HDB wants more contractors to help ease the squeeze

To realise the Government’s commitment to ramp up the supply of flats over the next few years, the Housing and Development Board (HDB) is looking to woo more contractors to bid for public housing projects.

Construction companies, however, are urging the Government to postpone its tightening on the influx of imported labour.

The construction industry has churned out an average of between 15,000 and 17,000 new flats annually in recent years but is now facing the challenge of building a record 25,000 Build-to-Order flats and tens of thousands of rental flats this year alone, amid what industry players described as a private property development frenzy.

To ease the squeeze, the HDB’s chief strategy is to rope in contractors who have the capacity but have not been bidding for public housing projects, according to a Ministry of National Development (MND) spokesperson.

In response to Today’s queries, the spokesperson added that there are 86 Building and Construction Authority (BCA)-registered companies here capable of building a typical HDB project, but only 40 of these are regular bidders – the remaining are involved in private property development, according to industry players.

Property experts such as Cushman & Wakefield vice-chairman Donald Han believe this will be effective as there is excess capacity in the industry after the completion of the integrated resorts. If the opportunities exist and the margins are good, the companies will go in, he said.

Construction companies, however, disagreed and said there has to be more resources available before the industry will be able to cope with the burgeoning project volume. Several companies Today spoke to said a temporary relaxation of the more stringent foreign worker quota and a suspension of the foreign worker levy hike would be crucial.

Said Straits Construction’s director and general manager, Mr Kenneth Loh: “Whoever is awarded the projects will still be competing for the same, finite resources. It is a Catch-22 situation (with the increased demand for construction services but a squeeze on the quota and levies).”

Jian Huang Construction’s managing director Annie Gan said if manpower resources remains tight, building costs will rise and it may also take longer for a company to complete a project. She suggested the increase in foreign worker levy be postponed by two to three years.

Chesterton Suntec International head of research and consultancy Colin Tan noted: “If costs increase, it will affect how contractors bid for future tenders. And if the increase is passed on to homebuyers in the end, it goes against the purpose of increasing the supply of flats.”

Possible ‘short-term market pressure’

The MND spokesperson acknowledged that there could be “a short-term market pressure on the contracting resources” of its pool of regular bidders for HDB jobs.

Describing the pressure as “the most significant impact” of HDB’s ramp-up of public housing supply, the spokesperson added that the BCA and HDB will continue to monitor the situation closely and work with stakeholders to come up with measures to help the industry plan resources in the short term.

But the spokesperson noted that this will be in terms of driving productivity improvements in the industry, such as mechanisation and pre-fabrication, rather than by adding headcount.

According to a HDB spokesperson, some 70 per cent of a typical HDB building, in terms of concrete volume, is constructed using precast materials. The HDB will continue with the effort to reduce the need for foreign workers by increasing its construction productivity, its spokesperson said.

But Mr Loh said: “Even if there’s more automation, when you have more projects, your attention may be spread thin. You will still need enough manpower to deploy in an efficient manner.”

Some companies also wondered if HDB rules concerning new contractors can be relaxed.

Jian Huang Construction’s Ms Gan said: “If new contractors who have experience in other projects of comparable size can get more than one project, then it will help increase the capacity a fair bit.”

New contractors to public housing projects can only be awarded one project in the first year under HDB rules. Their performance and workmanship will be assessed and only if they meet the mark, will they be allowed to tender for concurrent projects.

This is to ensure the quality of housing projects and also to “allow new contractors to fully familiarise with the construction processes and requirements of public housing projects”, said a HDB spokesperson.

Source : Today – 13 Jun 2011

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