Construction Comparative Guide

• Published date: 24 January 2022
• Subject Matter: Real Estate and Construction, Construction & Planning
• Law Firm: Chancery Law Corporation
• Author: Mr Tian Luh Tan

1 Legal framework

1.1 Which legislative and regulatory provisions govern construction projects in your jurisdiction?

Key legislation governing construction projects in Singapore includes:

• the Building Control Act, which regulates various aspects of buildings;
• the Building and Construction Industry Security of Payment Act, which regulates progress payments during a construction project;
• the Architects Act and the Professional Engineers Act, which respectively regulate the activities of architects and professional engineers; and
• the Building and Strata Management Act, which regulates the maintenance and management of buildings.

The COVID-19 (Temporary Measures) Act 2020 provides various reliefs for construction and supply contracts impacted by COVID-19, including a moratorium against the commencement of proceedings and even adjustments of the contract sum. However, in general, only contracts entered into before 25 March 2020 can benefit from most of the reliefs available under this legislation and various statutory requirements must be met in order for its provisions to apply.

1.2 What other legislative and regulatory provisions have relevance for construction projects in your jurisdiction?

Other potentially relevant legislation includes:

• the Land Titles Act or the Land Titles (Strata) Act, for issues pertaining to land titles;
• the Environmental Protection and Management Act, for issues of environmental protection; and
• the Employment Act and the Employment of Foreign Manpower Act, for employment-related issues.

There are also many potentially relevant regulatory provisions, which are managed by different key agencies and authorities, such as the following

• The Building Control Authority deals with general construction-related issues and infrastructure-related issues;
• The Public Utilities Board deals with matters relating to sewerage and drainage;
• The SP Powergrid deals with matters relating to electricity;
• The Land Transport Authority deals with matters relating to transportation, roads and so on;
• The Singapore Civil Defence Force deals with matters relating to fire safety and civil defence;
• The National Parks Board deals with matters relating to the planting of trees, parks and so on;
• The National Environment Agency deals with matters relating to pollution, environment and health;
• The Urban Redevelopment Authority deals with matters relating to zoning and urban development and planning;
• The Singapore Land Authority, the Housing Development Board and the Jurong Town Corporation deal with matters relating to obtaining consent for the use of land; and
• The Infocomm Media Development Authority deals with matters relating to info-communication facilities and services.

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

In general, the agencies and authorities identified in question 1.2 are responsible for supervising and enforcing the applicable laws and regulations. Certain agencies, such as the Ministry of Manpower, have their own prosecution department responsible for prosecuting offences pertaining to legislation that falls under the purview of the relevant agency.

In general, when it comes to criminal matters, the state prosecution agency will be the Attorney General's Chambers, which discharges the role of the public prosecutor. The attorney general is constitutionally empowered pursuant to Article 35(8) of the Constitution of the Republic of Singapore to institute, conduct or discontinue any proceedings for any offence.

As an example, in the recent Singapore High Court decision of Leong Sow Hon v Public Prosecutor [2021] 3 SLR 1199; [2020] SGHC 228, the offender was prosecuted for offences under Section 18(1) of the Building Control Act, punishable under Section 18(3) of the same act. This prosecution was brought against the offender by the Attorney's General Chambers.

1.4 What is the general approach in regulating the construction sector?

In general, the regulatory framework governing the built environment in Singapore is transparent and clear. Unless the issue is novel, past approvals should reasonably inform a party as to future regulatory responses.

2 Procurement methods

2.1 What procurement methods are most commonly used in your jurisdiction? Do these vary depending on whether international parties are involved?

When procurement is discussed in the sense of the process by which resources are gathered and used, and contracts are agreed for the purposes of implementing a project, the defining question is whether the project is a public one.

Public procurement is governed by:

• the Government Procurement Act;
• the Government Procurement (Application) Order;
• the Government Procurement (Challenge Proceedings) Regulations; and
• the Government Procurement Regulations 2014.

Pursuant to Regulation 23 of the Government Procurement Regulations 2014, public procurement must be by way of open tender or selective tender as prescribed, save in the exceptional situations provided for in Regulation 26 of the regulations, which permits limited tendering.

For private projects, the method of procurement is not mandated by law. Perhaps the most significant point to note is that it is fairly common for letters of intent to be issued by an employer/main contractor to a contractor/subcontractor.

Typically, such letters of intent will confirm the intent of the main contractor to engage the subcontractor, and provide for the subcontractor to commence some subcontract works while waiting for agreement to be reached on the actual contract.

The legal effect of such a letter of intent will turn on its individual provisions. Some letters of intent may have contractual effect, while others have no contractual effect at all.

For smaller construction projects, the employer may simply approach the desired contractor directly and negotiate with it on the terms - primarily pricing. In such cases, the tendering process is simple.

For larger and more sophisticated construction projects, employers may call for an open tender or a closed tender with pre-approved contractors.

2.2 What are the advantages and disadvantages of these different methods?

Please see question 2.3. When it comes to public procurement, it is not meaningful to speak of advantages or disadvantages, given that the procurement method is prescribed by statute.

2.3 What other factors may influence the choice of procurement method?

In general, under Singapore law, invitations to tender are merely invitations to treat: a binding contract is entered into only if the tender submission from the contractor is accepted by the owner.

Most comprehensive tenders do not envisage further contractual documentation to be agreed once a tender is accepted, as the tender documents will have already included all contract specifications, design intent drawings and the standard form of contract to be entered into.

While procurement issues are typically analysed from a contractual framework, it is important not to lose sight of the fact that other legislation may be potentially applicable.

For instance, the Competition Act regulates competition and abuse of dominant position in the market in Singapore. Contractors have been penalised by the Competition & Consumer Commission Singapore for bid rigging in tenders for maintenance services for swimming pools and other water features (see CCCS 500/7003/17), as well as for bid rigging in electrical and building works (see CCS 500/001/09).

3 Project structures

3.1 How are construction projects typically structured in your jurisdiction? Does this vary depending on whether international parties are involved?

In general, a less specialised client will simply engage a main contractor to manage the project under a design-and-build contract. A more specialised client may engage professionals to come up with the desired design and then engage various specialist contractors to carry out various aspects of the project. These specialist contractors may also be nominated contractors, as the client may only engage a single main contractor. In general, however, most clients for bigger projects will prefer to have a single point of contact: design-and-build contracts are common.

The presence of international contractors will not vary this analysis, save that international contractors will generally be the main contractors if they are engaged (assuming that they have the appropriate licences to carry out works in Singapore).

3.2 What are the advantages and disadvantages of these different structures?

The main advantage of the design-and-build model is that the client need only look to a single contractor for a 'one-stop shop' solution to all its requirements. There is no need to separately engage, for example, an architect to come up with the design and perhaps another construction professional to supervise the contractor's works as the contractor progresses with construction. This also important if a dispute arises, as the contractor cannot attempt to evade responsibility by saying that the issue arose from a negligent or defective design caused by the architect.

On the other hand, the disadvantage of a design-and-build model is that the client must be confident that the design-and-build contractor can achieve the design intent. As the design-and-build contractor is responsible for the design, the client may have less say over the specific design elements as compared to the traditional model of contracting, whereby the client engages a specialist architect to come up with the design. To some extent, this may be mitigated by, for example, the client first engaging an architect to come up with an intended design and then novating that design contract to the contractor.

3.3 What other factors may influence the choice of project structure?

Another key factor that will influence the choice of project structure is the complexity and costs of the project. For simple contracts, it may not make...