Tender Loving Society

Singapore is a tender loving society. We believe in using the tender for most business transactions. The contract is usually awarded to the party that submitted the lowest cost or, in the case of sale of land, to the highest bidder.

This system has bad consequences. When a contractor tender a lower price to get a job, they are under pressure to reduce their cost. This will find ways to cut corners, resulting in lower quality of work. Alternatively, they will seek opportunity to increase their revenue on variation orders or extended scope of work.

If a developer pays a high cost for a piece of land, they will add the cost to the final product tht is sold. This has led to escalation in the price of property. The high property prices have led to high cost of living and other an unfair distribution of income, from tenants to owners of property. This has led to a frenzy of property buying, which has in turn caused the property prices to escalate further.

There is an alternative to the tender system. It is easy to estimate the cost of a contract, using the inputs in materials and labour, and to award the contract based on cost plus a fair margin. The work can be distributed to eligible parties based on fair assessment of quality. This is people are recruited to work in a big organisation.

If land is tendered based on the average price of similar properties and is sold at controlled prices (i.e. cost of land, construction and a fair margin of profit), there is no need for property prices to escalate sharply. The property prices will reflect the true market, without the excessive speculation.

There is an alternative to the "tender loving society".

Tan Kin Lian