Thursday, 11 January 2018
I am very delighted to be here you with at the BCA-REDAS Built Environment and Property Prospects Seminar again. I wish everyone a very good start to the year.
The last few years, however, have been challenging for the property and built environment sectors. We have seen a drop in construction demand and many of our firms have felt the pressure.
Last year, $24.5 billion in building and civil engineering work was awarded. This was $1.9 billion less than the year before. The Government is trying to help firms ride out the downturn. For example, we have brought forward $1.4 billion in public projects to start from 2017 to early 2019. These include estate upgrading work, as well as the upgrading of a number of community clubs, neighbourhood police posts and other public sector buildings – a whole range of small to large projects.
We have also been encouraging Government agencies to parcel out large infrastructure projects into smaller chunks, where possible. This helps agencies diversify risk and creates more opportunities for our local firms. LTA, for example, has done this for some of its MRT projects.
It looks like things are picking up. Overall GDP growth last year is expected to come in at 3.5% - which is on the high end of initial forecasts. Sentiments in the private property market also appear to be improving.
BCA projects that construction demand for private residential projects could be up to $3.6 billion this year. Some of this will be generated by the spate of en-bloc sales which will also lead to increased supply of new private housing units over the next few years. BCA estimates that demand for private commercial projects could hit $2.5 billion this year, backed by upcoming office development projects at Central Boulevard and Harbour Drive.
But the public sector will continue to lead construction demand in the coming years. BCA projects that between $16 - $19 billion in public projects will be awarded this year – more than the $15.5 billion last year. Some of the projects expected to be awarded this year include additional major contracts for infrastructure projects like LTA’s North-South Corridor, PUB’s Deep Tunnel Sewerage System, and various healthcare facilities.
Overall, BCA estimates that construction demand will increase to between $26 billion and $31 billion this year. Demand is expected to continue to increase over the next 5 years. By 2022, BCA expects annual construction demand to hit about $35 billion. We will continue to monitor the demand for construction work and ensure a stable and sustainable property market.
But while we deal with current challenges, we must also look to the future. We need to work together, build up capabilities and position our local firms to be competitive to seize future opportunities and face future challenges. To help our firms do this, we have formed a Built Environment (BE) cluster sub-committee under the Future Economy Council (FEC). I co-chair this sub-committee with Mr Lim Ming Yan from CapitaLand and it is fully a tripartite effort.
The sub-committee is a joint effort between the government, the industry, unions, and the IHLs. It oversees the Industry Transformation Maps (ITMs) for our Built Environment cluster. Each ITM is a growth and competitiveness plan that is meant to help local companies address current challenges and develop capabilities. The intent is to create good jobs for Singaporeans and position our firms to face competition.
We have ITMs for the construction, security, environmental services, landscape, and real estate sectors. In short, we are looking at the entire value chain that designs, builds, transacts, manages, and maintains our infrastructure.
Today, I will take a few moments to share some of the ideas that the sub-committee has for two specific industries – construction and facilities management (FM).
The Construction ITM was launched in October last year, and we deliberately made it optically a tripartite effort so as to continue to drive across the message that the design of the ITM and its subsequent implementation needs to be tripartite.
Developed in close consultation with the industry and stakeholders, it provides a blueprint for our firms to develop niche capabilities in Design for Manufacturing and Assembly (DfMA) as well as Integrated Digital Delivery (IDD).
DfMA is a key method to transform the built environment sector. It involves moving aspects of construction away from open worksites that are out in the elements, highly dependent on the skills of individual craftsmen and workers into controlled environments such as an indoor factory or an open plant. Like in a manufacturing plant, building components are prefabricated, often in a highly mechanised manner, before being brought and assembled onsite.
DfMA means that projects can be completed faster, cleaner, quieter and with more consistent quality. It will also reduce and manage our reliance on foreign manpower while creating new and better job opportunities for Singaporeans seeking to venture into this field.
From fewer than 10 projects just 4 years ago, we now have more than 40 projects that have adopted DfMA. This year, we expect another 59 DfMA projects to be tendered out. Many of you here are DfMA pioneers in Singapore. Thank you for your willingness to innovate.
We target to increase the DfMA adoption rate from the current 10% to 40% of projects by 2020. We will make this possible by creating a sustained demand and building up our supply capabilities.
For the public sector, this is being done through the Productivity Gateway Framework – an important process. Agencies will be required to consider the adoption of DfMA technologies upfront when developing and designing their projects. For the private sector, we will stipulate the adoption of DfMA technologies for Government Land Sale sites where suitable.
We have also set aside land for multi-storey Integrated Construction and Prefabrication Hubs to meet future demand. The first wave of four are well underway – some are already operational – but there are more sites to come to build up strong capabilities.
Besides DfMA, we can be more effective and productive by streamlining processes. This is where IDD comes in. IDD builds on Building Information Modelling (BIM) and integrates the entire building lifecycle through digital information. This means that buildings can be designed to factor in construction and downstream maintenance considerations from the start. This saves time and reduces abortive work during construction. This can also make maintenance more efficient. I will talk about this later.
This is not something futuristic. In the course of the last year and a half, I had the privilege to visit many firms who have announced it or done it quietly. We have seen this happen. They have integrated their designers, consultants, builders, including their sub-contractors, all onto a single BIM and digital platform. For those sub-contractors who are not familiar, they put in the effort to train them and share with them the software. All of them work in one war room and solve so many problems that we take for granted as just part and parcel of the inefficiencies of construction here in Singapore.
Today, developers, consultants and builders have used BIM to collaborate closely during the design and construction phases of more than 70 projects. By 2020, we target to have a total of 40-60 projects adopting IDD – using various digital technologies to coordinate and optimize their projects across all stages of construction, from design to prefabrication to delivery and eventual assembly onsite.
We recognise that real integration of different systems takes time, but we can do it. To facilitate the process, we will develop shared platforms and standards to ensure IDD interoperability across the value chain. We will share more details when we launch the IDD Plan in mid-2018.
Construction is just one part of the infrastructure lifecycle. But maintaining infrastructure is another important part. As our city ages, and as we continue to build and go forward, maintenance is important.
FM companies have told me that the cost of running and maintaining a building could sometimes be as much as four times the initial construction cost! So we really cannot afford to keep thinking of FM and maintenance as a peripheral downstream concern which developers, consultants and builders need not be too concerned about. A poorly-designed building often results in expensive retrofitting and labour-intensive maintenance. A well designed building, with FM considerations factored in early, can avoid these issues.
We have had various conversations and discussions with FM companies – big and small, and have developed some preliminary ideas on how to transform the FM industry. Adopting IDD is one. We talked about IDD for the design and construction phase, but IDD has its value for the lifecycle of a building. Through IDD, we can make use of digital technologies like BIM to visualise our building design in 3D. This allows early detection of issues that may make maintenance difficult down the line. The visuals and details also facilitate discussion and allow maintenance considerations to be incorporated at the design stage.
The BIM models used for IDD also can contain useful information for longer-term maintenance. For example, FM managers can use BIM to tag and store replacement schedules and specifications on individual building components and mechanical and electrical (M&E) items.
This may seem prosaic, but the potential cost savings can be considerable. Developers whose business models are not meant to build, but to maximise the value of their assets through this or through the running of business in facilities, will well understand the tremendous savings that can be reaped from good maintenance as much as green buildings help them to save water and energy and overall costs.
Indeed, there are synergies to be reaped across the various BE ITMs. This is why instead of our earlier plan for a Construction Transformation Office with a focus on just the design and construction value chain, BCA will now set up a Built Environment (BE) Transformation Office to coordinate and drive our transformation efforts along with industry, unions and IHLs across the BE cluster and throughout the lifecycle of a building.
The BE Transformation Office will work closely with the industry, the unions, government agencies and the IHLs to translate the various BE ITMs into reality for the benefits of our firms, our workers and our economy. For the construction sector, the Transformation Office will work with construction firms to develop niche capabilities in DfMA and IDD, and help facilitate opportunities overseas. We are firming up the plans and will provide more information on the Built Environment Transformation Office later this year.
Last year was challenging, but we got through it together. This year looks like it will be better, but this should not stop us from pressing on with our transformation so that our firms will become stronger, more capable, more competitive, and better positioned to seize future opportunities. We look forward to working with you as we continue to transform Singapore’s BE sector.
Thank you and I wish you all a good seminar, and more importantly, a good and vibrant and transformative year ahead!