Sharp rise in construction cost and changes to project push bill to $21b
By Christopher Tan, The Straits Times, 30 Oct 2012
A SPIKE in construction cost has contributed to the MRT Downtown Line bill rising by more than 70 per cent from an original estimate of $12 billion to $20.7 billion.
Half of this $8.7 billion increase was attributed to a sharp rise in construction cost, with the other half linked to a number of changes to the project.
This was revealed to The Straits Times by the Land Transport Authority (LTA), which also said it is taking steps - like inviting more firms to bid for projects - to rein in prices.
The Downtown Line will link the north-western and eastern parts of Singapore to the Marina downtown, with the first stage due to open next year, and two other stages in 2015 and 2017.
When the line was announced in 2008, the LTA said that it would cost $12 billion. The latest price tag appeared in this year's Budget statement.
The changes adding to costs include expanding the capacity of the depot in Gali Batu near Woodlands, more stringent safety and regulatory requirements, and more connections to nearby developments to make the line more accessible.
For example, Downtown Line Stage 3's Tampines and Expo stations will each have an additional entrance.
The project is also slightly longer than when it was first announced in 2008. It is 42km long, with 34 stations - from the original 40km and 33 stations.
He attributed this partly to the deluge of infrastructural projects locally as well as overseas - especially in China - which caused a shortage of building materials, equipment and manpower.
Mr Chua cited how steel prices had doubled from $700 a tonne to $1,400 a tonne between 2007 and 2008. Concrete prices had nearly trebled to about $150 a tonne in the same period.
Steel prices have since fallen by 30 per cent to 40 per cent from their 2008 highs, but concrete prices have softened by only 10 per cent to 20 per cent.
Despite that, the cost pressure has spilled over to the Thomson Line, a project slated to be completed by 2021.
Linking the northern towns to the Marina downtown, the 30km line - estimated to cost $18 billion - works out to $600 million per km, compared with $493 million per km for the Downtown Line and $246 million per km for the Circle Line.
Contractors said though material costs may have dipped, other expenses - such as piling and labour - have continued to soar. The project involves more land acquisitions too.
Transport planner Lee Der-Horng of the National University of Singapore (NUS) is not surprised project prices are rising.
"Over time, construction cost will surely go up," he said. "But besides economics, there may be some engineering reasons for the cost rise."
Referring to the Thomson Line, he noted that the segment in the city area was no doubt more difficult to construct since the underground space has been congested by existing MRT lines, buildings and utility lines.
Some industry veterans noted that the elevated cost of MRT projects from the time of the Circle Line - completed last year - is staggering even after factoring in construction cost changes, higher complexity of projects and tougher safety requirements.
Which is why some pointed out that it is often wiser to build earlier - even if slightly ahead of demand - than later.
Others said launching projects during a slowdown helps too.
Singapore-based transport consultant Bruno Wildermuth said: "The Government had the foresight to push for the first MRT project during the 1980s recession."
Mr Chua of the LTA said the final bills for the current MRT projects may turn out to be lower. "If material prices go down, we can claw back some money from the contractors," he said.
He also said the LTA has of late invited more contractors to bid for projects, hoping that heightened competition will keep a lid on prices.
Indeed, he noted that this explains why Downtown Line Stage 3 projects are on average 33 per cent and 46 per cent less costly than those in stages 2 and 1 respectively.
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