Speech by Minister Lawrence Wong at the Singapore Contractors Association Limited (SCAL) Annual Dinner
Sep 2, 2016
I am very happy to join you for SCAL’s 79th anniversary celebration.
SCAL has a long and illustrious history; it was established in 1937, well before our independence. And over the years, it has been closely tied to the development and the building of today’s Singapore.
Today, SCAL is the voice of the construction industry in Singapore. You serve as a bridge between contractors and builders and the Government. You are our partner, and we look forward to continuing this close relationship for many more years to come.
Outlook for the Built Environment (BE) sector
I know that we are meeting at a time when the economy is slowing and many firms are feeling the pressure from the slowdown, and operating conditions are not so easy.
But we’ve all been through ups and downs in this sector. And I am confident that we can ride through this current slowdown and emerge stronger than before. In the past year, demand from the private sector has slowed down considerably. But we still have a good pipeline of public sector projects. In the first half of the year, we’ve had $11 billion worth of public sector projects and this is an increase of about 42 per cent over the same period last year.
Overall, the construction sector as a whole grew by 3.6 per cent in the first half of the year. 3.6 per cent may not seem very high when you look at the growth rates in the recent years, but you have got to take it in context, because the whole economy only grew at 2 per cent in the first half of the year. So the construction sector is still growing at almost double the rate of the economy so far.
Going forward, we expect construction demand from public sector to remain robust and firm over the rest of this year, and also over the coming years. Because we have more public projects coming up, be it in housing, in upgrading, MRT and transport, utilities, specialist infrastructure, the whole range of projects that we have are progressively going to be put out for tender. We also have many major infrastructure projects in the medium and longer term. Be it the development of Jurong Lake District as our second CBD, the movement of the city ports to Tuas, and the development of the Tuas mega port. These are some examples of projects which are happening in the longer term which will take many more years to develop. But there a good pipeline of projects that we have, not just in the short term, but also in the medium and long term.
Future-ready BE sector
Beyond looking at our immediate concerns, I think we also need to look to the longer term future of the industry, and think about how we can fundamentally transform the way we build in Singapore.
We all know that the traditional methods of construction are no longer tenable. The traditional methods have resulted in abortive work, time wastage and a heavy reliance on low-skilled foreign manpower. That is not sustainable. And we cannot continue with a labour intensive way of building, it is just not possible. It is critical for us to press on with measures to improve productivity. It is not just a good to have, but it is actually critical and essential to the construction industry and for Singapore.
So far I think we have made good progress. We started on this work, SCAL has been a very good partner, and all of you have been working at it as well. Construction site productivity has improved by about 1.3 per cent per year on average since 2009. And the last two years, there’s been a 2 per cent annual improvement. That’s good, but I’m sure we can do better, in fact, we ought to do better.
If we look ahead, we have no shortage of new projects to put out, in the public sector, there is no shortage of new projects that we are ready to roll out. Our main constraint is manpower. That is the only thing that is holding us back from rolling out new projects. The more productive the industry, the more productive all of us are in building, the more we will be able to roll out new public sector projects in the future. That is the ultimate constraint. Our productivity is not, as I said, a good to have, it is existential. If we are productive, we can continue to survive and thrive, but if we not productive in the construction sector, we will be held back, we will have to hold back and defer projects, and that would be to the detriment – not just of the construction sector, but for the whole nation. I think this is an urgent task and mission for all of us. I will share with you some of the areas where I think we can improve, and also the changes that we are looking into.
First, because a lot of projects are from the public sector, Government procurement I think is a major concern for all of you, and we will continue to ensure that through Government procurement there are opportunities for contractors that emphasize quality and productivity.
We want to see more local contractors being involved in larger and more complex projects, and we already see some positive signs of this. We are very happy that we’ve had contractors win significant civil engineering contracts recently. For example SembCorp and Hock Lian Seng’s joint venture clinched the Changi Airport 3rd runway extension; Woh Hup and KTC Civil Engineering & Construction won several station and tunnel contracts for LTA’s Thomson-East Coast Line. These are just some of the examples and we hope to see more.
We also recognise that it is not easy for our local companies to fully take on a big project without experience and track record. Wherever appropriate, MND and BCA have been encouraging our Government agencies to break down and parcel their big projects into smaller ones, and this has been happening, and that’s why we have seen more local companies participating and winning projects. By parcelling the mega projects into smaller ones, it not only enables more firms to participate, it also helps the agencies themselves to diversify their risks. So that is something that is happening already.
We are also fine-tuning our tender criteria to make the tender evaluation more robust. As far as tender evaluation is concerned, we welcome competition, obviously. Because healthy competition is a good thing, and it will ensure that when Government agencies do a project, they ensure value for money, and this is value for taxpayers’ money, so it is very important that we have good competition.
But we also recognise there is a problem when builders lower their prices so drastically that it is no longer realistic. And then they later find it difficult to deliver a good project. When that happens, then it is no longer good competition, it becomes bad competition, unhealthy competition. I think that is bad not just for the project, but for the whole industry, because it becomes a race to the bottom and in the end, the contractors themselves will suffer.
So we are putting more emphasis on non-price factors in our evaluation. One significant weightage will be on productivity. We are going to have higher weightage given to productivity considerations, among contractors when you put in your bids, and we hope this again will spur more local firms to build your capabilities and use more productive building methods. Because the more productive you are, the more successful, the higher your chances of being able to win in a public sector tender.
This leads me to my second point, which is that while we do this on tender evaluation, we will also provide more support for companies and for contractors to make full use of technology to enhance your productivity. We are giving you opportunities through tender, but we are also giving you full support to raise your productivity.
For the industry as a whole, we have to move towards embracing Design for Manufacturing and Assembly (DfMA) processes. It simply means off-site production through automation, through quality control, like in a manufacturing process, so production is done off-site; on-site assembly in a very efficient way to save manpower and to save time. It’s possible, because we know there are local firms doing it as well.
To support wider adoption of DfMA, we are setting aside land for the development of Integrated Construction and Prefabrication Hubs (ICPHs), so that we can do the off-site production at these ICPHs. We have set aside land for this, we have put out four sites so far, and I thank the local contractors who have stepped forward and have won the bids for these four sites and are investing in these sites. These are Straits Construction, SEF Construction, Soilbuild and Teambuild. We have six more sites to go, because we aim to have 10 sites by 2020. So again, we these sites, the contractors that have access to these sites, I think will have a good chance of being able to be more productive. They will be able to do more Design for Manufacturing and Assembly processes and techniques, and therefore they will be in a good position for public sector projects in the future.
A key part of the DfMA process is the use of Building Information Modelling (BIM) systems and Virtual Design Construction (VDC) – this means that you build virtually at first using a computer model, and then you can identify and fix the problems before the actual construction itself. This allows contractors to build better, plan and manage your projects.
I think over the years, we have seen higher take-up of BIM technologies, more firms are doing it, but we have not really fully harnessed the potential of BIM or VDC. We have not really done so, and I give you two examples why I believe that we have not fully harnessed this technology yet.
The first example is I was talking to an architect, and I asked him, “Is BIM really useful for you, how are you using it?” This architect replied, and he was a bit sheepish and embarrassed and he said that “actually, we just do the drawing on paper first, because that’s how we go about doing our work, and then we just outsource the BIM, for submission only”. They do the drawings on paper, BIM is done for submission, just to satisfy the requirements, get some company to do the BIM and submit. That is what one architect told me.
Second, I spoke to a contractor, and I asked him the same question, “Is BIM really useful for your work?” The contractor also looked a bit embarrassed and sheepish, and he said “actually we have the BIM but we don’t really use it for building. First of all, the architect doesn’t refer to it, they refer to their drawings. All this is for submission. We are not really involved in it, yes we have it, but it is not really something that impacts us, nor is it something that we are using fully.”
These are two conversations I’ve had, one is an architect, and one is a contractor. And it reveals to me, that we can talk about BIM, we can talk about virtual design, but I don’t think that we have truly fully harnessed the technology of something like this, the potential of something like this. Because if you are serious about it, and if you look at how this is done in an effective way in other countries, in other examples, you see examples where in projects there is very close collaboration between architects, engineers and contractors from the start of the process using BIM. The architect uses the BIM, they bring the contractor on board, they bring the engineer on board, and in a very integrated manner, all the different parties start to plan and build on BIM from the very start of the process. The result is better upfront design and much smoother construction downstream. Because the builder feels a sense of ownership, they were involved from the very start, their inputs were brought in, and they were able to influence the inputs through the BIM process, they own the process and when they build, they are already familiar with the process. These are successful examples; we see this happening in other case studies abroad. I think we should still try to push the boundary here, and try to work at integrating our processes better and making better use of this technology.
I have asked URA and BCA to study how we can facilitate this, whether there is a need to facilitate this, if there is, maybe we can impose it through some conditions, but preferably, the industry itself comes together, so we don’t have to do it through Government regulations, but the industry itself – architects, engineers, contractors, come together upfront and start collaborating using BIM and harnessing the full potential of BIM. That is another area that we could potentially improve, another technology that will potentially allow us to enhance our productivity, and to allow us to build in a safer and highly productive way.
Thirdly, we must continue to anchor capabilities in a Singaporean core for the built environment sector. We need people with the right skills, with the right mind-set, to implement these new ways of building. I want to again acknowledge strong support from SCAL and all our local contractors in our drive to upskill our workers.
We encourage all of you to tap on the various initiatives we have to build a high-quality workforce. There are many schemes that you can apply for – Workforce Training and Upgrading schemes, SkillsFuture programmes, which you can make use of to upgrade the knowledge and skills of your employees. The BCA Academy will continue to organise more productivity-related courses, including new Specialist Diploma programmes focusing on BIM, DfMA and lean construction. Firms, like yourself, can also partner BCA in offering scholarships and sponsorships so that we can attract more young Singaporeans into this sector, over time we can build up a Singaporean core in our built environment sector. That is a very critical task that we have set up for ourselves, we have a roadmap to do this, and we welcome all of your participation. Construction may not be the most glamorous industry, but I think over time we some of these technologies that we are embracing, with new methods of building, we have a chance of attracting and retaining even more young Singaporeans into this sector.
Finally, the fourth point, the construction sector must do its part to keep the workplace safe. Construction industry remains a major contributor of workplace fatalities and major injuries. And that is really not something that we can tolerate, every life lost is one too many. In our push for higher productivity, we must never compromise on workplace safety. I hope all our builders and contractors continue to keep this as a priority.
Beyond the safety of workers, a safe construction site should also uphold public health standards. Because whether you look at Zika recently, or dengue fever, or chikungunya, very often in the past we have breeding grounds located on construction work sites. It is not so easy to identify, but they exist, because when they do the tracing, they find it in some of these places. I know the industry, contractors, SCAL, have been again emphasising this very important point, and I hope all our builders here take this very seriously. Because NEA is going to step up its checks, and will not tolerate any mosquito breeding on construction sites. So the consequences may well be a stop work order in your site. Please take this very seriously and I urge all of you to make sure your sites are free from mosquito breeding, not only for those who are working on-site but really for the benefit for all Singaporeans.
Conclusion
Finally, as I said earlier when I started, these are challenging but exciting times for the economy. New technologies are emerging every day, they are disrupting traditional ways of doing business, but they are also offering new opportunities for those who are prepared to change and prepared to innovate. You see this across the board in all the different sectors. Of course, people often talk about Uber and taxis as one example, but even the traditional companies are now starting to think of new ways to automate, new ways to make use of IT and software. All sectors, companies everywhere, in all industries, are starting to transform themselves. And this must apply to the built environment sector too. It must apply to the construction sector as well. We must stay ahead of our changes; we must keep at the forefront of technological innovation.
The Government will give you maximum support in this, because this is a crucial issue for us. How we are able to build in the next 50 years, this productivity transformation is of crucial importance. We will give you maximum support, but we also need all of you to join in this effort together. We can only make this work together, when Government support, and company activities and company corporate leadership are all aligned. We hope that all of you will also set the tone, the right mind-set from the top, put emphasis on productivity, embrace new technologies, at the same time ensure safety for your workplace and for your workers.
For close to 80 years, SCAL and its members have worked hard to build the Singapore we have today – all of you have been involved in this effort, to build today’s Singapore. And we see the legacy of all of your work in the physical landscape that we have today. So I hope we can upload this same can-do spirit to enhance our built environment, and build an even better Singapore for the future.
On that note, congratulations on your 79th anniversary, I look forward to the 80th anniversary next year, all the best and have an enjoyable weekend.