The construction sector may have had a rocky year in 2016, but a surge in public sector building jobs could help it get its groove back this year.
Public sector construction demand, which is the value of contracts expected to be awarded this year, is projected to grow to between $20 billion and $24 billion, said the Building and Construction Authority (BCA).
This would be a significant increase from the $15.8 billion or so recorded last year.
Mr Desmond Lee, Senior Minister of State for Home Affairs and National Development, also announced measures yesterday to give the industry a shot in the arm.
He told the BCA-Real Estate Developers' Association of Singapore seminar that a sub-committee under the Council for Skills, Innovation and Productivity will be formed to develop an industry transformation map.
The sub-committee will be chaired by him and CapitaLand chief executive Lim Ming Yan.
Mr Lee urged firms to internationalise and develop Design for Manufacturing and Assembly (DfMA) capabilities.
DfMA, which involves moving as much on-site construction work to off-site prefabrication as possible, is "a game changer" for the sector because of its productivity gains, said Mr Lee.
Singapore's DfMA adoption rate is only about 10 per cent but the government land sales sites should lift that with more tenders stipulating that this approach be adopted.
The increase in public building jobs and government initiatives are much-needed boosts for the sector.
The construction sector shrank in the fourth quarter of last year, down 2.8 per cent compared with the same period in 2015, according to Trade and Industry Ministry advance estimates on Tuesday.
Last year's total value of construction demand also fell for a second consecutive year.
The BCA said the estimate of total construction demand last year was $26.1 billion compared with 2015's $27 billion.
Mr Kenneth Loo, president of the Singapore Contractors Association, said having more public sector jobs was a "blessing".
"Sentiment on the ground is that the market is very weak," he added, noting that for many contractors, "the prime focus is to survive".
Mr Loo added that "once there is work in the market, the whole ecosystem will be able to benefit".
Following the labour movement's call on Thursday for the Government to improve procurement practices to stamp out irresponsible outsourcing, contractors at yesterday's seminar raised questions as to whether the Government should use the Price Quality Method (PQM).
This ensures both price and quality are considered in awarding public tenders.
Mr Silas Loh, joint managing partner of property consulting firm Rider Levett Bucknall, told contractors he believes the PQM system works.
However, he pointed out that in several cases last year, the winning tender had been very much lower than both the second lowest bid and the pre-tender estimates, which are the benchmarks of how much a project should cost.
Mr Loh said lower-tier contractors face a serious shortage of work and are cutting profits to offset increase in labour and regulatory costs. He urged firms to adopt a "paradigm shift" to pursue expertise in new technology.
This article was first published on January 7, 2017.
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