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Some builders not keen to be first movers in PPVC
IT does not always pay to be the first mover. That's how some contractors feel about the government's push for more productive methods in the construction industry.
But Singapore building firms have little choice. As it stands, almost half the government land sale sites mandate the use of prefabricated prefinished volumetric construction (PPVC) - a building method where large modules complete with finishes are manufactured in factories and assembled on-site.
At a roundtable discussion focusing on infrastructure and construction, organised by HSBC late last week, panellists also fear that some contractors could be taking part in these tenders with their "eyes half closed", neither familiar with the tender requirements nor fully aware of the risks and complexities involved. Winning bidders could end up incurring losses and the project quality could suffer.
The government has been actively trying to raise productivity in construction, which had for years relied on cheap foreign labour for growth. The PPVC method is meant to require less manpower, whether for public housing or for private developments on state-sold land.
John Lee, executive director of Koh Brothers, said the construction industry does not have much choice but to go along with the government's direction; yet, there are risks that come with being first movers in using the PPVC technology, which is still considered nascent in Singapore.
Being first mover carries the risk of having to pay a higher price to learn from mistakes, he said.
"If you want to initiate this, it all depends on how much capital you are prepared to put in. It is always much cheaper to copy... We can be proud of ourselves maybe in year one, then in year three or four, it is (copied by others) at a cheaper rate. So it is better to be the second mover than the first."
Koh Brothers has not used PPVC yet, as the technology lends itself more to the construction of buildings, while Koh Brothers tends to takes on more infrastructure projects.
On its part, the government is aware of such concerns. Deputy Prime Minister and chairman of the National Productivity Council Tharman Shanmugaratnam attributed the high cost of PPVC to a classic principle of economics: "When it starts off small, you usually have to pay a premium... but that's the only way you can create demand and eventually force the price down."
To achieve economies, the government is taking the lead to build up the demand, so more suppliers will come on board. The public sector is in the best position to do this, Mr Tharman said last year at a tour of the new residential halls being built then at the Nanyang Technological University. The halls were Singapore's first public buildings to use PPVC technology.
Last week, the Housing and Development Board also announced that it plans to adopt the concrete PPVC method in 35 per cent of its projects by 2019 in its bid to chalk up a 25 per cent improvement in construction productivity in the decade between 2010 and 2020.
Wong Keam Tong, director of engineering at construction and civil engineering firm Woh Hup, shares the view that there is no turning back.
Even civil engineering graduates today are no longer heavily trained in the technical aspects of building like they used to be, but rather in the newer forms of technologies as well as soft skills such as people management. Clearly, they are being prepared for a different kind of role than that of a sun-scorched engineer on a construction site.
Mr Wong said construction firms are concerned about how to stay competitive while picking up new technologies such as PPVC and building information modelling (BIM). The latter involves digital modelling of a building before construction starts.
Woh Hup started adopting BIM two years ago, and found that besides hefty upfront costs in software, it also had to retrain workers and even subcontractors to provide their respective input so that the information fed into the system is complete.
But while this is short-term pain, Mr Wong conceded that there will definitely be a long-term gain: "The industry has to move; we can't just stay where we were 10 years ago. The future manpower we have will be better skilled and better educated. This is a transition period."
Mr Lee from Koh Brothers added that his only consolation is that his competitors are all facing the same problems of increased costs, which helps to level the playing field.
Asked to respond to these contractors' concerns, a spokesman from the Building & Construction Authority said he was not able to respond by press time.