In 2023, tender prices rose by 5.0 percent due to shortages in supply and skills, coupled with rising inflation. While prices for key construction materials have gradually declined over the year, they appear to be stabilising, the supply chain remains unpredictable due to global market conditions.

Manpower too remains a significant challenge with tightening regulations, skilled labour shortages, and increasing costs. The BE sector is driven to become more efficient, digitalised, and sustainable, with the opportunity to leverage various government grants to mitigate these challenges and benefit from the adoption of collaborative contracting.

Looking ahead, total construction demand for 2024 is expected to rise, ranging between S$32bn and S$38bn, with a strong portfolio of projects over the medium term, particularly in the infrastructure, healthcare, and residential sectors.

Tender price increases, projected to be between 3.0 percent and 5.0 percent, are anticipated to continue in 2024, keeping contractors cautious and selective in their approach to tenders.

As demand unfolds over the next 18 months, with a surge anticipated, developers must stay attuned to the market — monitoring major project launches and collaborating with supply chain partners on procurement and capacity planning. Understanding contractors' and key subcontractors' optimal timeframes is crucial. Early engagement with these partners ensures they have the capacity and opportunity to work together, facilitating smoother, more cost-effective project execution. Once projects launch, the sudden spike in input demand can make negotiations challenging, necessitating the securing of early partnerships to effectively manage project and construction costs.