Impact of COVID-19 Pandemic on Demand, Output, and Outcomes of Construction Projects in Singapore

Abstract

This study investigated the impact of COVID-19 pandemic on Singapore’s construction industry in terms of construction demand, output, prices and project performance. A three-pronged research approach was adopted: a survey, analyzing published statistical data, and conducting in-depth interviews with subject matter experts. The survey revealed that projects suffered significant delays and cost overruns and lower quality. It was found that construction demand and output decreased by 27.9% and 28.6%, respectively. Some project owners postponed awarding contracts or calling tenders because prices exceeded their budgets. While waiting for bid prices to decrease, they re-evaluated the feasibility, scope, design, budget, and timeline of their projects. Contraction of construction output was found to be due to a severe shortage of labor and to lower productivity as a consequence of complying with many safe management measures. The results of autoregressive time-series modeling predicted that tender prices will continue to rise in the short term before decreasing after mid-2022. Although manual labor may be replaced by productive technologies if technology is cheaper than labor, this was not found to be the case. The originality of this research is that it empirically quantified project outcomes due to the pandemic and predicted tender price indexes for the next 5 years. These predicted indexes are useful for estimating the risk and markup to be added to the base construction cost. The value of this research is that it informs policy makers that regulations need to be enacted to compel the adoption of productive technologies to reduce reliance on labor. Otherwise, the worker shortage problems faced in this pandemic may continue to surface in future pandemics. The implication of adopting productive technologies is that project owners must increase the project budget because these technologies cost more than manual labor. However, the cost might be passed to end users, who will end up paying more.