No more 'unlimited liability' for consultants in govt building contracts from Dec

HDB will also raise initial payments to small contractors to help with cashflow

- Grace Leong Senior Correspondent

From Dec 1, government contracts in the built environment sector must include a clause that limits a consultant’s contractual liability.

This is in response to feedback that “unlimited liability” in such contracts, which do not specify limits on consultants’ contractual liability, put them at significant risk of financial losses.

“(Some consultants) highlighted it was rather unfair for them to be subjected to unlimited liability, and they faced challenges in purchasing professional indemnity insurance to cover their potential liability claims,” said National Development Minister Chee Hong Tat.

Without limits on their liability, it is more expensive for consultants to buy such insurance, and this makes consultants less willing to take on government contracts.

“I understand their concerns. There is no winner in such a situation - whether the businesses or the Government,” Mr Chee said.

He was speaking at the EY Entrepreneur Of The Year Singapore awards ceremony held at the Ritz-Carlton hotel on Oct 17.

Mr Chee said that in November 2024, an option to limit contractual liability was added in standard consultancy agreements between government agencies and their consultants.

But in response to feedback, this clause will be made a mandatory provision in all such contracts from Dec 1 to ensure “more effective and equitable risk-sharing between government agencies and industry”.

“We hope that this move will give consultancy firms greater confidence and certainty when they take on government projects,” Mr Chee said.