SINGAPORE – Between $32 billion and $38 billion in construction contracts are expected to be awarded in 2024, the Building and Construction Authority (BCA) said on Jan 15.
An estimated $33.8 billion worth of contracts were awarded in 2023, higher than the initial construction demand forecast of between $27 billion and $32 billion.
BCA attributed this to higher tender prices, expediting of contract awards for several private residential projects and ramping up of public housing projects.
In 2024, the public sector is expected to contribute about 55 per cent of total demand, with $18 billion to $21 billion worth of contracts likely to be awarded, BCA said. These include several upcoming major public sector projects such as new Build-To-Order flats, contracts for phase two of the Cross Island MRT Line, infrastructure works for Changi Airport Terminal 5, Tuas Port developments, and major road and drainage improvement works.
Private sector demand is expected to contribute between $14 billion and $17 billion in 2024, National Development Minister Desmond Lee said at the Built Environment and Property Prospects seminar organised by BCA and the Real Estate Developers’ Association of Singapore.
BCA said this demand will come mainly from residential developments under the Government Land Sales programme, expansion of the two integrated resorts and redevelopment of commercial premises, as well as the development of mixed-used properties and industrial facilities.
From 2025 to 2028, the projected annual construction demand is expected to be between $31 billion and $38 billion per year, Mr Lee said. The public sector is expected to contribute $19 billion to $23 billion per year during this period, with about 70 per cent for building projects and 30 per cent for civil infrastructure works.
Major developments will include phase three of the Cross Island Line and the Downtown Line extension to Sungei Kadut, the redevelopment of Alexandra Hospital, a new integrated hospital in Bedok and the redevelopment of various junior colleges, said BCA.
Private sector construction demand is expected to remain stable in the medium term as well, at between $12 billion and $15 billion per year from 2025 to 2028, BCA added.
In his speech, Mr Lee said the Government has been transforming the built environment sector by emphasising higher productivity and sustainability standards.
Other efforts include a move towards collaborative contracting, which provides a framework that allocates risk more equitably so that the sector can withstand emerging challenges. “For example, we have introduced clauses that allow contractors to recover part of the additional costs that arise due to pandemics,” he said.
Mr Lee announced at the seminar that the Government, in collaboration with industry associations and consultancy firms, has completed a review of the Standard Consultancy Agreement (SCA).
The agreement is a common contract for public sector construction-related consultancy tenders in areas such as architectural consultancy, civil and structural engineering, and project management.
The enhancements that stemmed from the review aim to foster healthier practices between public sector developers and consultants by focusing on three key outcomes: Clearer definition of scope of services, fair and timely remuneration with the ability to request fee adjustments, and a more balanced allocation of risk, Mr Lee said.
He added that the Government will be enhancing the Quality Fee Method (QFM) framework for public sector consultancy tenders to place greater emphasis on quality. The enhancements include more merit-based shortlisting and increased differentiation in quality scores.
The proposed amendments to the SCA and QFM enhancements are expected to be implemented later in 2024.
From April 1, 2025, government entities that handle procurement will assess consultants involved in public sector projects on their performance every six months, and give them a performance score out of 100 points, BCA said. Firms will be temporarily suspended from tendering for public sector projects for three months if their half-yearly performance score is below 50 points, which translates to a “poor” performance.
Mr Lee also urged private developers to play a bigger role in transforming the built environment sector, such as adapting the public sector’s standard provisions for collaborative contracting.
“Some of these moves may seem challenging initially as they incur higher costs, and stakeholders throughout the value chain will need time to make process adjustments. However, transformation is crucial in the long term. It will ultimately result in a more resilient, dynamic and innovative sector, which will benefit you down the road,” he said.
