Singapore Government Press Release
Media Division, Ministry of Information and The Arts,
MITA Building, 140 Hill Street, 2^nd Storey, Singapore 179369
Tel: 837-9666

Mr John Lim, Chairman of BCA

Distinguished Guests

Ladies and Gentlemen

Last year when I spoke to you, the mood was pretty down. Construction industry growth for 2000 was –4.6 per cent. Recently, MTI released the 1Q2001 figures, and the growth for construction had improved from –1.9 per cent in the 4Q2000 to zero. After ten consecutive quarters of shrinkage in terms of value-add to the economy, the construction sector has finally lifted itself out of negative growth territory. In fact, BCA expects to see positive growth for the sector this year.

Are we seeing some light at the end of the tunnel? Perhaps. But it is too early to go out and celebrate. The industry still faces many challenges ahead. For the foreseeable future, we do not expect construction demand, in terms of monetary value of contracts awarded, to reach anywhere near the peak of $20 billion seen in 1997. Competition for jobs will remain intense in the industry. Size and capability will become more important for a company to stay competitive. Hence, it is timely for the industry to look into making fundamental adjustments.

The Building and Construction Authority (BCA) has been working on three initiatives to help the industry make adjustments to remain competitive. Firstly, it is revamping the Contractors Registry System (CRS) to keep pace with changes in the industry and to encourage companies to upgrade and grow. Secondly, legislative changes will be made to facilitate different Design & Build arrangements to help the industry players improve productivity and hence, earnings.

Thirdly, BCA will re-position the various financial assistance schemes to make them more accessible to the industry players to help them upgrade their operations and grow. Let me elaborate.

By setting minimum registration requirements for companies tendering for public sector projects, the CRS has been instrumental in raising standards in the construction industry and encouraging many companies to upgrade and grow over the years. For instance, in 1993, only 3 companies were ISO9000 certified. Today, all 247 building and civil engineering firms in the G6 to G8 grades are ISO9000 certified. This follows the introduction of ISO9000 certification as a criterion for G6 to G8 registration. In 1990, there were only 36 G8 building contractors but there are now over 87 such firms.

However, projects are getting larger and more complex. Clients are setting higher standards for the quality of products and services to be delivered. The current minimum required paid-up capital, net worth and professional personnel requirements are not commensurate with the scale of projects today. BCA will therefore set higher minimum requirements from July 2002. For instance, contractors at the top registration grade will need a minimum of $15 million paid-up capital, up from $5 million currently. They will also need to have a professional and technical staff strength of at least 30 instead of the current 4. Furthermore, they will have to achieve ISO 14000 and OHSAS 18000 certification by 2004. These changes have been discussed with SCAL and have received their support. The changes will encourage contractors to upgrade and grow. BCA will be releasing the details of the revamp to registered contractors later this week.

BCA is also looking into evolving the CRS into a rating system over the next few years. Under this system, contractors will be rated for their financial capacity, technical ability, management strength and performance separately. The ratings will be published. Hence, contractors will know how they stand relative to each other and the areas to upgrade if they want to improve their ratings. For the clients, instead of relying on fixed registration grades, they will be able to specify their minimum rating requirement for each area when they shortlist contractors. BCA will seek further feedback from the industry and the procurement agencies before finalising the details.

The second initiative relates to facilitating the design-and-build (D&B) method of procurement in the construction industry. The Construction 21 Report has identified D&B as one of the ways to improve productivity in the industry. By bringing design and construction services together, re-works can be minimized, and clients can save cost and time. The common practice today is for D&B services to be offered and delivered by a team comprising a contractor and various consultancy firms. To reap more benefits from D&B, it is better to have a multi-disciplinary firm offering design and construction services. However, current legislation does not allow such a firm to be set up.

Earlier this year, a committee comprising representatives from the public and private sector completed a review to facilitate D&B arrangements. They have proposed to allow professional design practices to provide both design and construction services. To encourage builders to form licensed corporations to provide D&B services, the Committee has also proposed to relax the requirement that the Chairman and two-thirds of the Board of Directors of licensed corporations must be professional engineers or architects.

My Ministry has accepted the Committee’s proposals. BCA, PEB and BOA, will make the necessary legislative changes to their respective Acts by early next year.

The third initiative is to make the wide range of financial assistance schemes more accessible to construction industry players. Industry players have given the feedback that they find it difficult to look for the right scheme that meets their needs and to apply to use the scheme.

BCA will work closely with firms on a package of assistance schemes which are readily available to meet their specific needs. It will provide information on the various types of capability upgrading that a consultant, a contractor or a supplier may need and help them find the appropriate financial assistance schemes.

Besides adopting this more pro-active approach in promoting assistance schemes, BCA will also introduce two new strategic programmes to assist industry players adopt new technology and best practices.

The first is "Jumpstart Construction", which is to encourage construction industry players to use info-comm technology to improve efficiency. Since the launch of the PSB’s Industry Productivity Fund or IPF last year, over $6 million has been approved under the scheme to support 3 pilot projects. This will help more than 400 companies in areas such as electronic procurement and the use of I.T. tools to improve productivity at the construction site.

However, the IPF will only benefit companies involved in the pilot projects. To make sure even more firms benefit from the adoption of innovative technology, BCA, working with PSB, has set up the Jumpstart Construction programme to provide up to 50% subsidy of setup costs for firms to upgrade their IT capabilities. Architects and engineers can use the programme to help them gear up for the electronic plan submission system or One-Stop Submission Centre (OSSC). Contractors and suppliers can also make use of the programme to help jumpstart their move into e-commerce. Over the coming year, the scheme aims to help up to 700 companies.

The second strategic programme is "CRS Step-UP", which is to help SMEs gear up to meet the new CRS requirements. The Local Enterprise Technical Assistance Scheme (LETAS) has helped many SMEs to achieve ISO 9000 certification. More than $10 million in grants have been approved since 1996, benefiting more than 700 firms. To help SMEs develop their environmental management system to the ISO 14000 standard and their occupational health and safety assessment management system based on the OHSAS 18000 standard, BCA has developed the CRS Step-UP programme under which firms can obtain up to 70% subsidy for consultancy in these areas.

The Government is committed to helping the construction industry upgrade. To succeed, members of the industry must be prepared to face the challenges ahead and restructure themselves. Tonight’s signing of the Memorandum of Understanding by SCAL and the key participating companies of the e-procurement project is an example of this progressive spirit. BCA and PSB have assisted SCAL to obtain $2.4 million from the Industry Productivity Fund for this project. Up to 220 companies would benefit from the project. I wish all the participating companies success in this venture.

I would like to congratulate all Awards and Merit of Certificate winners, in particular those who won the inaugural C21 Best Practice Awards. It shows that we have companies that have developed and adopted innovative techniques and processes. I am also happy to note that Excellence Awards have been given to three overseas projects by local contractors. It indicates that our local contractors are capable of competing successfully in construction markets outside Singapore.

Finally, I would like to wish all of you a most enjoyable and memorable evening.

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