that need an extension of more than four months will have to seek an assessor appointed by the Ministry of Law (MinLaw) to determine if the further delay was materially caused by the Covid-19 pandemic.

In addition, home and property buyers who incurred out-of-pocket costs due to the delays would be able to seek reimbursement from developers for up to 70 per cent of the liquidated damages payable in the purchase agreement.

For HDB flats, the prescribed liquidated formula would be 10 per cent per year of 60 per cent of the new flat price.

Property buyers and developers that disagree on the reimbursement amount can turn to a MinLaw-appointed assessor to make the final decision.

Meanwhile, contractors that have to co-share additional non-manpower costs could claim these costs through their regular progress payments.

If there are disputes, contractors can submit an adjudication application under the Building and Construction Industry Security of Payment Act (Sopa).

Sopa adjudicators will determine whether the relief applies and the co-sharing amount between the parties.

Join ST's Telegram channel and get the latest breaking news delivered to you.

A version of this article appeared in the print edition of The Straits Times on November 04, 2020, with the headline Contractors to get universal 4-month extension to complete projects. Subscribe