BT : Real brick and mortar war rages silently

Business Times - 06 Mar 2010

Real brick and mortar war rages silently

'Precast' may be the magic bullet but the construction sector is dodging it. Why?

By JOYCE HOOI

AS 'levy' rapidly became the new four-letter word among the 10,000-odd construction firms in Singapore this week, others were looking past the simplicity of the foreign worker levy hike.

There were other bigger words to worry about - five-syllable ones such as 'productivity' and 'buildability', according to industry experts who saw the levy as part of the carrot-and-stick mix to prod the local construction industry towards Japanese or Australian levels of productivity.

While unskilled foreign workers might become collateral damage in the battle for productivity, the real war is not being fought on-site and against foreign workers. It is being fought off-site and against the many links in the pre-construction process.

More assembling than building

Widely acknowledged as a forerunner in bringing Singapore up to speed with Japan and Australia is the use of precast components. Precast concrete, for example, is manufactured off-site in reusable moulds and then brought on-site to be assembled in buildings.

'With traditional building, things can go wrong such as the concrete site mix might not be good or it might not be cured properly. Precast concrete is made in a factory, under controlled and stringent conditions which are much more efficient,' said Eugene Seah, joint managing director of construction consultants Davis Langdon & Seah Singapore Pte Ltd.

While buildings built by the Housing & Development Board already feature precast components, there is ample room in private sector construction for precast material. 'In Singapore, the use of precast is mostly perfunctory - in staircases, rubbish chutes, and drain covers. Very few projects use them in main areas,' said Ashvin Kumar, president of the Singapore Institute of Architects.

The use of precast components appears to turbo-charge productivity. While a brick wall requires five to six bricklayers to put up and one or two labourers to assist them, a precast panel needs only four people to erect, without the tedious tasks of mixing and spreading mortar.

Where math becomes complicated

Weighing up the payoffs and trade-offs of precast, however, exemplifies the multitude of factors that have confounded contractors who want to make the push for productivity.

Precast materials are not cheap, pointed out Lum Chang Building Contractors' executive director, Tan Wei Pin. 'Precast materials incur heavy transportation costs. They can be 20-30 per cent more expensive than casting in situ,' said Mr Tan.

Even after taking into account the levy hike, he reckoned that the net outcome would still present a larger bill to construction firms to foot.

The back of the envelope, however, becomes much messier after labour is squared off against precast cost premiums.

'Although there is a premium to pay for precast, buildings generally get finished earlier and can be open for business faster. That means that income can be realised earlier hence decreasing the cost of borrowings for example,' said Mr Seah. 'There is a very fine line in the cost-benefit analysis.'

Software over hard labour

Experts believe that a lot of inefficiency can be removed from local construction even before it actually begins.

'I once worked on a warehouse in the UK. We spent nine months on design, and six months on building with little variation,' said Mr Seah.

A similar building in Singapore would have taken only six months to design but 10-12 months to build because of the many variations.

'What I have experienced is that if we spend more time upfront knowing what is needed and iron out the designs, there would be lesser changes during the construction phase,' said Mr Seah.

The Singapore Institute of Architects' Mr Kumar is also advocating a longer lead-time for the consolidation of tender documents. Currently, missing information in the documentation leads to abortive works on-site, he said.

Developers might be less than enthusiastic about building in more pre-construction time in an industry where land costs account for 60 per cent or more of development costs. 'There is a need to start work fast,' Mr Seah observed.

While more efficient approaches such as Building Information Modelling and value management could theoretically lead to fewer foreign workers, so embedded is industry inertia that the problem has to be solved backwards - firms' payrolls will first have to come under pressure before they make the changes that lighten these very payrolls. The emphasis on software over brute force means that the estimated growing demand for design planning and consulting will see white edging out blue in the collar stakes.

The construction dilemma

While the government is offering incentives to balance out the levy hikes, this carrot-stick mixture has to work on a dizzyingly large variety of donkeys. Some firms that are already largely mechanised reckon that they are close to the ceiling for automation. 'We work with steel structures. I don't think we can improve mechanisation any more,' said Lim Bong Guan, managing director of Anderco Pte Ltd.

Others have pointed out conditions overseas that cannot be replicated locally.

'In the West, qualified engineers are prepared to do more than an engineer's job and don't mind carrying things. Here, it's the Bangladeshi worker doing the carrying,' said the chief executive officer of CSC Holdings Limited, See Yen Tarn, who expects his monthly labour bill to increase by $50,000 to $70,000 after levies kick in fully.

The language problem also persists. While local workers overseas share a language, information here has to be duplicated or triplicated. 'You need to to tell the foreman something, who in turn needs another translator to pass it on to the workers,' said Mr Seah.

The final score

With the interim numbers unclear, the industry is divided on the final figure but leaning towards higher tender costs. 'We will have to bill the end user. The tender costs will have to be higher,' said Elvin Koh, Samwoh Corporation's managing director.

'For new contracts, the costs will definitely be passed on. The subcontractors are also going to build in the increased levies when they bill us,' said Lum Chang's Mr Tan, who expects building costs to increase by 1-2 per cent by 2012.

And if firms switch to precast, won't the demand raise its cost even more? Not necessarily. 'If more of the private sector uses precast materials, supply will rise to meet demand and market forces will make precast prices more competitive,' said Mr Kumar.

If the same principle can be applied to design software and automation, construction costs may ease and end users may not have to bear higher prices in the long run.

But it is a question of when the demand for precast components reaches the tipping point that gets the supply ball rolling. Till it does, costs will rise. As the sector fights its internal battle, the clock is ticking.

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