New methods may up developers' costs
THE requirement that developers adopt productive technologies and prefabricated components in new projects, as announced by the Ministry of National Development (MND) on Monday, 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 for low and medium-rise buildings.
The use of prefabricated bathroom units (PBUs) will be mandated for all residential GLS sites; and with industrial GLS sites, a minimum level of prefabrication will be required.
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 with their global peers - to buck up.
The BCA said 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 could 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 on 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.
Mr Lee Yi Shyan, Senior Minister of State for Trade and Industry and National Development, told Parliament on Monday that the Government will top up the five-year Construction Productivity and Capability 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, Mr Ong Hock Leong, told The Business Times that the company may not make cost savings at the start because it is setting up a factory of 100,000 sq ft 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 with using conventional methods," Mr Ong said, but added that manpower costs also stand to be halved.
Developers that have used productive technologies said the initial costs were high, but that the gains in site productivity would eventually offset the incremental costs of adopting the new technologies.
Major developer City Developments Ltd (CDL), for instance, is already using drywall for the internal partition walls and PBUs in most of its new condominium developments.
Mr 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 on 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 between 40 and 80 per cent for CDL.