The construction Tender Price Index ("TPI") compiled by the Singapore Institute of Surveyors and Valuers ("SISV") reflects the tender prices received for building projects in Singapore. Compared with the high construction demand in 2014 (at S$28.9 billion), the significantly low construction demand for building projects in 2015 (at S$21.6 billion) and 2016 (S$16.6 billion) is believed to be one of the causes for the low TPI for these 2 years. Against the backdrop of the competitive tender prices and the unfavourable economic outlook in 2017, the pressure on project budgets is expected to sustain.

In respect to parties that do not undertake non-building related projects, the pressure to protect smaller margins arising from increasingly competitive tender pricing may result in an increased amount of diligence in pursuing claims during the administration of construction contracts. The respondents to the claims would also be faced with similarly increasing budgetary pressures. In a tightening financial landscape where cash flow is of paramount importance, it would not be unexpected to see an increasing number of disputes arising in building related projects.

Contributed by: Mr. Chng Eng Hui - CTBH 

Read the circular depicting the tender price index for period from Year 2005 to 2016 (4rd Quarter)


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