That the latest measures announced in Monday's Budget would impact the construction industry is pretty clear, but the severity may be relatively muted, analysts and companies say. Steeper levy hikes on workers hired outside a company's Man‐Year Entitlement will also apply, along with regulations to mandate the use of more manpower‐efficient designs and technologies in building projects.

Kenneth Lim, the assistant director at civil engineering firm Swee Hong, said he believes the pain of restructuring may not be too prolonged, because the discomfort or displacement brought about by the changes would last only as long as it would take for the industry to see the benefits the changes bring.

Offering an example of how his company adopted technology in the form of Building Information Modeling (BIM) in 2010, he said that there was at first a lot of resistance to the technology, which generates 3D models of buildings on computers; its engineers had been used to 2D computer‐aided design (CAD). But the company was convinced that BIM would cut its reliance on manpower and improve the perception of the industry.

Ong Pang Aik, the executive chairman at Lian Beng Group, expressed concern that the increase in levies would make it difficult to plan project tenders. Firms make bids based on the levy at a specific point in time,so changes in between will affect their margins, he said. A knock‐on effect will be higher project costs for future property development. "Definitely part of the levy we will add to the construction costs," he said.

Ho Nyok Yong, president of Singapore Contractors Association, said smaller players have begun consolidating, but the industry will still be hamstrung by manpower shortages in the near term, with the
tightening of the labour policy.

Source: AmFraser