Ladies and Gentlemen

Good evening,

The last few weeks have been sad ones for the construction industry. Two major construction site accidents in the space of 10 days, first at Nicoll Highway, then at Ayer Rajah, caused the tragic loss of 6 lives. The industry not only suffered major losses in terms of time lost and damages, but also a dent in confidence. These incidents remind us that we should never take construction safety for granted because precious lives are at stake.

BCA, as the regulatory authority on building and construction, has the responsibility to ensure that our physical infrastructure is designed and constructed safely. BCA has authorized the Building Control Units, or BCUs, of LTA, JTC and HDB to carry out building control functions for projects under their respective purview. However, BCA continues to audit and exercise supervisory control on how the BCUs discharge the delegated functions, and assumes regulatory oversight in the event of construction-related incidents. In such incidents, BCA works closely with MOM, which has the responsibility to ensure the safety of workers at worksites in general.

In the immediate aftermath of the Nicoll Highway incident, BCA’s engineers inspected the buildings adjacent to the site to make sure that they were structurally stable and safe. BCA also ordered a continuation of this inspection and round-the-clock monitoring of the buildings. Such safety inspections and monitoring were also extended to buildings near to the other construction sites along the Circle Line. LTA, in consultation with BCA, decided to stop work at all the other worksites of the Circle Line, while BCA conducted an audit on the design and construction methods.

In the Ayer Rajah accident, BCA engineers were also at the scene quickly to assess the safety of the structures at the work site, as well as to ascertain the safety of nearby buildings and structures. I commend the quick response and professionalism of the BCA engineers.

Following these two incidents, there has been much speculation as to their cause. One common comment is that the public tender evaluation system is flawed, resulting in the award of projects at unrealistically low prices and contractors having to compromise on safety measures in order to remain viable. As a Committee of Inquiry has been appointed to look into the causes of the accident, it would not be proper for us to speculate at this stage. However, let me take this opportunity to set out some facts.

First, the Government’s procurement policy for construction works is to award a tender to the contractor that will give the best value for money in terms of quality and performance, and not necessarily to the lowest bidder. Between April 2003 and December 2003, 28% of all public sector construction contracts were not awarded to the lowest bidder.

Second, only contractors who have been prequalified or registered under the BCA’s Contractors Registry System (CRS) are allowed to bid for public sector projects. The CRS has stringent criteria on safety performance and technical competence, as well as management and financial capability. Contractors without good safety performance records are therefore barred from tendering for public projects. Finally, for complex projects, such as airport complexes, MRT lines and hospitals, additional pre-qualifying criteria are often specified to ensure that only contractors that are technically and financially competent can undertake such projects.

All things being equal, however, it is prudent to award to the lowest bidder who meets all the criteria. There must be compelling reasons not to do so, for transparency and public accountability.

Understandably, public confidence in the construction industry has been affected by the two incidents. However, we should view these incidents in perspective. Our construction safety record is good. According to MOM, the number of fatal construction accidents has dropped, from 72 in 1997 to 31 in 2003. Let us not speculate on the causes. The incidents will be thoroughly investigated and findings made public in due course. What is important is that we learn from the incidents and fully incorporate the lessons into our systems, structures and processes.

I now move on to another issue that has challenged the industry. In the past year, construction demand dropped to $10 bil, the lowest in a decade.

Competition for jobs was more intense and some firms faced financial hardships. Downstream, sub-contractors complained of not being paid or not paid on time.

In October last year, I announced the intention to introduce a security of payment legislation to improve cash flow across the industry. BCA has since studied the relevant legislations of UK, Australia and New Zealand, and consulted extensively with the industry, including SCAL, 6+6 Trade Alliance, SIA, REDAS, IES and SISV. I am pleased to inform you that a broad consensus has been reached on the key provisions of a security of payment model for Singapore. The proposed legislation is being drafted now. I expect to table the Bill in Parliament by the third quarter of the year.

The key principle behind the proposed legislation is that any party carrying out construction work or supplying construction-related goods/services will have the right to receive progress payments for work done.

It will provide a framework for rapid payment dispute resolution via adjudication. Suspension of work will be allowed after adjudication and if the adjudicated amount is not paid. Direct payments will also be allowed. For example, the client or developer can pay the first-level subcontractor directly if the main contractor fails to pay, and thereafter recover the payment from the main contractor.

The proposed security of payment legislation will smoothen the cash flow across the industry and provide some respite. At the same time, we are seeing the bottoming of the economic downturn and the worst appears to be over for the industry.

It is not realistic to expect construction demand to reach the peak of $24 billion in the 1990s. BCA has projected construction demand reaching at most $12-$13 billion in the medium term. Against such a backdrop, our local firms must consolidate and venture overseas to overcome the constraints of our small domestic market. To succeed, our contractors must offer good vale for money, in other words, quality work at competitive prices.

BCA has been active in promoting building quality. A building of high quality will have a longer lifespan and better maintainability. Several initiatives have been implemented in the last few years to enhance building quality.

This includes the CONQUAS and Quality Mark schemes, buildable designs, and raising the skills standards of the workforce.

Tonight, I am pleased to announce that BCA will launch a set of National Productivity and Quality Specifications, or NPQS in short, as an additional step in the holistic approach to promote building quality.

This is the result of a 3-year effort by the industry to harmonise different building specifications into a base set of common specifications. The NPQS will provide a common understanding on the minimum quality standards on materials and workmanship. This will help to ensure that buildings are consistently well constructed.

The NPQS is a joint project by SPRING Singapore, BCA, Singapore Institute of Architects (SIA), Institution of Engineers Singapore (IES) and Association of Consulting Engineers Singapore (ACES). In addition, REDAS, SCAL, SISV were also actively involved in drafting the specifications.

I wish to reiterate that construction safety must not be compromised and its importance cannot be overstated. There is always room for improvement when it comes to enhancing safety. The Government is open to suggestions for improving safety and will continue to review the regulatory framework to identify any gaps and deficiencies that need further improvement. We will tighten up the regulations, if necessary. The Industry must also play its part. It must further improve its construction safety record by implementing strict safety measures and reviewing critical processes. Safety consciousness must be inculcated. By working together, we can restore public confidence in the industry.

Finally, let me extend my heartiest congratulations to all the winners of BCA’s Quality Awards at tonight’s ceremony. I see that quite a few are past winners. I especially commend them for their sustained efforts to excel. I hope this will motivate their peers in the industry to emulate their success.

I wish all of you a pleasant evening.