AS one of the key pillars to Singapore's growth and development, the construction industry has always been an important component of the economy, accounting for five per cent of the nation's GDP in 2016. But, it is not spared from a sluggish cycle as data from the Ministry of Trade and Industry (MTI) indicated its continued contraction in the second quarter of 2017 by 5.6 per cent due to a decline in private and public projects and a forecasted growth of just 0.3 per cent this year.
With economic restructuring and disruptions becoming the new norm, it is high time for the construction industry to evaluate current measures and mindsets in order to ensure its competitiveness. The government has kick-started this with the launch of the Construction Industry Transformation Map (ITM).
For example, the Building Construction Authority of Singapore (BCA) has made clear its goal of reducing reliance on foreign construction workers by up to 30 per cent by 2020. This focus is expected to help provide higher skilled jobs for Singaporeans in the manufacturing process, and lower reliance on on-site construction jobs. Unsurprisingly, conversations revolve around offsite construction methods such as Prefabricated Prefinished Volumetric Construction (PPVC) and Cross Laminated Timber (CLT), which can shorten building time and cut manpower needs.
So, what and where are the gaps? Examining the elements that inhibit the construction eco-system is vital - right from the starting point of building materials suppliers to the construction companies and even the relevant building authorities, how can the various parties contribute to greater productivity?
The benefits of adopting newer methods of construction, like PPVC, are evident - it can save up to 50 per cent in manpower and time required for the completion of projects. Beyond financial savings, it also allows for better quality control, improved site safety, reduction in noise pollution, and sustainable building practices. Currently, 70 per cent of building components used in HDB apartments are pre-cast, but there have been a growing adoption of prefab methods for construction projects such as Nanyang Technological University's three new campus residential halls and new sports halls.
Amid this rapidly changing landscape, the reality is that a majority of companies, especially small and medium enterprises (SMEs) are finding it hard to keep pace with the new direction, citing challenges such as cost and lack of trained manpower. In an interview with The Straits Times, Madam Gwee Sung, director of Chong Tong Construction, said firms like hers are feeling the squeeze and switching to new technologies could erase her company's years of experience in conventional construction methods.
Yet transformation is imminent. According to a report by McKinsey & Company, an analysis of the construction sector of various countries in 2015 showed that Singapore is lagging behind countries such as Australia and the United Kingdom, and this lag was also echoed by Second Minister for National Development Desmond Lee during his speech at the opening of Singapore Construction Productivity Week. All these underline the significant scope to deliver efficiency improvements in the industry's overall performance levels. Companies have to switch from the mind set of maintaining status quo; having the "wait-and-see" mentality, to identifying the areas to achieve such improvements.
Undoubtedly, questions will surface. Will there be high costs and significant risks incurred? Does this mean companies could be obliterating their years of experience in conventional building techniques? At this crucial crossroads, the industry will need to come together to navigate this challenge to prime themselves for success.
Here are some of the key areas the industry can look towards:
- Forming partnerships along the value chain - The construction industry has been hesitant about fully embracing the latest technological opportunities and its labour productivity has stagnated accordingly. One of the issues to resolve is inadequate collaboration with suppliers and contractors. Purchasing strategy involves long-term relationships with key suppliers, but frequently, such decisions are made ad hoc and project-based. Companies need to enhance coordination and cooperation across the value chain, and jointly define standards and agree on common goals.
- Embracing support from the government - The government's latest measures send out signals that the community should focus on providing jobs for the local population, as well as creating better-skilled labour. In the recently released ITM, the Building and Construction Authority (BCA) shared their goal on having 80,000 personnel trained in built technologies to enter the industry by 2025. Focusing on cutting costs and therefore looking at measures solely for that goal could be myopic. Companies should embrace support from the government to upgrade skill sets of the current workforce via training schemes such as Workforce Training and Upgrading (WTU), and the Construction Productivity & Capability Fund (CPCF). In the long term, this would also translate to retaining skilled operatives for an extra few years and use them to train and mentor less experienced co-workers so they too become more productive. Governments shape the industry in their actions as key project owners. With about 80 per cent of major construction contracts awarded to SMEs, schemes pushed out by the government could be instrumental for an uplift.
- Identifying optimal responses to mega trends - In fairness, the construction industry is innately conservative and that hinders attempts at major reforms. According to a KPMG Global Construction Survey, about 70 per cent of firms are trailing behind in this innovation curve globally. Yet, several success stories on technology transitions have made it clear that the industry is ripe for and capable of transformation.
In the United States, the Construction Industry Institute collects best-practice insights on construction methods and models, and allows member-access to such information. Similarly, the Canadian Construction Association - representing more than 20,000 member firms, formed a Lean Construction Institute in 2015 to provide a platform for all stakeholders along the supply chain to join forces on the development and application of new technologies and techniques. These measures aim to create a repository of knowledge for companies to share key learnings and tried-and-tested methods for inspiration. Perhaps, we can also adopt a similar approach to risk by first creating a safe environment for discussion and experimentation.
The road towards an advanced construction industry will need to go beyond large corporations leading the change. Companies cannot realise their full potential alone and the industry relies on a smooth interplay of all participants across the value chain.
Given the construction industry's economic importance, small improvements in performance can bring about strong results for society as a whole. Closing gaps in infrastructure capability can generate additional jobs and economic activity in the long run. Also, by harnessing the capacity of the building sector, we are also looking at reducing emission rates cost-effectively and achieving energy savings.
From innovative technologies to revolutionary construction techniques, the decision is in the industry to embrace these new opportunities more vigorously and change the way it has traditionally operated. Construction companies need to act quickly and decisively to reap lucrative rewards. Only then can Singapore's construction industry advance towards becoming an exceptional leader in the global playing field.
- The writer is general manager, USG Boral Singapore, a building materials supply firm.