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SPEECH BY DR LEE BOON YANG, MINISTER FOR MANPOWER, AT THE SOCIETY OF PROJECT MANAGERS’ ANNUAL DINNER, FRIDAY, 15 OCTOBER 99, 7.30 PM

Mr Khor Poh Hwa,

President of the Society of Project Managers (SPM)

Members of SPM

Ladies and Gentlemen

The Singapore construction industry faces two main challenges: the first is in resolving the fundamental problems of low productivity and heavy reliance on unskilled foreign workers, and the second is to prepare itself to meet the challenges posed by changing trends in the construction industry. In May 1998, my Ministry launched Construction 21 (C21) Study to address these issues. The C21 Steering Committee has completed its deliberations and has submitted its recommendations. The C21 report will be launched next week. Tonight, I would like to outline 3 proposals put up by C21 which are of special relevance to project managers. I will then elaborate on the role that the Society can play to complement the C21 efforts and lift the industry onto a higher plane.

Currently, the construction value chain is broken up into distinct segments in the upstream and downstream stages, namely design; tender documentation; construction and maintenance. Each of these segments encompasses activities and players that are separated from the others. Major users of construction services, both public and private, often have to deal with various parties, e.g. designers, main contractors, specialist contractors, etc. The coordination work that the client has to perform is costly and highly inefficient. Moreover, the segregation of design and construction activities could result in mistakes in the design stage which require changes and rectification at the construction stage, leading to project delay and cost overrun. The demand for greater responsiveness, guaranteed cost and delivery schedules of projects and the push for greater efficiency requires adoption of a new delivery system in the construction industry.

One answer to this demand is the Design and Build (D&B) arrangement. This new arrangement has been proven to increase efficiency and better manage costs. A study conducted by the Construction Industry Institute in the USA found that the median cost growth (that is the difference of the final project cost and the contract award cost) for D&B projects was less than half that of traditional design-bid-build projects. In terms of speed of construction, D&B projects are able to complete 9000 square feet of space per month while design-bid-build projects completed 4,600 square feet of space per month. Locally, a survey conducted in 1998 by the then CIDB revealed that three-quarters of respondents reported total time savings of 5-30% for D&B projects. More than half the respondents reported cost savings of 5-10% and manpower savings of 10%.

At present, D&B projects in Singapore are still rare compared to other countries. In Australia, the proportion of projects with D&B arrangements is more than 60%, while the D&B level in Singapore in 1998 was only 14%. In the USA, a study estimated that by 2005, 50% of construction would be carried out via the D&B approach. Currently, major MNCs, such as Coca Cola, are already adopting D&B arrangements to build factories worldwide. The integration of design and construction processes benefits developers and consumers. The reduction in the number of steps and key players in the value chain will result in cost savings.

The C21 Committee supported an integrated approach to construction. The C21 Committee recommended a three-pronged approach to increase the use of D&B arrangements – through promotion, provision of a conducive environment, and the nurturing of D&B firms. The 3-pronged approach will help pave the way for greater integration among the players in the value chain.

Project managers will have a key role to play in this new business environment. Hitherto, project managers in the industry are mainly involved in the task of construction management and confined to the downstream processes. However, with the redefinition of the construction value chain, project managers will have to bridge the upstream and downstream activities. You will have to distinguish yourselves by the ability to integrate activities and coordinate people and equipment so that projects are designed, built and delivered on time, within budget, and to specification. There is also much scope for project managers to be involved at the developmental stages of projects as you have the experience to provide cost effective solutions to clients and can help to set the framework for buildable designs, and help clients to increase profit margins and productivity.

The move to increase the level of D&B arrangements will require project managers to be more than just good engineers and site managers. You need to be business managers who can understand the whole spectrum of the construction value chain. Project managers must possess expertise in many areas in order to add value to your clients. These include financial and accounting knowledge in managing monetary resources, as well as soft-skills such as leadership and negotiation. A D&B environment will open up more opportunities for project managers. The Society has an important role to play in aiding project managers to undertake greater responsibilities in project management. The Society’s training and certification programmes can help members to build up technical expertise to enable you to undertake more complex assignments. Your efforts in raising the profile and professionalism of project managers will also help to attract more talents into the profession.

The second issue is the need for higher buildability in the construction industry. Higher buildability can be attained through standardization of components and dimensions, simple building construction systems and installation details, as well as the use of single integrated elements or prefabricated components, such as precast staircases and toilets. The experience of Japan and Australia showed that higher buildability is crucial to raising labour productivity and efficiency. Locally, the Tanglin View condominium project has illustrated that higher buildability through the use of prefabricated components allows the contractors to reduce their reliance on manpower by about 40%. This has translated into cost and time savings as well as enhanced safety due to a cleaner and more orderly construction site. Buildability is commonly practised in countries such as Japan, Denmark, UK and the USA. This is largely driven by the fact that construction companies in these countries do not have access to cheap foreign workers and hence the industries will have to ensure that buildings are easy to build in order to reduce their reliance on workers.

Higher buildability starts at the design stage. That is why Government had earlier decided to introduce a requirement for minimum buildability score for building plan approvals. This legislation will take effect from 1 Jan 2001. The C21 Committee supported such requirement and recommended that the minimum buildability score be raised progressively in order to add impetus to attaining higher buildability.

What this means is that there will be a more industrialized approach to construction, where components are prefabricated and brought on site for assembly. This is akin to the Just-In-Time production method found in the manufacturing sector. Project Managers will be a key link in this drive to improve buildability. You would need to acquire more core competencies to take on this new challenge. You would need to be familiar with new methods of construction and be extremely proficient and precise in coordinating construction processes. For example, you will have to keep to tight time schedules and manage the flow of components efficiently, otherwise delays in the project may incur substantial costs in renting storage space for bulky prefabricated components. In short, as we move towards higher buildability, project managers will have to be at the forefront to achieve smooth delivery.

The third issue is the increasing use of information technology (IT) in the construction industry, not only at the design stage, but also at downstream construction stages. For instance, more construction companies are using the Internet to procure material and components, allowing them to have faster response and greater cost savings due to reduced inventory costs. In the USA, some construction companies are experimenting the use of wireless handheld technology to enter daily production information in order to improve communication and reduce paperwork. It is important for our contractors and project managers to harness information technology to boost productivity and raise the level of professionalism.

Currently, the construction industry is lagging behind manufacturing and exportable service sectors in the use of IT. The construction industry therefore has to close the gap and use IT as a tool to achieve productivity breakthroughs. IT can be a key enabler for integration and innovation in the construction industry. Currently, the industry uses IT for computer aided design (CAD) of projects as well as procurement. IT usage could be expanded to other areas such as project management, where developers, designers, contractors and suppliers are connected to the same network and they can monitor the progress of a project in real time. IT can be applied to project simulation so that bottlenecks and problems can be identified early and addressed even before work on site begins.

The C21 Committee strongly supported the use of IT in construction. The Government had announced last week an investment of $44 million to set up the Construction and Real Estate Network ( CORENET) to help the construction industry to speed up its IT development. However, while the Government can encourage the industry to use IT, it is the industry players who will set the pace for IT application in the industry. Industry players like you must take the initiative to upgrade to keep up-to-date with changes in technology. I am happy to note that the Society has been proactive in this area by including modules on IT for your membership qualification course. The Society can further help to upgrade the construction industry through spearheading research projects related to construction IT or through adapting useful construction practices from abroad. It could also provide useful information on how project management can be improved using IT and share real life success stories with its members. Only through such innovative and value-adding services can the Society distinguish itself as a progressive and informed association of knowledge workers.

In conclusion, project managers must adopt a new mindset in the way you view construction and your roles in the industry. You will have to acquire new skills to manage future projects, and learn new ways of organizing construction in the midst of changing technology and processes, and greater expectations of clients.

The Society of Project Managers can help its members to prepare for the new challenges in many ways. Given its broad spectrum of members, from developers to IT specialists, the Society could enhance integration of construction activities through programmes which foster closer cooperation among industry players. It can also ensure that members keep up with the latest changes in technology and industry practices and adapt such innovations for our industry’s use to attain productivity breakthroughs. This could be through sharing of information on best practices and new technology, and professional development programmes devised in consultation with tertiary institutes. The Society would be an ideal forum to drive home the importance of lifelong learning and provide the opportunities for members to do so. Finally, the Society will be crucial in maintaining and enhancing the professionalism and standards of project managers so that they become a valued partner with other professionals in the transformation of the industry.

The construction industry of the future will see a larger role for project managers. You will become one of the key drivers for change. I am confident that the Society will succeed to help members meet these challenges and to transform the industry into a world class construction industry.

On that note, I would like to offer my congratulations on the occasion of your 4th Anniversary and may I wish your Society every success. May you have an enjoyable evening. Thank you.

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