Could collaborative contracting re-energise Singapore’s construction recovery?

Singapore’s construction sector has experienced a 10% year-on-year rise in the fourth quarter of 2022, following an 8.1 growth in the third quarter, indicating strength and stability for the sector into 2023 says Turner and Townsend.

The construction sector remains vulnerable to global challenges such as high inflation and rising interest rates (Photo: AdobeStock)

The company says that this is due to pent-up demand for both public and private construction, with residential, commercial, and infrastructure projects leading the way. This positive trend is expected to continue, with a projected construction demand of between S$27 billion (US$20.3 billion) and S$32 billion (US$24.1 billion) for 2023, outpacing the broader economy.

The construction sector’s growth is expected to be driven by a robust pipeline of public housing and private residential developments. Additionally, commercial construction demand is expected to ramp up in 2023.

Turner and Townsend highlight that Singapore’s government has set out a refreshed infrastructure approach, with the 2023 budget outlining plans for key construction and infrastructure needs, indicating a more consensus-driven approach to increase productivity, such as the top-up to the S$4 billion (US$3 billion) National Productivity Fund and the new Enterprise Innovation Scheme.

However, the construction sector remains vulnerable to global challenges such as high inflation and rising interest rates. Khoo Sze Boon, managing director of Singapore and Vietnam at Turner and Townsend, adds that this calls for more investment in collaborative contracting, which creates value through closer consultation among stakeholders and has the potential to re-energize Singapore’s built environment beyond its current rate of recovery.

Implementing collaborative contracting practices takes time and requires trust from all parties from the start, said Boon. Singapore’s government is already encouraging this, with the Building and Construction Authority recently refreshing the Built Environment Industry Transformation Map (ITM) to combine the previous Construction and Real Estate (Facilities Management) ITMs into a single map focusing on a value-chain approach.

Boon suggests that Singapore’s construction sector is expected to continue its growth trajectory in 2023. By investing in collaborative contracting practices, the industry has the potential for further growth, contributing to Singapore’s economy’s overall resilience. The refreshed infrastructure approach and government incentives will likely increase productivity and facilitate the implementation of these collaborative practices. However, the sector must remain vigilant and adaptive to global challenges to maintain its upward trend.