Mr Gerald Giam Yean Song: Sir, construction costs have skyrocketed since the start of the COVID-19 pandemic. The price of materials has shot up, wages have increased and the cost of bringing in foreign workers is also elevated. The construction industry’s confidence has been shaken up late resulting in shorter payment terms and demands for higher upfront payments.
Against this backdrop, it is not surprising that recent bid prices for town improvement projects, like the Neighbourhood Renewal Programme are up to 50% higher than pre-tender estimates. Yet, HDB’s grants to Town Councils have not kept up with these price increases.
Some may suggest that Town Council’s existing funds can be used to cover the cost increases. However, doing so would be unfair to the majority of residents as each project mainly benefits residents living in a particular precinct. It is also unfair for residents of those precincts if the new projects are pared down to meet the original budget.
I have three suggestions. First, can HDB temporarily increase its NRP grants to Town Councils to cover these short-term cost increases? Second, can HDP provide contractors and subcontractors for town improvement projects some price protection for raw materials, like steel and concrete – similar to that of HDB’s BTO projects? This will better ensure residents receive comparable and amenities regardless of market conditions at the time of tendering. And third, can the Ministry explore more measures to restore confidence among construction firms, so as to ameliorate the need for onerous upfront payment terms? This could also help temper price increases across the industry.
8 March 2022
Ministry of National Development