Events & Speeches

Speech by Mr Cedric Foo, Minister of State for National Development and Defence, at the Building and Construction Industry Security of Payment Adjudicators Accreditation Ceremony

Thursday, 31 March 2005 at City Hall Chamber

Honourable Justice Chao Hick Tin, Judge of Appeal,
Distinguished guests,
Ladies and Gentlemen.

Introduction

1 I am very pleased to join you at today’s accreditation ceremony for the first batch of adjudicators under the Building and Construction Industry Security of Payment or SOP legislation.

Significance of the SOP Act

2 The Construction Industry today is plagued with the fundamental problems of over-capacity and heavy reliance on transient foreign workers, which have affected the productivity and quality levels of the industry. The Building and Construction Authority or BCA intends to adopt a more proactive approach to help the industry overcome these problems, and position the industry for recovery and long-term competitiveness. BCA is intensifying its efforts to promote the export of construction services and encourage contractors to employ innovative and less labour-intensive building methods, as well as exploring ways to uplift professionalism such as through contractor licensing, tighter Contractors’ Registry System or CRS requirements, and tradesmen registration.

3 Underlying these efforts to advance the industry is the provision of a conducive operating environment for all industry players to operate their businesses in. In this regard, the introduction of the SOP legislation is indeed a significant milestone as it will provide a level playing field for all parties in the industry, regardless of whether they are big or small players.

4 The aim of the legislation is facilitate cash flow in the construction industry by upholding the rights of any party to seek payment for work done, and providing fast and low-cost adjudication to resolve payment disputes. It is a step in the right direction towards enhancing the operating environment of the construction industry.

5 Since the passing of the SOP Act last November, BCA has launched a series of programmes to inform, educate and prepare the industry for the legislation, which will come into effect from 1 April 2005. These programmes include distributing publicity leaflets and conducting briefings on the key features of the SOP legislation; organising seminars for practioners to provide them with an in-depth understanding of the legislation and making available information kits to provide guidance on the application of the SOP legislation. In addition, BCA has also set up a hotline to answer to general enquiries.

SMC as Authorised Nominating Body (ANB)

6 The provision of adjudication under the SOP legislation will be instrumental in improving the flow of payments in the industry. It is a faster and less expensive avenue to settle disputes, compared to arbitration or litigation. The criteria for adjudication review, qualifications of adjudicators, limit on the costs of adjudication, as well as other operational details are set out in the SOP Regulations.

7 To put in place an adjudication system to meet the objective of the legislation, we need to set up an Authorised Nominating Body or ANB. The ANB is to administer the adjudication process, train, certify and maintain a register of adjudicators.

8 At the second reading of the SOP Bill in Parliament, I had indicated that the Singapore Mediation Centre or SMC would be appointed as the ANB.

9 The appointment was made after careful consideration and extensive consultation with the industry. Industry stakeholders hold the SMC in high regard, and deem it a most suitable and appropriate organisation to administer the adjudication process. The SMC is familiar with payment disputes and issues pertaining to the construction industry. I understand that about 30% of the existing SMC Principal Mediators is from the construction industry and about 40% of the disputes handled by SMC involve construction or renovation issues.

10 Under the able chairmanship of Justice Chao Hick Tin and a dedicated team of dispute resolution professionals, I am confident that the SMC and its register of adjudicators will discharge their duties effectively, efficiently and impartially.

11 I am glad to note that SMC has formed the Construction Adjudicator Accreditation Committee, chaired by the 2nd Solicitor-General, Mr Lee Seiu Kin, to ensure quality in the training and assist in the accreditation of adjudicators. This committee helps to determine the training content, select suitable applicants, and assess the potential adjudicators.

12 I also understand that the SMC has set a high standard for the selection of the first batch of adjudicators by requiring applicants to have more than 15 years of relevant experience in the industry, instead of 10 years as required in the SOP regulations. Despite this, I was told that more than 160 applicants applied to be adjudicators when the notice of invitation was sent out last year.

Conclusion

13 Finally, let me reiterate that the SOP Act will play an important role in creating a conducive operating environment for the construction industry. The provision of adjudication is key to the successful implementation of the Act.

14 I would like to congratulate SMC for successfully conducting its first training course for adjudicators, and the participants who will be accredited to the SMC’s register of adjudicators today.

15 Thank you.