While a pipeline of projects is building up gradually, the Singapore construction industry is still facing significant manpower shortages, supply chain constraints, and escalating construction costs all attributable to the global pandemic. Meanwhile, productivity needs to further improve to meet this growing demand.

The immediate focus to resolve the manpower shortage issues is critical so that the pressure of the current backlog can be better managed and eventually resolved. In tandem, there is a need to accelerate the key initiatives under the Construction Industry Transformation Map (ITM) which aims at improving productivity and also instilling a more collaborative mindset and culture amongst the key project and industry stakeholders.

These include the adoption of Design for Manufacturing Assembly (DfMA) technologies, Integrated Digital Delivery (IDD) and also towards a more collaborative contracting/partnering approach. It requires a paradigm shift in the mindset of all key stakeholders within the Built Environment sector and a continuous effort to push and support the upskilling of the workforce at all levels.

Performance of the construction sector continues to be weighed down by declines in both public and private sector construction works. Current market sentiments, especially investments from the private sector, continue to appear low.

Tender price escalation forecast

The construction industry is still facing significant manpower shortages, supply chain constraints and productivity concerns. Recent border restrictions further add to these challenges. Higher labour and material costs are expected to continue.

More recently too, a surge in prices for steel reinforcement, copper, other raw/commodity materials and oil are also key drivers impacting on the construction cost. We are also seeing significant cost increases in M&E works due to the unavailability of skilled labour related to these trades.

At the beginning of 2021, we anticipated that tender price escalation for this year could increase in the range of six percent to ten percent. The forecast was based on the considerations that the construction industry is slowing gaining momentum with the vaccination programme being progressively rolled out and the number of COVID-19 cases from the dormitory have been contained at a relatively low level. Based on recent tender returns, we continue to see volatile tender pricing and we observe that contractors are also selective on tender opportunities.

Key construction material market prices