SINGAPORE – With fuel prices up by more than 200 per cent in recent weeks, contractors working on both public and private sector projects will need Government help, said the Singapore Contractors Association Limited (SCAL).

SCAL president Lee Kay Chai told The Straits Times on April 8 that discussions with the Government have focused on requesting financial support for both types of projects, rather than only critical public projects.

Fuel-related costs typically make up about 15 to 25 per cent of total construction costs, and sometimes more depending on the project type, he said.

He called the cost pressures “unprecedented”, adding that construction contracts are typically based on lump-sum tendering, “with contractors making assumptions based on normal inflation or modest price increases”.

“This sudden spike of over 200 per cent for fuel is well beyond what any contract could reasonably anticipate. Many in the industry feel broader coverage is needed to fully mitigate the impact,” Mr Lee said.

On April 7, Senior Minister of State for Finance Jeffrey Siow said in Parliament that Singaporeans have already felt some effects of war in the Middle East, citing the sharp rise in petrol and diesel prices, in tandem with global oil prices.

Consequently, he announced that the Government would share cost increases directly related to fuel costs with contractors.

It will bear half the additional cost incurred by contractors arising from the use of diesel and bitumen for key public projects, such as the Cross Island Line and public housing projects.

Giving more details in an April 7 circular, the Building and Construction Authority (BCA) the move will cover contractors that carry out four types of construction activities ...