News: COVID-19 outbreak has taken toll on construction firms

Feb 27, 2020

Shortages of workers and materials because of the virus has impacted construction deadlines for projects. 

With the coronavirus outbreak causing supply chain disruptions and labour shortages, some construction firms in Singapore are starting to seek deadline extensions for their projects.

Earlier in the month, the Ministry of Manpower required all work pass holders with travel history to China in the past 14 days to secure approval from authorities before entering Singapore as part of measures to contain the spread of COVID-19. Thereafter, the returning workers will be placed on a 14-day leave of absence.

With the reduction of flights to and from China, the new requirements slowed the return of Chinese workers, aggravating the existing manpower crunch within the construction sector, noted industry players.

“Even before COVID-19, there’s already a shortage of workers as the industry, which was in a downturn previously, slowly recovers and is seeing more construction projects,” said Kenneth Loo, Executive Director and Chief Operating Officer of Straits Construction Singapore.

“These (new rules) have only aggravated the shortage.”

Teambuild Construction Group said it suffered a “significant impact” considering that most of its workers with expertise in areas like reinforced concrete works, come from China, reported CNA.

Adding to the firm’s manpower woes, the number of Indian and Bangladeshi workers requesting to return home also increased following news that five workers from Bangladesh tested positive for COVID-19.

Then there is also the issue of late delivery of machinery as well as raw materials like steel coils and tiles as factories in China that were closed for an extended period following the Chinese New Year have been slow to restart.

In fact, almost two-thirds of the respondents at a Singapore Contractors Association Limited (SCAL) survey said their supplies of equipment and materials were “severely or very severely affected”.

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Construction firms also have to contend with face mask shortage, including the N95-type masks which workers wear as part of their protective gear, said Ng Yek Meng, President of SCAL.

Moreover, 73% of survey respondents indicated that the virus outbreak severely impacted their cash flow as work at construction sites slowed down.

With this scenario, industry players are concerned about potentially missing their deadlines.

Teambuild Construction Group revealed that it is “currently seeking all possible assistance” for an extension of time (EOT) due to the outbreak’s “substantial” impact to the company.

It was previously reported that some local construction companies are seeking legal advice on invoking the force majeure clause.

Force majeure is any unexpected external circumstance that prevents a party from complying with its contractual obligations.

Spring Tan, partner at Withers KhattarWong, said four clients had made preliminary inquiries “not specifically on the option of invoking force majeure but whether they can get EOT to complete their projects”.

“Our clients tell us that they are not feeling the full brunt of the impact at this moment as the situation is still evolving, and for now owners (and) developers are still understanding,” she said.

“However, construction firms are and should be exploring their options in case the situation worsens.”

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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