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New methods may raise costs for developers

Govt to top up CPC Fund by $30m: Lee Yi Shyan

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The BCA will also progressively raise the bar on buildable designs and the use of labour-efficient construction methods this year and next year - PHOTO: SPH

[SINGAPORE] Requiring developers to adopt productive technologies and prefabricated components in new projects, as announced by the Ministry of National Development (MND) yesterday, is widely expected to translate into higher costs for them in the short term.

Developers will have to adopt productive technologies for selected Government Land Sale (GLS) sites from the second half of this year, MND said during the Budget debate.

These technologies include prefabricated prefinished volumetric construction (PPVC) for hotels and residential projects and cross-laminated timber (CLT) for low and medium-rise buildings.

The use of prefabricated bathroom units (PBUs) will be mandated for all residential GLS sites; with industrial GLS sites, a minimum level of prefabrication will be required.

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The Building and Construction Authority (BCA) can issue a stop-work order on a project which does not fall in with these requirements, which are being instituted to force construction firms here - laggards in productivity compared to their global peers - to buck up.

The BCA said yesterday that developers have a greater role to play in raising construction productivity because they drive building projects from their place at the top of the construction value chain.

BCA chief executive John Keung said the use of productive technologies can speed up completion of buildings, reduce dust and noise for people living near construction sites and reduce the risk of on-site accidents.

The use of PBUs for residential GLS sites is expected to save manpower by 60 per cent. More than 20 private residential projects have incorporated such bathrooms since 2005.

Mr Keung conceded that the initial adoption of these more productive construction methods may mean higher costs for some developers, but declined to provide an estimate.

The BCA will also progressively raise the bar on buildable designs and the use of labour-efficient construction methods this year and next year.

Lee Yi Shyan, Senior Minister of State for National Development, told Parliament yesterday that the government will top up the five-year Construction Productivity and Capability Fund (CPC Fund) by $30 million.

Since its launch with $250 million of capital in 2010, the fund has helped 4,000 companies, of which 80 per cent are small and medium-sized enterprises.

Mr Lee said: "We will explore a second five-year tranche of funding to continue our support to firms to raise construction productivity."

Singapore-listed Swee Hong, a major construction firm here, is a licensee for the PPVC technology. Its managing director Ong Hock Leong told The Business Times that the company may not make cost savings at the start because it is setting up a 100,000-sq-ft factory in Kranji Link to produce modular housing units. Costs will also be run up in training its staff and in storing and transporting the prefabricated units to the site.

"We expect a 5 to 20 per cent increase in costs compared to using conventional methods," Mr Ong said, but added that manpower savings also stand to be halved.

Developers that have used productive technologies say the initial costs are high, but that the gains in site productivity will eventually offset the incremental costs of adopting the new technologies.

Major developer City Developments Ltd (CDL), for instance, has already been using drywall for the internal partition walls and PBUs in most of its new condominium developments.

Allen Ang, the head of Green Building at CDL, said: "While the cost of prefabrication is still relatively high due to production, transportation and logistics issues, with the government's latest stringent measures in foreign-worker levies and PBUs now mandated, we expect a wider adoption of PBUs by developers.

"With economies of scale, the cost of PBUs should go down and could even be cheaper (to build) than conventional bathrooms in the long run."

The use of PBUs has yielded productivity improvements of 40 to 80 per cent for CDL.

Leading the way in the public sector, the Nanyang Technological University's upcoming hostel in North Hill will be the first project here to be built using PPVC.

Paul Chain, the chief executive of the university's Development & Facilities Management, said: "The cost savings are expected to be marginal as there is a trade-off between manpower savings and material and mechanisation costs."

To ensure an adequate supply of precasts and address a lack of space for manufacturing them, the BCA will call land tenders for the building of 10 multi-storey integrated construction and precast hubs by 2020.

The more than 20 pre-cast suppliers here are now able to meet the bulk of demand here; imports meet no more than 10-20 per cent of the demand for pre-casts.

As an interim measure, BCA said it is extending the leases of existing pre-casters where possible; it will also provide temporary precast storage land and import pre-casts from Malaysia and other sources.

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