Category Archives: Construction

Project delays caused by tighter rules on foreign workers

Singapore’s construction industry is suffering from late payments and project delays, as contractors are squeezed by higher operating costs and the government’s curb on foreign workforce, according to media reports.

“Construction demand is expected to continue with many big projects such as the MRT line extensions, Changi Airport expansion, but a shortage of workers means projects may cost more and take longer to complete,” said KPMG Singapore Partner for the building sector, Teo Han Jo.

In fact, more than half of the payment transactions in the sector were overdue in the second quarter, with the incidence of late payments increasing by 3.8 percentage points to 51.4 percent, revealed the Singapore Commercial Credit Bureau (SCCB).

Payments are considered late when over half of the amount owed is not satisfied on time, while prompt payments are made when at least 90 percent of the total amount is paid on the stipulated date.

But one of the most pressing issues for construction companies are the high levies on foreign workers. In fact, the operation of a subcontractor working on Downtown Line 3′s Upper Changi Station has been disrupted when it failed to pay such fees on three instances due to cashflow problems.

“Works on the DTL3 (Downtown Line 3) Upper Changi Station are progressing as normal. The sub-contractor . . . has foreign worker levy arrears and the main contractor, Samsung C&T Corporation, is in the process of taking over (its) workers. There is no impact to the schedule of the project,” a representative from the Land Transport Authority (LTA) said.

Despite these issues, the prospect of the construction industry appears promising due to the substantial number of projects in the long-term pipeline, particularly government infrastructure developments, noted Teo.

“Government agencies are also placing more emphasis on quality rather than just prices when awarding projects. The net effect of this for the construction industry is good over the longer term, as it raises overall quality and helps construction companies maintain healthy margins,” she added.

More construction & prefab hubs in the pipeline

The authorities plan to build more construction and prefabrication hubs to upgrade construction technology and reduce reliance on labour.

A new construction and prefabrication hub will be ready by the end of next year to cater to demand for precast production in Singapore.

The project, to be developed by construction company SEF Group, is the first to be awarded under a public tender by the Building and Construction Authority.

It is part of the government’s initiatives to upgrade construction technology and reduce reliance on labour.

The new five-storey complex will have an annual production capacity of more than 100,000 cubic metres of precast components – three times more than a conventional open precast yard.

Up to 25 per cent of private residential developments in Singapore utilise precast technology. That number is as high as 70 percent for HDB projects.

The authorities plan to raise these figures further with about a dozen of prefabrication hubs to be built and rolled out over the next few years.

Senior Minister of State for National Development, Lee Yi Shyan, said: “It will supply a lot more prefab components to construction industries, reduce the need for offsite work, raise the productivity and reduce reliance on foreign workers.

“Secondly, this production will also produce high-quality components because it is in a factory-made environment. If you put the two together, this is the way to go for our industry going forward.”

Mr Lee added: “For this kind of construction method, they call it the integrated hub method, we are going to roll out more and more. This is one of the dozen that are going to be rolled out and then going to be built over the next few years.

“The outstanding feature of this project is that it brings together all existing technologies into one building such that the end result is a major capability upgrade for our construction industry.”

Source – CNA – 29 Jul 2013