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Circular No: C&P/66/04/SJ

30 April 2021

Additional Measures to Support the Construction Sector and Simplified Claim Process for Public Sector Construction Contracts

The tightening of border measures with India due to the rapidly deteriorating COVID-19 situation in the country, has impacted the inflow of Indian workers into Singapore.

Recognising the impacts brought forth to the construction sector by the measures, the Government will provide the following support measures to help the construction sector:

Provide a time-limited flexibility to recruit workers from the People’s Republic of China (PRC) without having to enrol in Overseas Testing Centres (OTCs) for skill certification

From 7 May 2021, BCA and MOM will introduce a temporary scheme for six months to allow new PRC Work Permit Holders (WPHs) to obtain their skills certification in Singapore.

Upon implementation of this temporary scheme, employers will be permitted to bring in PRC WPHs without skills certifications, but they must comply with the other prevailing entry approval and work pass requirements.

Employers can submit their applications to BCA’s Approved Training and Testing Centres (ATTCs) from 7 May 2021. The list of ATTCs accepting applications will be made known to the construction sector within the next two weeks.

GPEs to grant additional 49-day Extension of Time (EOT) to eligible construction contracts for delays due to COVID-19 for public sector projects

GPEs will be granting a 49-day EOT for delay due to loss of productivity for the period from 7 August 2020 to 31 December 2020, on an ex-gratia basis, for public sector construction contracts:

(i) in which the tender was closed on or before 1 June 2020;

(ii) that was not terminated by the Employer on or before 7 August 2020 under Clause 31 of PSSCOC (or equivalent clause under the contract); and

(iii) that was not certified to be substantially completed on or before 7 August 2020 under Clause 17 of PSSCOC (or equivalent clause under the contract).

 This is in addition to the earlier 122 days of EOT provided under Part 8A of the COVID-19 (Temporary Measures) Act (COTMA). No claim for the 49-day EOT is required from contractors.

Contractors who wish to seek longer EOT for the same period shall provide the necessary substantiation for GPEs’ assessment. GPEs can grant longer EOT if they assessed that the requests are appropriate.

GPEs to provide 0.1% of awarded contract sum for every month of delay as payment for cost sharing of non-manpower related cost increases under Part 8B of COTMA for public sector projects

     For eligible contracts with awarded contract sum up to $100mil, GPEs will co-share 0.1% of awarded contract sum for every month of delay arising from COVID-19 events (substantiated with EOT).

GPEs have been reminded to expedite the payment of prolongation cost claims, in particular for the universal 122 days granted under COTMA Part 8A (Tranche 1) and 49 days ex-gratia common EOT (Tranche 2), through the following steps:

Step 1: GPE to calculate co-sharing amount based on 0.1% of awarded contract sum per month of delay and inform the eligible contractor. See Annex B in the attachment.  

Step 2: The contractor shall include such amount in their next progress payment claim, for GPE’s certification via the payment response.

Contractors who wish to claim beyond the 0.1% including any ex-gratia payment of contractor-owned equipment can continue to submit claims with substantiation, through a simplified computation method developed by the Trade Associations and Government agencies.

For eligible contracts with awarded contract sum above $100mil, main contractors are required to submit breakdown of claim and documentary proof (e.g. invoices and receipts) for claim items with incurred cost above $6,000 as part of the claim.

For claim items with incurred cost of $6,000 and below, GPEs can have the flexibility to certify the claim without documentary proof if GPEs assess that the claim items are reasonable. However, contractors may be asked to produce documentary proof for audit checks by the GPEs at any time. GPEs may also reserve the right to claw-back any overpayments.

Common methods of computation for depreciation of contractor-owned equipment

For construction equipment with purchase value of up to $200,000/-

 

For construction equipment with purchase value of above $200,000/-

Computation method

 

Method 1: Based on monthly rental rate

 

If rental quotation/receipt is not available, the contractor shall compute based on Method 2b “via straight line depreciation formula”.

 

Computation method

 

Method 2a – based on audited financial statement

 

where the contractor shall submit audited financial statement and asset register and sieve out the depreciation costs of the identified equipment from audited financial statements/asset register; OR

 

For equipment with purchase value of less than $6,000:

 

Contractors shall submit not more than 5 unique claim items per claim. If more than 5 items are submitted, GPEs will only evaluate the claim for the 5 items with highest claim value.

 

Method 2b – based on straight-line depreciation formula

 

where the contractor shall apply the following formula based on purchase price and useful life:

 

Purchase value / 6 years*

 

if scrap value can be ascertained:

 

(Purchase value – scrap value) / 6 years*

 

*Note: GPEs have the flexibility to adjust the useful lifespan of the equipment based on available data or documents submitted. E.g. if the equipment has been purchased for 10 years, the useful life

can be adjusted to 10 years instead of 6 years.

 

 

         

 

Combined cap for claims under COTMA Part 8B and ex-gratia cost-sharing of contractor-owned equipment  

With the above, the total cost-sharing under COTMA Part 8B and ex-gratia co-sharing of contractor-owned equipment would still be subject to the monthly cap of 0.2% of contract sum and overall cap of 1.8% of the contract sum.

For more details on the 49-days EOT and the simplified computation method, refer to the BCA Circular here on Simplified Claim Process for Extension of Time and Prolongation Costs in Public Sector Construction Contracts due to COVID-19 Events.

 

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