Compensation by Government Agencies to Construction Firms for Full Price Fluctuations for Materials Used in Construction Projects

21 Mr Gerald Giam Yean Song asked the Minister for National Development (a) whether and how does the Ministry ensure that all Government agencies compensate construction firms for the full price fluctuations for materials used in construction projects; and (b) whether the Ministry will ensure that any shortfalls in such adjustments will be reimbursed to construction firms.

Mr Desmond Lee: Government agencies are required to use the Public Sector Standard Conditions of Contract (PSSCOC) for their construction contracts. The PSSCOC includes a fluctuation clause that allows contract prices to be adjusted according to the prevailing material price indices of key construction materials, that is, ready-mix concrete and steel rebars. This means that Government agencies are contractually bound to adjust their contract prices according to the changes in these price indices during their projects.