The headline report of the value of construction contracts by the Building and Construction Authority (BCA) published 15 January 2016 was quickly appropriated the following day to the “Business” section of Singapore’s national newspaper, The Straits Times, with an even more tantalising headline “Strong Supply of Public Building Jobs.” The headlines appear good news for the construction industry for the celebration of Chinese New Year which sees The Monkey take centre stage, the ninth animal of the twelve terrestrial branches and who is generally regarded as an intelligent problem solver, fitting nicely into teams whilst demonstrating independence and a strong mind to succeed. Notwithstanding the fanfare, the Chinese calendar forecasts that The Monkey will have to find its own way in difficult situations and overcome obstacles this New Year. By staying calm and confident difficulties will be overcome and opportunities will present itself!

1. “Risk comes from not knowing what you’re doing”
- Warren Buffet
“S$27 billion to S$34 billion Worth of Construction Contracts in 2016”, Building
Construction Authority
Introduction
The headline report of the value
of construction contracts by the
Building and Construction Authority
(BCA) published 15 January 2016 was
quickly appropriated the following
day to the “Business” section of
Singapore’s national newspaper, The
Straits Times, with an even more
tantalising headline “Strong Supply of
Public Building Jobs.”
The headlines appear good news
for the construction industry for the
celebration of Chinese New Year
which sees The Monkey take centre
stage, the ninth animal of the twelve
terrestrial branches and who is
generally regarded as an intelligent
problem solver, fitting nicely
into teams whilst demonstrating
independence and a strong mind to
succeed.
Notwithstanding the fanfare, the
Chinese calendar forecasts that The
Monkey will have to find its own way
in difficult situations and overcome
obstacles this New Year. By staying
calm and confident difficulties will
be overcome and opportunities will
present itself!
Building and Construction Authority
The annual forecast by the BCA
estimates the total construction
demand of construction contracts
to be awarded to be between S$27
billion and S$34 billion, 65% of
this being driven by public sector
demand. If these projected figures
are met then this year will be the
highest proportion of construction
demand from the public sector since
2002.
This year’s public sector projects
will include the addition of stock to
Home Improvement Programme for
HDB flats, the new National Cancer
Centre, PUB’s water reclamation and
sewerage projects, and the remaining
contracts for the Thomson-East Coast
MRT line.
The average construction demand
forecast for 2017 to 2020 follows a
similar upwards trend of between
S$26 billion to S$37 billion, with
nearly 60% of the total comprising
building projects and the remaining
from civil engineering projects.
Positive news, but what’s the risk?
Risk
To execute and deliver major public
works it is incumbent that supply
chains are properly set-up at the
outset and projects are managed
appropriately to control risk.
The tools of risk registers, heat maps,
risk dashboards and so-called “war-
rooms” are only part of an integrated
risk management approach that
needs to be owned not only by senior
management but percolate and be
part of an entire organisations risk
culture.
An integrated risk management
system comprises five key parts:
ü Risk Transparency
ü Risk Ownership and Strategy
ü Risk Decisions and Processes
ü Risk Governance
ü Risk Culture
By adopting these steps, project
managers, together with senior
design, engineering, commercial and
planning personnel are allowed to
focus on the pro-active control and
mitigation of risk.
Risk is allocated to the best risk
owners across the project allowing
risks to be monitored, controlled
and mitigated. Risk governance lead
by top management is the driver of
the constituent parts, making risk
management a priority in day-to-day
work activities.
Every organisation strives to control
and reduce costs associated with risk;
which is unsurprisingly prevalent on
major public sector projects.
Continue to next page
Page 1 of 2February 2016

2. Hill International is a leading
construction consultancy firm
providing innovative program and
project management, management
consulting, tender assistance,
dispute mitigation/resolution and
construction consultancy services to
public and private clients worldwide.
We specialise in construction risk
mitigation and avoidance.
Additionally, we offer a full
spectrum of services to assist clients
to successfully manage capital
construction programs, from initial
feasibility through implementation
and contract closeout. Hill has
served public and private sector
clients in many varied projects from
public works, transportation, hotels
and resorts, leisure and amusement
parks and sports complexes to heavy
industrial projects such as, power &
nuclear plants, pipelines, refineries,
offshore and onshore oil refineries,
petrochemical plants, public utilities,
water and sewer systems and
treatment plants.
Hill International currently has over
4,800 employees in 100 offices
worldwide providing program
management, project management,
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construction claims services. Hill
International, Inc is listed in NYSE. For
more information on Hill, please visit
our website at www.hillintl.com.
“Risk comes from not knowing what you’re doing”
- Warren Buffet
The type of procurement and form of
contract should be carefully selected
by the client and other stakeholders
to ensure risks are managed by the
most appropriate party. There is an
ever-increasing demand by clients
to transfer the risk of design using
Design and Build (D&B) contracts and
guarantee cost certainty through the
use of Guaranteed Maximum Price
(GMP).
Thus, contractors must ensure
subcontracts and supply agreements
reflect the correct level of obligations,
liabilities and risks as contained in the
head contract.
Itisessentialforcontractorstoengage
with technically competent and
experienced supply chain entities;
from subcontractors to suppliers
and vendors that have a proven
track-record of executing projects on
time to the necessary standards and
workmanship.
Management should also give
due regard to the importance of
programme management. The
recording of actual progress against
plans has to be more systematic, with
regular updates showing the effects
of delays and the impact on overall
project completion. The control of
time is paramount to effective risk
management.
In general, most time and cost
overruns are avoidable and can be
solved by a robust risk management
regime that manages risk in all stages
of the value chain and throughout
the life cycle of a project.
An integrated risk management
system identifies possible risks,
assesses the likelihood of occurrence
and impact on a project’s time and
cost parameters that are ultimately
controlled by the appropriate risk
owners.
In The Year of the Monkey,
organisations in the construction
industry should remain bold and
embrace best practices to ensure
nothing is left to chance. By managing
risk and providing solutions to the
delivery of projects, competitive
advantage will become the norm.
Warren Buffet, the Sage of Omaha,
once said that “Risk comes from not
knowing what you’re doing.”
In the Chinese New Year, adopt the
same strategy as The Monkey: grasp
opportunities and follow best practice
of an integrated risk management
policy to manage the vagaries of
risk inherent in the construction
industry. n
This article is written by Andrew
Merrilees,Director,HillInternational,
Inc.
Andrew Merrilees, Chartered Quantity
Surveyor, has over 20 years’ experience
on major international building and civil
engineering projects in the UK, Hong
Kong, Macau, and the Middle East,
representing Employers, Consultants,
Contractors and Joint Ventures, providing
a range of commercial and contractual
advice, claims management, including
preparation and defence, and arbitration,
mediation and expert witness support
services. Andrew is a practising associate
of The Academy of Experts for the
provision of expert services and he is
currently engaged as Director for Hill’s
Singapore office.
Page 2 of 2
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$27 Billion to $34 Billion Worth of Construction Contracts To be Awarded in
2016, Building and Construction Authority Singapore
February 2016
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