How Singapore Construction Companies Can Overcome Market Challenges
Singapore Construction and Overcoming Market Challenges
Running Singapore construction means overcoming market challenges that are particular to the region. Here’s how you can protect your interests and business.
Is your Singapore construction business struggling to remain competitive and productive? Are you curious about how you can improve your business despite challenging market conditions?
The Singapore construction sector is currently facing some unique challenges. From new foreign labour laws to concerns about safety and productivity, Singapore’s construction professionals have a lot to consider.
In this article, we will go over some current Singapore construction concerns and what steps can be made to improve this industry.
Boosting construction productivity with technology
In recent years, Singapore has been suffering from lower-than-ideal construction productivity. Singapore construction productivity rates have been hovering around 30% of Japan’s and around 50% of the United States.
Fortunately, as the Singapore construction industry is constantly growing and evolving, so too is construction technology and its availability. Singapore’s Building and Construction Authority (BCA) is working to encourage construction companies to adopt technologies that will improve construction productivity.
BIM (building information modelling)
One construction technology that the BCA has been encouraging use of is BIM (building information modelling). BIM allows design work to be done digitally before a structure is built. This can save a huge amount of time and expense, as potential problems can be caught in advance and adjustments can be made.
Use of pre-fabricated building materials can save time and manpower, increasing construction productivity. Having this manual labor done offsite also makes construction sites cleaner, quieter, and safer.
Drywall and cross-laminated timber are also being used more often, as they are quick and clean to install, and lighter than concrete to transport and manage.
Singapore Construction Productivity Week
Another way the BCA has been working to help businesses improve their productivity is through hosting Singapore Construction Productivity Week (SCPW). Every October for the last six years, an SPCW event has been held for all sorts of construction industry professionals to come together and share ideas and solutions.
Construction safety performance
Another pressing concern for Singapore construction companies is improving safety. Over a dozen fatalities have occurred due to construction site accidents in the first six months of 2016 alone.
Construction safety can be improved by better training of laborers and paying more careful attention to safety precautions. The Singapore government is working with construction companies to implement more training programs, such as Design for Safety, which will be mandatory for jobs with contracts over $10 million.
Singapore’s Ministry of Manpower has implemented a demerit system, in which businesses that fail to adhere to safety regulations will lose “points.” Loss of enough points will render a company disallowed from hiring foreign workers.
Current Singapore Construction Market Challenges
Beyond productivity and safety, Singapore construction companies are currently facing some other unique challenges.
Tight foreign labour control
A large percentage of the construction manpower in Singapore is comprised of foreign workers. New regulations are being put in place to limit how many foreign workers may be employed in Singapore. The current quota is you may hire 7 foreign workers for every full-time local worker your business employs. Levies on foreign workers have just been raised as well.
Singapore does benefit from a very low unemployment rate. But locals are not often choosing jobs in construction. The concern now is that basic laborer wages for Singapore locals are being driven too low by the presence of foreigners who will gladly do the work and accept lower pay.
Lower public tenders
In Singapore, most public-sector projects are subject to public tenders, which can drive prices down. The government does not set the price they expect to pay for a project, it is left instead open for any interested companies to bid on.
In Singapore, the rising costs of running a construction business can make competing for tenders a tricky business. Of course, to get the project, your company will need to bid out the job at an acceptable and competitive price. Then your company’s financial ratings may also be put under scrutiny before your bid can be accepted.
Keeping your business in good financial shape is crucial to being able to secure tenders. Since public sector projects currently make up most of the Singapore construction market, getting your company’s finances in order should be a priority.
Slow sales of private housing projects
Despite its continued status as one of the most expensive places in Asia to buy a luxury home, Singapore’s real estate market has been steadily declining since 2009. This has understandably driven down demand for new construction in the private sector.
Higher operating costs
Between higher levies, aggressive competition for public sector projects, and a lagging private sector building market, the cost of running a construction business has gotten higher.
In these challenging times, what can construction businesses do to evolve and survive?
Training and innovation
Despite the current challenges in the Singapore construction sector, there are steps you can take to help your construction company evolve into a more productive and competitive phase.
How is the government helping?
Public sector projects
The Singapore government has been providing the construction industry with a rising number of public sector projects. Major infrastructure projects make up a lot of this pipeline.
Singapore Construction Productivity Week
As mentioned above, SCPW is an opportunity for construction professionals to meet and share ideas on how we all can work together to improve this industry and be more successful.
Extended time workers can stay
As a concession to businesses who will be struggling as a result of stricter foreign labor rules, the Singapore government has allowed foreign workers to stay on for ten years instead of the previous six-year limit.
What you can do to stay competitive
More training for workers
Many construction companies are now training their employees to do multiple tasks within their field, rather than only one specialty. There are a few benefits to providing your workers with extra training:
First of all, when using foreign workers, you will pay a significantly lower levy if they are classified as “higher-skilled” workers. Learning an additional trade or two may increase your workers’ ability to pass the BCA assessment for “higher-skilled” and save your company money.
Whether they are foreign or local, having workers with multiple skills can greatly improve your company’s productivity. The employees you have will be more flexible, and you may find you don’t even need to employ quite as many.
With the new allowance for foreign workers to be employed for ten years instead of six, you have the opportunity to use more experienced employees to train newer ones. Even if they are a little more expensive than young, brand-new workers, experienced employees are often more productive overall.
Embrace construction technology changes
From using BIM for designing to using drywall instead of brick walls, construction technology is there and evolving for a reason, to help your business to be more productive. Use it to your advantage!
Stay in the know
Most of all, you can stay ahead of the game if you keep yourself well informed about the latest news and changes in the Singapore construction industry. This includes connecting with other industry professionals to share what you know and learn from others.
The Construction Singapore community is a great place to start. Here you can connect with other industry professionals, find new employees, and have access to a directory of helpful businesses and services.
Get started here and get ready to bring your business to the next level of success!