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By TBH Asia Director, Meiske Sompie
This article was first published by Frontier Enterprise on 4 November 2024.
Amidst the bustling skyline and constant hum of construction, professionals in Singapore remain optimistic about the industry’s future. The projected total construction demand in Singapore is estimated to be between SG$32 billion and SG$38 billion in 2024, with the public sector contributing to roughly 55% of the total demand. However, beneath this optimistic facade, the industry continues to grapple with a significant productivity problem that threatens its long-term sustainability and growth.
The Global Productivity Challenge in Construction
The persistent productivity challenge in the construction industry remains a foundational crack that resists repair. Despite being a major contributor to the global economy, accounting for about 13% of worldwide GDP, the sector has consistently struggled to achieve productivity gains comparable to other industries.
In fact, over the past two decades, labour productivity growth in construction has averaged only 1% annually, significantly lagging behind the 2.8% growth seen in the total world economy and the 3.6% in manufacturing. The consequences of this productivity gap are severe and far-reaching, leading to project delays, cost overruns, and an inability to meet the growing demand for infrastructure and housing.
This issue is particularly critical given the projected global economic expansion. Over the next 15 years, the global economy is predicted to grow from its current value of US$4 trillion to US$14 trillion. While China is expected to contribute significantly to this growth, the fastest-growing economies are predicted to be the Philippines, Vietnam, Indonesia, and Malaysia. Each of these countries will have unique infrastructure needs, ranging from transportation to energy generation and urban development.
Singapore’s Challenges in the Fourth Industrial Revolution
In Singapore, the productivity issue has similarly troubled industry stakeholders for decades. The local construction sector faces its own set of challenges, compounded by the aftermath of COVID-19, a slump in overseas investments, and rising costs. Liquidators are witnessing more construction companies facing insolvency, with numbers higher than pre-pandemic levels. This situation underscores the urgent need for timely solutions to boost productivity and ensure the industry’s resilience.
The world is currently undergoing a period of rapid change, often referred to as the Fourth Industrial Revolution. While exciting, this also poses various challenges to the construction industry. Political instability, economic downturns, pandemics, and war are just a few examples of broader global challenges that can affect productivity. These geopolitical shocks can disrupt supply chains, cause economic turmoil, and leave businesses struggling to adapt. Inflationary pressures, price escalation, and skilled labour shortages further exacerbate these issues, making it increasingly difficult for companies to maintain productivity and profitability.
Despite these challenges, technology offers a promising solution to boost productivity. Research has found that the productivity gap between the construction sector and other industries has grown significantly over the past 31 years. According to the Australian Constructors Association’s 2022 report, Disrupt or Die, the construction industry globally has become one of the slowest sectors to adopt digital technologies, largely due to a lack of awareness about the benefits, concerns over disruption, or concerns over the safety of established practices. However, many countries in Asia have significantly improved their productivity by investing in digital training and development programs. Technologies such as data analytics, construction management software, and mobile apps are increasingly being utilised to streamline operations and enhance the efficiency and accuracy of tasks.
Leveraging Technology for Productivity Gains
To tackle the persistent productivity problem, Singapore, as a highly developed economy, is exploring how technology can be used to boost productivity levels. The government has been a strong advocate for the adoption of technology, with initiatives such as the Productivity Innovation Project (PIP) incentive subsidising up to 70% of technology adoption costs for innovations that boost productivity on construction sites. Additionally, the Building & Construction Authority (BCA) has allocated SG$250 million to the Construction Productivity and Capability Fund (CPCF), supporting efforts to bolster industry productivity and capability.
The integration of building information modelling (BIM) and the use of digital twins are becoming more commonplace, providing a more detailed and dynamic overview of projects, which helps in reducing errors, risk identifications, and improving project delivery times. Implementing technology can drive more decisions rooted in data, a crucial step towards improving productivity. By using digital tools, real-time project data and analytics, project managers can make informed decisions based on facts rather than assumptions. This data-centric approach will in turn increase productivity and lead to more efficient construction practices, reduced labour costs, and improved project timelines.
A key approach to improving productivity is the implementation of integrated project controls (IPC). IPC provides a unified framework for monitoring and controlling projects throughout their lifecycle to prevent budget overruns, scheduling delays, and costly mistakes that could derail a project. IPC has several benefits: It enables data-driven decision-making by utilising digital tools and real-time project data. It also facilitates effective planning and scheduling through detailed project timelines established from the start, allowing for better coordination and resource allocation.
Furthermore, IPC enables real-time monitoring and control by integrating data from various sources, offering visibility into project performance. It also assists in scope and change management by assessing changes for their impact on productivity, cost, schedule, and resources. Another key aspect is risk mitigation, with IPC helping to identify potential risks early and develop strategies to address them. Finally, it improves collaboration and communication by aligning team members towards shared goals, reducing conflicts and miscommunication.
Although there is no simple solution to improving productivity in construction, a considerable amount of time, money and tension could be saved if unnecessary delays and costs were eliminated by implementing a more effective combination of people, technology, and processes. The future of construction in Singapore looks bright, and leveraging technology will allow businesses to achieve productivity gains and get ahead of the competition. By embracing digital transformation, the construction industry can build a stronger, more efficient future, capable of meeting the growing demands of Singapore’s dynamic urban landscape.
About Meiske Sompie
Meiske is a qualified and experienced P
roject, Program, and Portfolio Specialist with more than 20 years of experience in providing advisory services in Planning and Control, Governance & Delivery framework and Project Management.