Singapore extends measures to support construction companies

Out-Law News | 09 Oct 2021 | 2:06 am | 2 min. read

Singapore's Ministry of National Development (MND) and Building and Construction Authority (BCA) have separately taken measures to help local construction companies mitigate the impact of Covid-19.

The MND announced an extension of relief periods under the Covid-19 (Temporary Measures) Act, which offers temporary relief to business and individuals who have been affected by the Covid-19 pandemic. Parts 2, 8B and 10A of the Act will be extended to 31 December 2021 from their original end date of 30 September 2021.

Hai Song Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: “The extension of relief periods is certainly welcome news to the downstream contractors, though it is by no means a long-term solution”.

“One has reason to be optimistic, however, given the anticipated changes to the public sector contracting practices, which include, for instance, amendments to the Public Sector Standard Conditions of Contract to include pandemic as a relevant ground for claiming time extensions and the associated costs. This is in line with the Singapore government’s approach of making the country a ‘Covid-resilient’ nation and will pave the way for the private construction sector to adopt similar practices,” he said.

The measures are intended to ensure no single tier of the construction supply chain takes a disproportionate share of the burden caused by the pandemic.

Part 2 of the Act provides temporary relief from legal and enforcement actions where certain contractual obligations cannot be met due to the pandemic. Construction companies impacted by the pandemic can deliver a notification for relief online by 31 December 2021.  

If there are any disputes over whether contracts are covered by the provisions, either party may submit an application for an assessor's determination up to two months after the end of the relief period.

Part 8B requires cost-sharing of additional non-manpower qualifying costs between contracting parties due to delays caused by Covid-19. Part 10A allows for the adjustment of contract sums to address the increase in foreign manpower salary costs.

The BCA released an announcement on making changes to public sector construction tenders. The amendments will allow contractors to apply for an extension of time due to Covid-19 and to include provisional amounts for expected pandemic-related costs unknown at the time of tender.

The reasons for the extension of time now include delays caused by measures required by the government or other Singapore authorities to be implemented by the contractor to contain the spread of infection.

The amendments also set out the principle of “co-sharing” losses and costs arising from a pandemic or measures introduced by the government, capped at 5% of the awarded contract sum. Developers would be able to review the cap if additional costs rise above the initial cap.

Private sector contractors including subcontractors are also encouraged to adopt the proposed terms to provide more price and risk certainty in new tenders.

The amendments will take effect from 1 November. government agencies that are ready to implement them can do so immediately.