Legal 500

Country Comparative Guides 2024

Singapore
Construction

Contributor

CMS Cameron
McKenna Nabarro
Olswang (Singapore)
LLP
Lynette Chew

Partner, Co-head Infrastructure Construction & Energy | lynette.chew@cms-cmno.com

Kelvin Aw

Partner, Co-head Infrastructure Construction & Energy | kelvin.aw@cms-cmno.com

Asya Jamaludin

Partner, Infrastructure Construction & Energy | asya.jamaludin@cms-cmno.com

Grace Lu

Senior Associate, Infrastructure Construction & Energy | grace.lu@cms-holbornasia.com

Andy Yeo

Associate, Infrastructure Construction & Energy | andy.yeo@cms-holbornasia.com

Dian Tambunan

Associate, Infrastructure Construction & Energy | dian.tambunan@cms-cmno.com

This country-specific Q&A provides an overview of construction laws and regulations applicable in Singapore.

For a full list of jurisdictional Q&As visit legal500.com/guides

 Construction: Singapore

Singapore: Construction

1. Is your jurisdiction a common law or civil law construction project will therefore generally be
jurisdiction? required to comply with such statutory
obligations to ensure fitness for purpose /
Singapore is a common law jurisdiction. satisfactory quality of goods supplied.

2. What are the key statutory/legislative 3. Are there any specific requirements that
obligations relevant to construction and parties should be aware of in relation to: (a)
engineering projects? Health and safety; (b) Environmental; (c)
Planning; (d) Employment; and (e) Anti-
The key statutory obligations relevant to construction and corruption and bribery.
engineering projects in Singapore are set out in the
following legislation: (a) health and safety;

Building and Construction Industry Security of Workplace Safety and Health Act 2006 – This
Payment Act 2004 (the “SOP Act”) – The SOP is an act relating to the safety, health and
Act seeks to improve cash-flow in the built welfare of persons at work in a workplace,
environment sector by giving parties who are which requires stakeholders to take
carrying out work or supplying goods and reasonably practical steps for the safety and
services for construction projects in Singapore health of persons at the workplace.
the right to seek monthly progress payment for Work Injury Compensation Act 2019 (“WICA”)
work done. It also provides a fast and low-cost – WICA allows employees to make claims for
adjudication mechanism to resolve payment work-related injuries or diseases without
disputes. having to first file a civil suit at common law.
Building Control Act 1989 – This act seeks to This provides a low-cost and quicker
ensure that building works comply with certain alternative to common law for the settlement
standards for safety, accessibility, of compensation claims.
environmental sustainability, and buildability.
All building works, except those that are minor Under WICA, employers are required to purchase work
and exempted under the First Schedule of the injury compensation insurance for all employees carrying
Building Control Regulations, will require plan out manual work, regardless of their income level, and for
approval from the Commissioner of Building all employees carrying out non-manual work earning an
Control. income of S$2,600 or less per month (excluding overtime
Planning Act 1998 – This act regulates the / bonus payment, annual wage supplement, productivity
development, conservation, and land use incentive payment and allowance), failure of which is an
planning and controls in Singapore. It also offence which may attract criminal prosecution or fines.
imposes development charges on the
development of land. (b) environmental issues;
Unfair Contract Terms Act 1977 – This act
imposes further limits on the extent to which Existing buildings – Owners of existing buildings are
civil liability for breach of contract, or for required to comply with minimum environmental
negligence or other breach of duty, can be sustainability standards, submit periodic energy
avoided by means of contract terms and efficiency audits of the building’s cooling systems, and
otherwise. submit information in respect of energy consumption and
The Sale of Goods Act 1979 – This act sets out other related information as required by the
the obligations on parties to ensure that goods Commissioner of Building Control [Building Control Act
sold are fit for its purpose and are of 1989 (Part IIIB—Environmental Sustainability Measures
satisfactory quality. For construction projects, for Existing Buildings), Building Control (Environmental
a contractor providing goods under a Sustainability Measures for Existing Buildings)

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 Construction: Singapore

Regulations 2013] are piling works, ground support and stabilisation works,
site investigation work, structural steelwork, pre-cast
Prior to installing or replacing a chiller, buildings owners concrete work and in-situ post-tensioning work, are
must meet the requirements as specified in the Code on required to procure a Specialist Builder License.
Environmental Sustainability Measures for Existing
buildings. Under Part II of the Building Control Regulations 2003,
relevant plans must be submitted to the Building and
New buildings – The Building Control (Environmental Construction Authority (“BCA”) for approval through a
Sustainability) Regulations 2008 together with the Qualified Person (“QP”) (as defined under the Building
Building Control (Environmental Sustainability) Contract Act 1989) before building works may commence
(Amendment) Regulations 2021 and 2022 require new (except for insignificant building works listed in the First
buildings (and existing buildings that undergo major Schedule of the Building Control Regulations).
retrofitting) be constructed to a minimum environmental
sustainability standard set out in the Code for After the structural plan approval is obtained, there must
Environmental Sustainability of Buildings. also be an application for a permit to commence works
before the commencement of building works. Certain
(c) planning; types of works, including works involving additions and
alterations, fixings or claddings, alternative solutions
Planning Act 1998 – Planning permission is required for
and/or demolition works, may require additional
development of any land outside a conservation area.
certification / documents.
Conservation permission is required for development of
any land within a conservation area. In certain cases, environmental permits are required (for
example, in the discharge of trade effluent).
(d) employment; and
A failure to obtain the required approvals / permits in the
Employment Act 1968 – This act provides the basic and
above scenarios may lead to a range of penalties, from
minimum terms and working conditions at work for
the removal of construction works to criminal
employees who are working under a contract of service in
prosecution and fines.
Singapore. However, it does not apply to seafarers,
domestic workers, and statutory board employees or civil
servants. 5. Is tort law or a law of extra contractual
obligations recognised in your jurisdiction?
(e) anti-corruption and bribery.
Yes, Singapore law recognises the right to bring an action
Prevention of Corruption Act 1960 (“PCA”) – Singapore
for civil wrongs under tort law, which are separate from,
adopts a zero-tolerance approach towards corruption.
and additional to, a party’s rights under the construction
The PCA is the primary anti-corruption legislation in
contract.
Singapore. The PCA provides the Corrupt Practices
Investigation Bureau with the powers to investigate In the construction context, tortious claims typically
corruption and other arrestable offences which are include claims for loss and damage suffered due to the
disclosed in the course of a corruption investigation. tortfeasor’s negligence (for example, in carrying out
design negligently or for defective workmanship). In such
4. What permits/licences and other documents cases, the claimant as the injured party must prove that:
(i) the tortfeasor owed the claimant a duty of care; (ii) on
do parties need before starting work, during work
a balance of probabilities the tortfeasor breached that
and after completion? Are there any penalties for duty of care, and (iii) the breach caused the damage
non-compliance? suffered, legally and factually. The claimant is also
required to show that the loss was a reasonably
Construction companies carrying on business as general foreseeable consequence of the tortfeasor’s negligent
builders or specialist builders will be required to procure act.
the necessary licenses to operate. General builders
holding a Class 1 General Builder License are allowed to
take on projects of any value whereas general builders 6. Who are the typical parties to a construction
holding a Class 2 General Builder License may only take and engineering project?
on projects of S$6 million or less. Specialist builders
carrying on any of the six specialist building works, which In a typical scenario which involves an

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employer/developer entering into a construction contract providers would be invited to submit their bids;
with a contractor to carry out construction or engineering or
works, the typical parties involved are: c. “limited tender” – where only selected service
providers are invited to tender.
i. The employer/developer, who is the owner of
the Project; There is no legislation governing the procurement
ii. The contractors, which include the sub- approach of the private sector in Singapore. The private
contractors the main contractor may engage, sector may adopt any of the procurement approach
who are typically specialist contractors prescribed for the public sector as set out above, but
engaged to undertake specific packages of typically procures by way of quotations or tenders.
works;
iii. The designers such as architects, civil &
structural engineers, mechanical & electrical 8. What are the most popular standard forms of
(“M&E”) engineers, who are responsible for contract? Do parties commonly amend these
design; and standard forms?
iv. The professional consultants such as the
contract administrator, quantity surveyor, cost In Singapore, the Public Sector Standard Conditions of
consultant, architect and/or project manager Contract (“PSSCOC”) is typically adopted as the form of
to provide professional advice and support to contract for public sector construction projects, versions
the employer. of which include the “PSSCOC for Construction Works”,
for build only projects, and the “PSSCOC for Design and
Build”, for design and build projects. To encourage
7. What are the most popular methods of
greater collaboration and mutual trust between
procurement?
stakeholders in the built environment sector (i.e.
collaborative contracting), a set of collaborative clauses
In Singapore, the public sector generally takes an open
has been introduced as an “Option Module” for both
and competitive approach towards procurement, which is
versions of the PSSCOC.
primarily governed by the Government Procurement Act
1997 (See Question 9 below).
The more popular standard from of contracts used in
private sector construction projects in Singapore are: (i)
Procurements of value not exceeding S$6,000.00 are
the Singapore Institute of Architects Building Contract
procured by way of Small Value Purchases (“SVP”), which
are direct purchases from suitable service providers or
(“SIA Contract”) (versions of which include the “Lump
off-the-shelf at fair market value, typically sourced by Sum Contract” – for fixed sum pricing contracts, the
verbal or written quotations, off-the-shelf purchases, or “Measurement Contract” – for remeasurement contracts
catalogues published on the Government Electronic where the amount to be paid to the contractor is based on
Business portal (“GeBIZ”). a remeasurement of the quantities of works carried out,
and the “Minor Works Contract” – for smaller and less
Procurements of value more than S$6,000.00 but not complex projects); and (ii) the Real Estate Developers’
exceeding S$90,000.00 are procured by way of Association of Singapore (“REDAS”) Design and Build
quotations, either by way of an “open quotation” – by Conditions of Contract (“REDAS D&B Contract”) i.e. for
which the quotation notice is published openly on GeBIZ D&B construction contracts.
inviting interested service providers to quote, or “limited
quotation” – by which quotations would be issued only to The FIDIC standard form contracts is a popular standard
selected service providers who are invited to quote. form of contract used by parties for engineering,
procurement and construction (EPC) works in Singapore.
Procurements of value exceeding S$90,000.00 are The predominant forms of FIDIC contract are:
procured by way of tenders, by way of:
i. The “Red Book” – the Conditions of Contract
a. an “open tender” – by which the tender notice for Construction for Building and Engineering
is published openly on GeBIZ inviting Works Designed by the Employer;
interested service providers to bid; ii. The “Yellow Book” – the Conditions of
b. “selective tender” – a 2-stage process in Contract for Plant and Design-Build for
which interested service providers would be Electrical and Mechanical Plant and for
shortlisted via an open pre-qualification Building and Engineering Works Designed by
exercise, after which shortlisted service the Contractor; and

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iii. The “Silver Book” – the Conditions of Contract 10. Do parties typically engage consultants?
for EPC/Turnkey Projects. What forms are used?
In Singapore, the 1999 edition of the FIDIC forms are still
For most construction projects, the employer will typically
more commonly used than the 2017 edition FIDIC forms.
engage a range of consultants to carry out a variety of
roles, which include:
Amendments to these standard forms are not uncommon
and are typically effected via a set of “particular
i. designers such as architects, civil & structural
conditions” to the contract.
engineers, M&E engineers;
ii. quantity surveyors to value the works, both at
9. Are there any restrictions or legislative the outset and during the execution of the
works; and
regimes affecting procurement?
iii. project consultants / delay experts to monitor
In Singapore, public procurement is primarily governed by the cost impact to the project and/or progress
the Government Procurement Act 1997, which includes of the works and/or analyse delays in the
the following subsidiary legislation: project.

iv. Government Procurement (Application) Order,

11. Is subcontracting permitted?
which outlines the authorities, procurement
types and contract values that are either Generally, yes.
subject to or excluded from the GPA;
v. Government Procurement Regulations 2014,
which specifies the necessary principles and 12. How are projects typically financed?
procedures of the procurement process itself;
and (i) Public project financing could be through loans or
vi. Government Procurement (Challenge bonds.
Proceedings) Regulations, which outline the
procedure for the Government Procurement Loans – In 2021, the Significant Infrastructure
Adjudication Tribunal to hear and determine Government Loan Act 2021 (“SIGLA”) was introduced to
challenges brought by a bidder whose owed allow the Singapore Government to raise loans up to the
duty was breached. limit of S$90,000,000,000 and with the limit on interest
payment of up to S$5,000,000,000, to finance major, long-
The Government Procurement Act 1997 does not apply to term infrastructure, such as new rail lines and coastal
private sector entities. protection infrastructure to protect Singapore against
rising sea levels [Section 5(1) of the SIGLA].
As Singapore is a signatory to the World Trade
Organization’s 1994 Agreement on Government Bonds – Under the SIGLA, the Singapore Government
Procurement and several free trade agreements, may raise money through the issuance of securities (i.e.
Singapore’s procurement regime is bound by its stock, bonds, notes, certificates, bill and similar
international commitments and internationally upheld instruments) through the Monetary Authority of
standards. Singapore with the limit up to S$6,500,000,000 or a higher
sum if specified by Parliament [Section 18 of the SIGLA].
Building upon the Government Procurement Act 1997 and One example is the issuance of the $S2.4 billion
its subsidiary legislation, the Ministry of Finance (“MOF”) sovereign green bond, Green SGS (Infrastructure) bond in
issues central procurement guidelines on the Government August 2022.
Electronic Business portal (i.e. GeBIZ), covering
participation, registration, bidder debarment and other (ii) Private project financing could be through loans,
facets of the public procurement process. Although these bonds or equity
guides do not have the force of law, they provide bidders
with valuable insight into the procedural process in public Loan – Projects can be financed through debt financing
procurement. As for public-private partnerships (“PPPs”), provided by the commercial banks, investment banks and
which are an alternative form of traditional procurement institutional investors. The loans may be structured in
that bidders may wish to consider, these are covered in tiers with tranches of senior debt and mezzanine
depth in the PPP Handbook, also published by the MOF. financing.

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Bonds – Bonds may be issued with various terms of required to be maintained until the final
maturity and secured on the proceeds of the project. completion of the project.

Equity – The private sector may finance the project In Singapore, fraud and unconscionability are the two
through the shareholding and capital injections into the bases upon which a demand on a bond may be restrained
Special Purpose Vehicle. by way of an interim injunction [JBE Properties Pte Ltd v.
Gammon Pte Ltd [2011] 2 SLR 47 at [6]; CKR Contract
Services Pte Ltd v. Asplenium Land Pte Ltd [2015] SGCA
13. What kind of security is available for 24 at [15]]. In addition, the court is also willing to restrain
employers, e.g. performance bonds, advance part of the bond in case the demand was unjustified
payment bonds, parent company guarantees? [Eltraco International Pte Ltd v. CGH Development Pte Ltd
How long are these typically held for? [2000] 3 SLR(R) 198 at [36]].

(i) Bonds and Bank Guarantees (ii) Guarantees

Typically, there are two types of bonds, which are: Besides bonds, guarantees are also a common form of
security. A guarantee is a secondary obligation which
i. Conditional – Typically known as a arises only if the contractor fails to perform the
“guarantee”, these types of bonds require a guaranteed obligation. The liability under a guarantee is
condition to be fulfilled upon a call on the typically conditional on the beneficiary meeting certain
bond. conditions precedent, such as: giving the guarantor a
ii. Unconditional – Typically known as “on- notice of the breach within a specified period of time;
demand” bond, these bonds impose a primary requiring the guarantor to compensate the beneficiary for
obligation on the issuer to make payment upon the loss; or establishing the relevant loss and damage
the demand of the beneficiary. resulting from the breach.

To distinguish between a conditional bond and an Guarantees may be provided by:

unconditional bond, the wording of the bond has to be
examined. i. Banks or insurers; or
ii. The parent company of the contractor
Throughout the project, the following bonds are typically
required by the owner/employer: Typically, guarantees may also be a condition precedent
to the contractor’s right to payment under the
i. Advance payment bonds – At the early stages construction contract. To distinguish guarantees from an
of the project, the owner/employer may on-demand bond, it is necessary to examine the wording
provide an advance payment to the contractor, of the instrument and the undertakings, and not just the
and in exchange will require an advance titles.
payment bond to be provided by the
In Singapore, pursuant to the Civil Law Act 1909,
contractor.
guarantees need to be in writing, or evidenced in writing
ii. Performance bonds – During the execution of
and signed by the guarantor or guarantor’s agent.
the project, the owner/employer will ordinarily
require the contractor to provide a
(iii) Indemnity
performance bond. In such circumstances, the
contractor is required to maintain the validity An indemnity is a binding promise by the contractor to
of the bond throughout the project, failing indemnify the owner/employer against loss and expense
which the contractor will be in default of the arising out the performance of works. It also may cover
terms of the contract, entitling the the loss resulting from the third party’s claim against the
owner/employer to make a call on the owner/employer. An indemnity represents an
performance bond. independent undertaking that is not necessarily
iii. Retention bonds – As an alternative to the conditioned upon a third party having committed a
withholding of retention monies, the breach of obligation.
owner/employer may request the contractor to
furnish a retention bond, which is typically in In Singapore, an indemnity is created by contract and not
equivalent sum of the retention monies. The by law, and there is no statutory requirement for an
validity of the retention bond is usually indemnity to be made in writing. In Tan Juay Pah v. Kimly

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Construction Pte Ltd [2012] 2 SLR 549 at [42], the court (vi) Charge, Mortgage, and Pledge
found that the law is slow to imply an indemnity into a
contract on the basis of the presumed intentions of the These forms of security will usually be required from the
parties. inception of the project.

An indemnity would not apply to any wilful default of the i. Charge

indemnitee or losses resulting from the carelessness of
the indemnitee or illegal acts committed by the Fixed charge – a fixed charge is similar to a charge over
indemnitee. the land which can be created over permanent goods,
such as plant, machinery and equipment which constitute
An indemnity clause is subject to strict interpretation fixtures to a piece of land.
under Singapore law, where the contra proferentum rule
applies to construe the indemnity clause against the Floating charge – a floating charge is created on movable
party who puts it forward [Kay Lim Construction & goods, such as chattels, plant, machinery, equipment,
Trading Pte. Ltd. v. Soon Douglas (Pte) Ltd and another receivables, and intellectual property rights. There is no
[2013] 1 SLR 1]. need to transfer the possession of the goods to the
charge.
(iv) Insurance
i. Mortgage
See our further response to Question 22. Typically, before
the commencement of the project, the owner/employer Security can be taken over all real property by either a
will require the contractor to effect and maintain relevant legal mortgage or an equitable mortgage. However,
insurances throughout the project duration, which may consent will be required before such security can be
continue for a certain period after practical completion. taken out over real property where the lessor is a
governmental authority in Singapore.
i. Contractor All Risk Insurance – This insurance
will usually be provided by the contractor to ii. Pledge (legal and equitable)
the owner/employer to cover material damage
A pledge can be created to the tangible and intangible
and third-party liability during construction
movable goods which require the physical transfer of
and maintenance period.
possession of the goods, and it is non-registrable.
ii. Professional Indemnity Insurance – This
insurance is suitable when design work is part There are some formalities that need to be followed:
of the contractor’s scope of work. It covers
against the risk of loss or liability resulting a. A charge requires registration with the
from any neglect, error, or omission in the Accounting and Corporate Regulatory
design and/or construction of a structure. This Authority of Singapore (“ACRA”) within 30 days
insurance does not necessarily cover the (if executed in Singapore) or 37 days (if
failure to satisfy a “fitness of purpose” executed outside Singapore) of the date of
obligation, and it is only limited to the failure to creation of the charge [Section 131 of the
exercise due skill and care. Companies Act];
b. A legal mortgage of registered land requires
(v) Deposits and Escrow Accounts – a deposit is a registration with the Singapore Land Authority
common form of security for tender submission or works (“SLA”) Land Titles Registry; and
execution where the contractor has to pay the money “on c. A charge over intellectual property requires
deposit”, and in the event of default, the owner/employer registration with the Intellectual Property
is entitled to keep the monies paid. Office Singapore (“IPOS”).

An escrow account is usually relied upon by contractors (vii) Vesting, Forfeiture and User Clauses
where there is uncertainty as to the financial condition of
the owner/employer. Under such arrangement, the These clauses provide the owner/employer with security
owner/employer is required to deposit monies for the for performance of the contractor throughout the project
project into an escrow account, which is released to the duration.
contractor progressively upon the completion of its
works. This is to ensure that funds will be available for i. Vesting Clauses – Under a vesting clause, the
the project. ownership of plant, equipment and unfixed

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material will automatically pass to the maintain insurance.

owner/employer when the contractor brings iii. Intellectual Property License: the warrantor
them onto the site, and it will be revested to shall grant to the warrantee the right to use
the contractor upon completion of its works. and reproduce all intellectual properties in the
Clause 16(1) of SIA Building Contract 2016 works (including the third party’s intellectual
Without Quantities, 1st Edition, is one such properties).
example of a vesting clause: iv. Assignment: this is related to the ability to
transfer the benefit of the warranty to the third
“16(1)(a) All plant and temporary buildings brought onto party.
the Site by the Contractor until completion of the Works v. Materials: the warrantor shall ensure that the
under clause 22(2) shall be deemed to be the property of materials used are fit for purpose.
the Employer vi. Step-in rights: this provides the right for the
warrantee to step-in to the underlying contract
… for the replacement of the contractor/main
contractor.
16(1)(c) Upon completion of the Works, or removal with
consent, the property in the plant temporary building shall
be deemed to be revested in the Contractor.” 14. Is there any specific legislation relating to
payment in the industry?
ii. Forfeiture Clause – a forfeiture clause enables
the owner/employer to seize the contractor’s Yes, the following legislations are relevant to payment in
plant, equipment and material in the event the the industry:
contractor’s employment is lawfully
terminated by the owner/employer. It provides a. The SOP Act (the Building and Construction
Industry Security of Payment Act 2004).
the owner/employer with the right to sell the
b. Building and Construction Industry Security of
forfeited plant, equipment and material so as
Payment Regulations (the “SOP Regulations”).
to offset against the financial liability of the
contractor to the owner/employer.
iii. User Clause – This clause is similar to a 15. Are pay-when-paid clauses (i.e clauses
forfeiture clause. However, under a user permitting payment to be made by a contractor
clause, the ownership does not pass to the only when it has been paid by the employer)
owner/employer when the contractor’s
permitted? Are they commonly used?
employment is terminated. It only enables the
owner/employer to use the plant, equipment No, pay-when-paid clauses are not permitted pursuant to
and material to complete the works. Section 9 (1) of the SOP Act which states that:

(viii) Collateral Warranty 9.—(1) A pay when paid provision of a contract is

unenforceable and has no effect in relation to any
A collateral warranty is an additional contract between
payment for construction work carried out or undertaken
the contractor, consultant and the subcontractor (the
to be carried out, or for goods or services supplied or
warrantor) and the third party (the warrantee) where the
undertaken to be supplied, under the contract.
warrantor warrants to the warrantee that it will fulfil its
obligations under the underlying agreement. This is This is also confirmed by the Singapore courts in the
relevant when the owner/employer intends to have a case of Shimizu Corp v Stargood Construction Pte Ltd
direct contractual relationship with the subcontractor or [2020] 1 SLR 1338, which held that Section 9 of the SOP
the supplier. Therefore, the owner/employer would Act “limits the parties’ freedom to contract” and rendered
immediately be able exercise their rights against them by “pay when paid provisions” completely unenforceable.
entering into a collateral warranty.
Section 9(2) of the SOP Act defines the meaning of “pay-
Typically, a collateral warranty comprises: when-paid” clauses, which are clauses:

i. Principal Covenant: a covenant given by the a. that makes the liability of one party (called in
warrantor that it will satisfy its obligations this definition the first party) to pay money
under the underlying contract. owing to another party (called in this definition
ii. Insurance: warrantor is obliged to provide and the second party) contingent or conditional on

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payment to the first party by a further party liability period and on final completion of the works (See
(called in this definition the third party) of the SIA Lump Sum Contract, 9th Edition 2010, Clause 31 (9)
whole or any part of that money; and Clause 31 (10)).
b. that makes the due date for payment of money
owing by the first party to the second party Retention of payment is not a general or implied right in
contingent or conditional on the date on which the construction contract and has to be contractually
payment of the whole or any part of that agreed between the parties.
money is made to the first party by the third
party; In addition, the owner/employer may have recourse to the
c. that otherwise makes the liability to pay retention money if the owner/employer has a liquidated
money owing, or the due date for payment of claim against the contractor.
money owing, contingent or conditional on the
In order to protect the contractor from the risk of the
operation of any other contract or agreement;
owner/employer’s insolvency, retention monies are
or
usually held in trust for the contractor or segregated for
d. that is of such kind as may be prescribed.
the duration of the project or at the contractor’s request.
Generally, “pay-when-paid” arrangements fall within the Retention monies do not form part of the
meaning of “pay-when-paid” set out in section 9(2) of the owner/employer’s assets [Nam Fang Electrical Co Pte Ltd
SOP Act if such arrangements render the obligation to v City Developments Ltd [1996] 3 SLR (R) 298].
make payment to the subcontractor contingent upon the
operation of other contracts.
17. Do contracts commonly contain delay
In Frontbuild Engineering & Construction Pte Ltd v JHJ liquidated damages provisions and are these
Construction Pte Ltd [2021] SGHC 72, the “pay-when- upheld by the courts?
paid” clause was held to be unenforceable even when the
contract was terminated. Many projects in Singapore incorporate common
standard form articles and conditions of contract which
In this case, the Plaintiff made an application to set aside contain provisions for a non-performing party to pay
the Adjudication Determination on the basis that the liquidated damages for delay to completion of
Adjudicator failed to consider the application of Section 4 contractual milestones such as phased completion dates
(2)(c) of the SOP Act where the suspension of payment or the completion of contract works.
under the terminated contract was permissible “until a
date or the occurrence of an event specified in the Such liquidated delay damage provisions are generally
contract; and that date has not passed or that even has intended to put the innocent party back in the same
not occurred.” The High Court rejected the Plaintiff’s position as if the contract had been performed. Penalty
submission and found that Section 4(2)(c) of the SOP Act clauses are generally unenforceable at law, and a
does not take precedence over Section 9 of the SOP Act. liquidated damages provision which imposes a monetary
sum that goes beyond compensating the innocent party
However, despite being unenforceable under the SOP Act, for its loss will be unenforceable. In this regard, the
it is not uncommon for such clauses to be included in courts’ focus will be on whether the clause provided a
construction contracts in practice. genuine pre-estimate of the likely loss at the time of
contracting.

16. Do your contracts contain retention

provisions and, if so, how do they operate? 18. Are the parties able to exclude or limit
liability?
Yes, construction contracts typically contain retention
clauses. The retention is usually set at 3 – 5% of the Parties are generally able to contractually exclude or limit
value of the work carried out by the contractor. The liability, save as prohibited under the Unfair Contract
owner/employer is entitled to retain the retention against Terms Act 1977.
any progress payment “pending full rectification of
defects“. The retention monies are typically released in 2 A person cannot restrict liability for death or personal
instalments, the first instalment being released on injury resulting from negligence under the Unfair Contract
practical completion of the works and the second Terms Act 1977. In the case of other loss or damage,
instalment being released at the end of the defects such exclusion of liability must satisfy the requirement of

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reasonableness. party. All such third parties must be expressly identified

in the contract by name or as a member of a class or
answering a particular description.
19. Are there any restrictions on termination?
Can parties terminate for convenience? Force A third party may have a right to claims in tort against a
majeure? contracting party, subject to any duty of care that the
contracting party is shown to have assumed vis-à-vis the
There are restrictions at law on a party’ ability to third party. Even if this is shown, policy considerations
terminate a validly formed contract without complete may militate against the finding of a duty of care.
performance of parties’ mutual rights and obligations
under the contract – for instance a contracting party’s
21. Do contracts typically contain strict
right to release itself from its outstanding contractual
obligations upon its counterparty’s prior repudiatory provisions governing notices of claims for
breach of contract. additional time and money which act as
conditions precedent to bringing claims? Does
These restrictions are subject always to any express
your jurisdiction recognise such notices as
terms of the contract entered into that further restricts or
conditions precedent?
otherwise provides for a party’s right to termination in
specified circumstances, for example, a clause granting
Many projects in Singapore incorporate common
one or more parties the power to terminate a contract on
standard form articles and conditions of contract that
condition of giving prior written notice to the other
contain provisions governing notification of claims for
contracting party or parties.
additional time and money as condition precedents to
bringing of claims.
Whether one or more parties to a contract can terminate
the contract for convenience or due to the operation of Whether a notice provision in a contract operates as a
force majeure will be subject to and governed by the condition precedent is a matter of contractual
terms of the contract. Events of force majeure must be construction and dependant on the express terms of that
stated in the contract. It is also possible to contractually contract. As a general principle, clear words are
limit or exclude certain circumstances from being defined necessary to create a condition precedent. If a notice
as force majeure, especially if such circumstances have provision is found to be a condition precedent, it will be
the quality of foreseeability. enforceable at law.

20. What rights are commonly granted to third 22. What insurances are the parties required to
parties (e.g. funders, purchasers, renters) and, if hold? And how long for?
so, how is this achieved?
See our response to Question 13, item (iv). Obligations to
The general rule is that a non-party to a contract cannot obtain project or party-specific insurance coverage for
enforce any rights or obligations under that contract, risks associated with material or property damage in a
subject to certain exceptions at law including but not construction project – commonly under contractors’ all
limited to exceptions under the law of agency (where one risks policies – and/or for third party claims, and the
party enters into a contract as agent for its principal), duration of such insurance coverage, are typically
land law, and statute. provided for under express terms of contract. Such
policies are usually procured by the employer or main
One of these exceptions with a broad scope of application contractor for the whole project.
is statutory in nature and as embodied in the Contracts
(Rights of Third Parties) Act 2001. A third party may rely Employers are required by law to take out compulsory
on a term of the contract if the contract expressly work injury compensation (“WIC”) insurance for all
provides that the third party may do so, or a contract term employees doing manual work, and all employees doing
purports to confer a benefit on the third party, under the non-manual work below a specified salary threshold.
Contracts (Rights of Third Parties) Act 2001. Mandatory WIC insurance coverage applies to both local
and foreign employees.
Whether a contract term purports to confer a benefit on
the third party will depend on whether the contracting Typically, WIC insurance and insurance for plant and
parties intended the term to be enforceable by the third equipment are procured by the relevant contracting party

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 Construction: Singapore

for their own workers and equipment. are governed by the International Arbitration Act 1994
(“IAA”). Subject to the IAA, the UNCITRAL Model Law on
International Commercial Arbitration substantially has
23. How are construction and engineering
force of law in Singapore.
disputes typically resolved in your jurisdiction
(e.g. arbitration, litigation, adjudication)? What Applications to the Singapore courts for permission to
alternatives are available? enforce arbitral awards made under the AA or the IAA are
governed by procedures set out in the applicable rules of
How contracting parties refer construction and court. An application for permission to enforce an arbitral
engineering disputes for resolution is primarily governed award may be made without notice and must be
by any express terms of contract that set out agreed supported by an affidavit. Whether the application is
dispute resolution procedures between them. granted and how long it takes for an order giving
permission for enforcement of the arbitral award to be
It is common for public sector construction contracts to
obtained is subject to the Courts’ determination.
provide for referral of disputes or differences to
arbitration. It is also common to see multi-tiered dispute
resolution clauses which provide for parties to attempt 25. Are there any limitation periods for
alternative modes of dispute resolution, such as through
commencing disputes in your jurisdiction?
mediation or dispute adjudication boards (“DABs”), either
as optional modalities or as pre-conditions to the
Yes. The Limitation Act 1959 governs limitation periods
commencement of arbitration or litigation.
for different causes of action, including but not limited to:
Under the courts’ civil procedure rules, all parties to
actions founded on a contract or on tort;
litigation have an obligation to consider whether some
actions to enforce a recognizance;
form of alternative dispute resolution, including
actions to enforce an award;
mediation, might enable them to settle the matter without
commencing or continuing court proceedings. The court
actions to recover any sum recoverable by
may consider the parties’ conduct in attempting or virtue of any written law other than a penalty
refusing offers of amicable resolution in determining any or forfeiture or sum by way of penalty or
issue of costs. forfeiture;
action for an account;
Contractual payment claim disputes in specified action upon any judgment;
construction and supply contracts are additionally action to recover any penalty or forfeiture;
subject to the statutory adjudication regime embodied in action to recover contribution.
the SOP Act. Downstream parties of every tier can apply
for statutory payment claim adjudication – the regime is Generally, claims founded on a breach of contract or tort
mandatory and cannot be contracted out of. have a statutory limitation period of six years from the
date on which the cause of action occurred. Where the
damage suffered is a latent defect, the statutory
24. How supportive are the local courts of
limitation period is three years from the earliest date on
arbitration (domestic and international)? How which the plaintiff first had both the knowledge required
long does it typically take to enforce an award? for bringing an action for damages in respect of the
relevant damage and a right to bring such action (if this
Singapore law and courts are generally supportive of the
three-year duration expires later than the six-year
rule of law and pro-arbitration, with minimal interference
limitation period for actions founded on a breach of
in arbitration proceedings unless there is good reason.
contract or tort). This limitation period of three years is
Singapore is a signatory to the 1958 New York subject to a longstop limitation period of fifteen years
Convention on the Recognition and Enforcement of from the date on which there occurred any act or
Arbitration Awards. The Singapore courts will recognise omission that is alleged to constitute negligence,
and enforce an award rendered by a tribunal in the nuisance or breach of duty; and to which the injury or
territory of another contracting state. damage in respect of which damages are claimed is
alleged to be attributable (in whole or in part).
Generally, domestic arbitrations are governed by the
Arbitration Act 2001 (“AA”), and international arbitrations

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 Construction: Singapore

26. How common are multi-party disputes? How Singapore’s construction sector continues to grapple
is liability apportioned between multiple with the aftermath of the Covid-19 pandemic. The
measures implemented during the pandemic highlighted
defendants? Does your jurisdiction recognise net
the inherent issues and weak points of the sector, such
contribution clauses (which limit the liability of a as the heavy reliance on foreign workers (causing
defaulting party to a “fair and reasonable” manpower shortages); and the weak domestic
proportion of the innocent party’s losses), and manufacturing sector (amplifying the global supply chain
are these commonly used? issue).

Whether a dispute involves multiple parties is subject to Manpower Shortage

the factual matrix of the dispute in question.
The Covid-19 pandemic exposed the cracks in the
Whether and how liability is apportioned between multiple Singapore construction sector’s heavy reliance on foreign
defendants for claims arising out of breach of contract or workers. In 2019, the number of Singapore residents
tort will be subject to determination of relevant issues involved in construction stood at around 115,500, while
such as factual and legal causation, mitigation, and the foreign component of the construction workforce was
remoteness between the acts of wrongdoing and the around 341,200.2 The travel restrictions imposed in 2020
claimed loss and damages suffered. The terms of during the pandemic resulted in a major shortage of
contract between the parties in the dispute may also be foreign workers. Workers who returned home during this
relevant to the apportionment of liability, for example, period were unable to re-enter Singapore, and new
contractual provisions for indemnity and guarantee, joint workers were unable to enter and join the workforce. This
and several liability between identified parties, and reduction was acute – in the construction sector, 52.8%
apportionment or limitation of liability that apply to the less foreign workers were employed when compared to
dispute in question. 2019 figures.3

Clauses that limit liability – such as net contribution Even as travel restrictions were lifted, the manpower
clauses – are generally enforceable at law save as shortage issue remained unresolved. The skilled and
prohibited under the Unfair Contract Terms Act 1977. experienced workers who had not left the country during
Whether net contribution clauses are used in contracts is the pandemic took the opportunity to return home. The
a matter for parties’ choice at time of contracting. new intake of foreign workers were generally
inexperienced and needed training. Therefore, even
though it was possible to hire foreign workers on
27. What are the biggest challenges and construction projects, a majority of these workers were
opportunities facing the construction sector in unable to immediately contribute to ongoing projects.4
your jurisdiction?
The Singapore government has since implemented a
In January 2024, Singapore’s Building and Construction number of initiatives designed to address the over-
Authority (“BCA”) projected that the total construction reliance on foreign labour in the construction industry –
demand in 2024, in terms of the value of construction which left Singapore exposed to manpower shortages.
contracts to be awarded, would be between S$32 billion With effect from 1 January 2024, Singapore’s Ministry of
and S$38 billion in nominal terms, i.e. without taking into Manpower (“MOM”) together with various other agencies
account inflation.1 This will come from a healthy mix of had removed the Man-Year Entitlement (“MYE”)5
public and private sector projects. The forecast in the framework in the construction sector,6 and reduced the
medium term between 2025 and 2028 is equally healthy, Dependency Ratio Ceiling (“DRC”),7 or the foreign worker
with the public sector continuing to lead the demand quota, that a company can employ at any given time.
through public housing developments, public transport
projects, hospital projects, integrated development The MYE was a work permit allocation system for foreign
projects and school redevelopment projects. workers from countries such as the People’s Republic of
China, India, Philippines, Myanmar, Bangladesh, Thailand,
However, amidst the opportunities provided by this and Sri Lanka. It signified the total number of such
steady demand are challenges brought about by the workers from these countries that a primary contractor is
global and regional geopolitical and economic entitled to employ per year. From 1 January 2024,
uncertainties. companies with contracts that were awarded or had
tender called after 18 February 2022 do not need MYEs or
Challenges prior approvals to hire migrant workers from these

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 Construction: Singapore

countries. Companies can hire these workers as long as it these delayed projects.
is within their quota, or the DRC, which is the ratio of the
maximum number of local workers to foreign workers. Further, we also observe an increase in loss and expense
However, as mentioned above, the DRC has now been claims emerging as a result of changes in building
reduced – from 1:7 to 1:5: i.e. 1 local employee to 5 Work material prices that were not accounted for during the
Permit Holders or S Pass holders. tender stage. The supply chain issues discussed above
caused prices for core building materials such as copper,
These measures aim to reduce the total number of steel, concrete, cement, and bricks to rise beyond what
foreign workers employed in the construction sector and was anticipated for during the tender stage. For example,
to encourage the employment of local workers, with a the Steel Rebar Price Index has seen a 16% increase
view to address the concerns and problems brought between December 2019 to September 2023, while the
about by an over-reliance of foreign labour. Concrete Price Index has increased 23% between
December 2019 and September 2023.9
However, in view of the fact that the construction sector
in Singapore is still labour-intensive, the restriction on the Additionally, there has been an uptake in claims for
employment of low-cost foreign labour is a double-edged unforeseen construction costs as a result of the
sword. As the supply of foreign labour shrinks, with manpower shortage and mobilisation issues discussed
employers having to look to the domestic market for above. The measures implemented during the pandemic
labour, there will be an increase in the short-term costs of and the periods of lockdowns gave rise to additional
construction. Unless and until there is an appropriate charges such as dormitory charges and workers’ expense
adoption of technology and more efficient delivery at a time when work was halted. Even when restrictions
methods to off-set the need for labour, these rising costs were lifted, the construction sector struggled with a
will pose a challenge to the sector. shortage of skilled manpower; all of which gave rise to
unforeseen dormitory costs, training costs and delays in
Rising Interest Rates and Supply Chain Costs completion of projects.

While there appeared to be a decrease in tender pricing Opportunities:

from 2021 to 2023,8 suggesting that the costs of material
prices were stabilising, the uncertain and unstable market Singapore’s construction sector continues to operate on
still poses a challenge to the Singapore construction a labour-intensive basis. As Singapore continues to
sector. tighten its requirements for foreign workers in a bid to
reduce reliance, the construction industry will have to
In addition to the labour concerns discussed above, look into other methods to maintain productivity and
elevated interest rates and the on-going global supply increase profitability.
chain issues continue to plague the Singapore
construction sector. Elevated interest rates contribute to This is an opportunity for the industry and technology
the rising wages and higher pass-through costs from sector to pivot and implement advanced technology to
suppliers, impacting project costs. In addition, the on- compensate for this loss of human productivity.10
going challenges facing the global supply chain puts
Footnote(s):
Singapore’s construction sector in a vulnerable position.
1
Not having an established manufacturing sector for Construction demand to rise to $38 billion in 2024: BCA
construction and being heavily dependent on the imports – Singapore Property News (edgeprop.sg)
of building materials leaves Singapore exposed to the 2
market volatility, instability and uncertainty caused by the mrsd-Labour-Market-Report-4Q-2019.pdf
ongoing global geopolitical tensions. (mom.gov.sg), page 25

3
Rise in legal disputes mrsd-Labour-Market-Report-4Q-2020.pdf
(mom.gov.sg), page 12
The impact of the measures implemented to control the
4
spread of the Covid-19 pandemic are now being Labour shortage, elevated interest rates still plague
observed, as disrupted projects are coming to completion Asia-Pacific construction sector (businesstimes.com.sg)
in 2024. As Final Accounts are being closed, we note that
5
parties are beginning to claim for liquidated damages, What is Man-year entitlement (MYE)?
prolongation costs and acceleration costs in respect of (singaporeemploymentagency.com)

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6 period of 2025 to 2028 between S$12 billion and S$15

advisory-on-foreign-worker-quota-compliance.pdf
(bca.gov.sg) billion per year.

7 In this regard, we see that public sector construction

Foreign worker quota and levy requirements
projects will continue to take the limelight in the coming
(mom.gov.sg)
years, with civil infrastructure construction projects to
8 make up the majority of works within the sector.
AIS (asiainfrasolutions.com), page 1

9 Footnote(s):
AIS (asiainfrasolutions.com), page 2
11
10 Steady Demand for the Construction Sector Projected
“The 2024 Vision”: Navigating Singapore’s for 2024 (bca.gov.sg)
Construction Industry Future Through Regulatory Agility
and Emerging Trends (viact.ai)
29. How do you envisage technology affecting
the construction and engineering industry in your
28. What types of project are currently attracting
jurisdiction over the next five years?
the most investment in your jurisdiction (e.g.
infrastructure, power, commercial property, Singapore’s construction sector is bound to undergo a
offshore)? massive technological transition, not least as a necessary
measure to address the increased cost of labour
The public sector construction demand is projected to discussed above. In a bid to remain competitive in the
contribute to 55% of the total construction demand in region, Singapore’s Minister for National Development,
2024, ranging between S$18 billion and S$21 billion, during the International Built Environment Week 2023, set
while the private sector construction demand will make out Singapore’s plans to transform “the entire building
up for the remainder of the construction demand, ranging lifecycle by harnessing emerging technologies and
between S$14 billion and S$17 billion. innovations to drive collaboration across various project
parties.”
Some of the upcoming major public sector projects to be
awarded in 2024 includes: new public housing We set out some examples of technologies the industry
developments (Built-to-Order flats), new underground may expect to see in the next five years:
train system (Cross Island MRT Line contracts (Phase 2)),
the development of a fifth airport terminal (Changi CORENET X
Terminal 5), continuing development to the maritime
CORENET X is the successor of CORENET, a technology
infrastructure (Tuas Port), as well as road enhancement
that revolutionised regulatory submissions for building
and drainage improvement works. Within the public
works when it was launched more than 20 years ago. It
sector, BCA projects civil engineering construction
essentially allows electronic plan submissions. CORENET
projects to make up the majority of the work, with
X aims to cut down more than twenty approval
contracts to be awarded ranging between S$7.9 billion
touchpoints across agencies to three key submission
and S$9 billion.
gateways. At each gateway, Qualified Persons (as defined
Looking to 2025 to 2028, BCA forecasts public sector in the Building Control Regulations)12 will make a
construction projects to continue to lead overall coordinated submission. Agencies will then provide a
construction projects in Singapore, with building projects consolidated response. This upfront coordination will
and civil infrastructure construction projects to make up help minimise costly abortive works downstream.
70% and 30% respectively. Major developments during
Ultimately, CORENET X seeks to reduce the reliance on
this period include further developments of the
manpower for regulatory issues in the construction
underground train system (Cross Island Line (Phase 3)
industry.
and Downtown Line extension), developments in new
public infrastructure (Alexandra Hospital and a new Building Information Modelling (BIM)
integrated hospital in Bedok), the construction of new
integrated developments (in Siglap South and Toa Payoh) The Minister for National Development foresees that the
, as well as the redevelopment of educational institutions benefits of BIM will be “turbocharged” when used in
11
(various Junior Colleges). Private sector construction conjunction with CORENET X. Architects can make use of
projects have been forecasted to remain stable in the BIM to speed up and help the design process while

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 Construction: Singapore

quantity surveyors can use those same digital models to marginal increase of 1%.14 However, the recent
estimate their material needs easier via BIM’s simulation geopolitical conflicts in the Middle East are giving rise to
of the construction processes. BIM will help reduce further periods of uncertainty. It would not be surprising if
design conflicts and miscommunication between global supply chain issues will arise again, with the cost
consultants, streamlining processes to save time and of materials rising in tandem.
costs during construction projects.
However, with the Singapore Government’s push for
Internet of Things (IoT) digitalisation in the sector, it is anticipated that there will
be an uptake in the usage of technology in the
Singapore is currently ranked as one the world’s leading construction process to circumvent or reduce the ills of
digital cities with its IoT market generating a total the ongoing supply chain issues and rising material
revenue of 5.47 billion US dollars in 2022.13 With the costs. This push for digitalisation can be seen from
Singaporean government’s plan to digitalise the Singapore’s Built Environment Industry Transformation
construction sector (see above), it is expected that the Map. It is “a product of extensive tripartite engagement
adoption of IoT (the interconnection of devices that and crystallises the collective vision and strategies to
collect and exchange data over the internet, which transform the built environment sector”.15 This initiative
essentially allows monitoring of the entire construction seeks to integrate planning and designing of projects
site) will pick up in the near future. This allows for the with the use of BIM and to advance manufacturing and
early identification of potential safety issues resulting in assembly by investing in automated fabrication in
improved safety, increased efficiency, and lower costs. factories to improve productivity, and quality.

Footnote(s): The Singapore Government is also rolling out generous

grants with an expanded scope for construction
12
MEDIA RELEASE (bca.gov.sg) at page 1 and Building companies, to co-fund up to 50% of the qualifying costs
Plan Submission | Building and Construction Authority of new technology such as BIM software and the training
(BCA) required for CORENET X.
13
Internet of Things (IoT) in Singapore – statistics & The main anticipation in the coming year is the way
facts | Statista and Global digital cities index ranking technology will be leveraged to combat potential supply
2022 | Statista chain issues and the rising costs of materials tied with
greater investment in technology by construction
companies.
30. What do you anticipate to be the impact from
ongoing supply chain issues and the escalation Footnote(s):
of material costs over the coming year?
14
Country Commodity Reports Q2 2023 (ctfassets.net), at
It had seemed that the global supply chain was starting page 48
to stabilise since the volatile period between 2020 and
15
2023. In 2023 the price of cement and lumber have Built Environment Industry Transformation Map (ITM) |
remained the same while the price of steel saw a Building and Construction Authority (BCA)

Contributors

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 Construction: Singapore

Lynette Chew
Partner, Co-head Infrastructure lynette.chew@cms-cmno.com
Construction & Energy

Kelvin Aw
Partner, Co-head Infrastructure kelvin.aw@cms-cmno.com
Construction & Energy

Asya Jamaludin
Partner, Infrastructure Construction & asya.jamaludin@cms-cmno.com
Energy

Grace Lu
Senior Associate, Infrastructure grace.lu@cms-holbornasia.com
Construction & Energy

Andy Yeo
Associate, Infrastructure Construction andy.yeo@cms-holbornasia.com
& Energy

Dian Tambunan
Associate, Infrastructure Construction dian.tambunan@cms-cmno.com
& Energy

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