Singapore: too many construction jobs, too little time?

Youth Olympics 2010: Can S'pore deliver?
Elysa Chen, The New Paper 10 Mar 08;

WITH many big projects underway, will our construction resources be strained?

That possibility is worrying some in the industry.

By 2009, stage three of the Circle Line and the Marina Bay Sands integrated resort have to be up and running.

By 2010, the Youth Olympic Village at the National University of Singapore has to be ready, as well as the second integrated resort in Sentosa.

And in 2011, the $1.87 billion Sports Hub in Kallang is expected to be completed.

On top of these big projects, public housing upgrading and road widening works will be on-going.

Former secretary general of the Singapore Contractors Association Ltd (SCAL) Chan Shelt Tsong said: 'We all share in the euphoria of Singapore hosting the Youth Olympic Games, but I wonder how is it going to be built?

An indication of the red-hot construction sector, Mr Chan said, is that developers are more willing to reduce the imposition of penalties should a contractor fail to complete a project on time.

Mr Chan, also a general manager at a multi-national construction company, said that 20 people would submit tenders for a project previously, compared to an average of only three bids now.

A deputy general manager in another major construction firm, who did not want to be identified, said: 'For projects like the integrated resorts and the Youth Olympic Village, you are setting a deadline which you have to meet, whether or not you can achieve it.

'This is different from designing the project first, then working forward to estimate your deadline.'

He added that the situation might have worsened with the current market situation, where manpower supply cannot be increased on short notice.

He said: 'Everybody is hard pressed. In order to attract and retain workers, we need to offer higher wages and more in variable bonuses.'

Mr Lim Pik Sim, a project director with Smatra Engineering, said: 'The whole of Singapore has become a construction site.'

Citigroup economist Kit Wei Zheng feels that the construction industry is 'already at maximum capacity'.

'How much faster can we grow? We've hit our limit and this will translate into potential pressure on cost,' he said.

A check with several construction companies and suppliers confirmed that prices of materials used in construction have increased due to higher demand.

Concrete prices have gone up from $60 per cubic m in 2006 to $130 per cubic m.

Prices of steel are also on the rise, from $800 in 2006 to $1,400 per ton now.

Mr Nicholas Mak, director of the consultancy and research department at Knight Frank, said that construction costs for a medium-quality development has increased 15 to 20 per cent.

Even equipment suppliers are finding it difficult to meet the surge in demand over the last two years.

A director of a equipment rental and supply company, who wanted to be known only as Mr Wong, has already spent $10 million importing more cranes and hoists since 2006.

He has bought 10 cranes and 30 hoists within the last two months.

And it is still not enough.

He said: 'A lot of customers are asking for quotations, but we don't even dare to quote because, if we have no cranes, how can we supply?'

Mr Wong said that rental prices of equipment have increased by 20 to 30 per cent, and the rental volume has increased by at least 50 per cent.

Manpower is similarly stretched.

A clerk at a construction consultation company, who gave his name only as Mr Chiu, said that crane operators can clock up to 10 hours a day in overtime.

Speaking in Mandarin, he said: 'They end work at 3am or 4am, so that companies can catch up on delays. Including overtime pay, their pay has increased from $3,000 to almost $10,000 a month.'

Member of Parliament Lee Bee Wah, who has been in the construction industry for more than 20years, feels that we should further relax the foreign labour quota in certain sectors, especially if employers can prove that they have tried their best to get manpower.

She said: 'We should not impede growth because of these restrictions.'

Manpower Minister Ng Eng Hen had said in Parliament last week that the ministry will continue to monitor the situation.

Ms Lee told The New Paper on Sunday that there was not only a shortage of labourers, but also of professionals such as architects and engineers.

She described how her friends had to go to China, India and the Philippines to recruit employees, and how she had to hire skilled labour from Malaysia.

Mr Wee Teck Han, the secretary general of the Asian Concrete Construction Institute, a non-governmental organisation, added that the supply of skilled workers is also tight regionally because many other countries are experiencing construction booms.

Referring to big train projects in Thailand and the Iskandar Development Region in Malaysia, MrWee, who has been in the industry for over 30 years, said: 'The region is busy, and this will impact on our ability to deliver.'

But despite these problems, MsLee remains confident that the industry will be able to deliver the projects on time, provided the Ministry of Manpower can help to balance the demand for manpower.

Agreeing, SCAL executive director Simon Lee said: 'We just need to increase the necessary resources to increase our capacity. We also need to be even more precise in our planning.

'We need to get it right the first time.'