The Fall & Fall of the Australian Building Industry

CHAPTER 2: DEVELOPMENTS JANUARY-JUNE 2019

Recognising that there is a problem – Why did it take so long?

• We now have two large residential tower projects which have caught the imagination of the Australian media and the Government. It is ironic that all of the endeavours in the last seven years and more to get Government to properly focus on building defects have been ignored. All of those buildings of four storeys and less (from where the bulk of claims upon the Home Building Compensation Fund emanate) have largely been ignored over the years. The Owners Corporation Network, a body which represents the interests and occupiers of strata title properties, has despaired of the lack of interest from government to the plight of residents, financially and emotionally affected by the results of bad building practices. If any doubt remains:

• Cost of Homeowners Warranty Insurance Scheme See report by NSW HBCF 2019

Premiums collected in 2018 $83.98m. HOW claims $204.00m. Net cost = $120m – $10m per month paid by the taxpayer.

If we had proper certification in place there would be fewer HWI claims, this annual loss would be greatly reduced, and the revenue saved could go towards filling the gap in current property stamp duty receipts. Imagine the collective deficit if you include buildings larger than four storeys. $1 billion? 

The issue now is that the building owners are confronted by two problems:

1. The cost of rectifying the defects. 2. The loss of value of their properties due to the negativity disseminated by the media, poor response by Government ministers and lack of an industry emergency control plan.

• Certification of design and certification of construction of each particular critical building element must be undertaken by the same person/organisation 

 The New South Wales Government has announced that it plans to revise the Building Regulations later this year and have requested submissions by 24 July 2019. Hopefully it will forget about the need for a Building Commissioner. Perhaps the biggest single problem with the current legislation is the separation of certification for design from certification of construction. There are two key points which I believe are definitely not realised by the whole industry and where the fabric of the industry has been very damaged by this previously ill-conceived decision: 

 1. The design of a building is not like a tin of baked beans. Every building is different. To an architect, each building is like a baby to be nurtured to fruition. For two hundred years the Architect has been aided by a support team of chartered engineers (these days, confusingly, called Accredited Certifiers). They give so much of themselves to the buildings. The current disconnection of the building designer from site activity is not only destroying self-respect among professionals but preventing them from also checking the correctness of their work efforts: they don’t get to see the completed project. In times past the architect had his Clerk of Works. On large projects, the engineer had his Resident Engineer; those people were a key part of the QA team. Today, those roles no longer exist and the industry suffers as a result. If professionals who design buildings are not required to supervise the installation or construction of that which they have designed (or subcontractors have designed and supplied), the likelihood of another party being able to understand the significance or relevance of key design decisions of their own design is minimised. 

2. A system where design certification is separated from construction certification is legal madness. Everyone is responsible and no one is responsible.

“The person who designs must inspect, must supervise, must certify and be completely accountable”. This is how it was for 200 years. We need to go “back to the future”.

• C1-C15 BPB Engineering Categories – MDC Engineers Australia Report June 2013 Building Governance Bodies

Last Tuesday – 2 July 2019, I addressed a group of 50 members of CIBSE (College of International Building Services Engineers). Presentations were also given by Mr Michael Lambert and Mr Michael Wynn-Jones. Michael Wynn-Jones reminded us that the BPB had originally identified fifteen categories of certifiers to be formally recognised for the industry to operate effectively. The fifteen categories nominated were almost identical to the fifteen Building Governance Bodies (BGB) recommended by the MDC (Multi-disciplinary Committee) of Engineers Australia in June 2013. Unfortunately, for reasons unknown, the government chose not to implement the recommendations of the BPB at that time. I suggest that this was a critical error. For 200 years, the professional institutions set the rules for design, inspection and certification. The current system of “Design and Construct” (D&C) has allowed a total abrogation of those rules and for a culture to prevail where “price and programme” are the principal drivers towards an outcome rather than quality of product. Those fifteen bodies (irrespective of their title) are needed to set mandatory rules which must be followed (with documented evidence that they have been followed) so that individual professionals acting under the aegis of any one of those fifteen bodies are accountable. The Principal Certifying Authority (PCA) can then issue a Certificate of Occupancy with the confidence that his receipt of certificates from the professionals can provide: Unconditional certification; Nothing else will work.

The system of professional oversight was proven to work for over 200 years. The “Design and Construct” system must now develop mechanisms to address the problems it has created and to re-establish rules to ensure quality of construction alongside the advantages of time and cost inherent in the D&C system. (The Brits have seemingly similar problems).

• The current expectations of the PCA are totally unrealistic and unfair

The current focus on the PCA is quite ridiculous. Clearly, the government does not understand the role of the PCA. Their role should be identical to that of the Chief Building Surveyor currently operating in Shires and councils in rural Australia, and in the same way that they have always operated.. I do not know the exact number of Australian Standards which relate to the building industry but let us guess a number of say, 300. How can one person have knowledge of so many Standards in fifteen different Disciplines? Clearly, they cannot do so. It is just as crazy to think that a PCA can visit a site when a building is completed and issue a meaningful certificate of compliance in the absence of any certificates from professionals (which indicate that critical building elements have been correctly designed and installed) and then issue a Certificate of Occupation. Yet this typically is what happens in the entire new domestic housing and renovation markets.

Years ago, “Sam the Surveyor” would say to “Bob the Builder”:

“Do not put the plaster board on the walls and ceiling until I have inspected the roof tie down straps, the wall frames, the wall frame connection to the foundations and checked that the brick veneer is properly tied to the frame and that the cavity flashings are clean and correctly positioned”.

This still happens in country areas because they still have Council Building Surveyors to undertake inspections and to give compliance orders. The private certifiers in Sydney do not (as a rule) undertake such a role. There are no Private certifiers acting in the same manner as council building surveyors to do inspections of building works prior to completion. It is for this reason that the supervision, inspection and certification of critical building elements must be conducted by accredited and accountable industry professionals.

“The PCA today is like a football referee with no pea in his whistle. It does not matter how hard he blows no one will listen because there are no rules”

As with all projects, but particularly for large projects, it should surely be obvious to anybody that the fifteen governance bodies are essential to the realisation of a successful outcome with building projects based upon the involvement and authority of building professionals.

DICA: Design • Inspection • Certification • Accountability

• As-Built Drawings

Recently, Victoria announced that “As-built” drawings would be a mandatory requirement for all government projects. This should be introduced in New South Wales not just for government but for all projects. This is the only way to complete the circle. Builders must realise that they must construct in full compliance with the formal, already approved and certified, design documentation. Subsequent changes to suit subcontractors (particularly such as prestressed concrete) can only be implemented if approved by the original designer certifier for that particular Discipline. This is the key problem today. It is in the interests of builders to ensure that the designer engaged for each discipline must approve all post-construction-commencement of design changes, must approve them, inspect the result and as appropriate certify. Even if the subcontractor has his own engineer, that engineer is accountable to the original designer/certifier. No split responsibility. There are frequently variations to an original design: There are frequently adjustments by the engineer (when given the chance) to “tweak” a design.

Accountability Without Compromise Is Essential!

• Insurance – No “As-Built” drawings – No Insurance

The MDC of Engineers Australia Committee 2012-2013 made very strong recommendations that all available building insurance for HOW should be linked to proper certification. Perhaps if that were the case, we might be able to increase the width of cover available to buildings. As this article is being written, we hear that the availability of insurance for PCAs is an issue and that all other Accredited Certifiers are expecting significant rises in their premiums. The PCAs are currently totally exposed which should not be the case. At the CIBSE seminar on July 2, Both Lambert and Wynn-Jones alluded to the fact that the only meaningful Professional Indemnity Insurance (PI) today is that available from the PCA. This is because it is virtually impossible to get any other important meaningful certification because the system has not introduced mandatory provisions for the issue of certificates from the responsible persons in categories C1 to C15. The reality is this: If the C1 to C15 people were required to certify critical building elements and to provide their certificates to the PCA, the PCA becomes the party with the need for the least onerous conditions of PI insurance to be imposed.

Until the designers of the critical building elements are compelled to adopt DICA, plus the builders are made to understand that unless DICA prevails, the PCA will not issue a Certificate of Occupation. If he does this, and only then, should he be liable.

• Lambert or Lose

Since 2012 and the creation of the MDC of Engineers Australia, I have been working with a group of around 25 persons who have a very clear understanding all of the points raised in the foregoing and stand frustrated beyond belief that the building industry in New South Wales (and Australia less so) has come to such a parlous state and that successive governments have been so contemptuous of the need for reform. Industry and government are equally responsible. It should never have been allowed to have developed. It has been a gradual process, starting with “Quality Assurance”, introduced in the 90s. It did nothing for the quality of building. It created the concept that everything was a tin of baked beans and if you ticked the boxes, all would be good. The truth is:

“We lost the plot. The only way to get a building built properly, is to have the right person, in the right place, at the right time”. Quote from P Thompson, Arup Circa 1995

• The Solution

In order to rectify the mess created in the last 30 years, it must be understood that the following is required:

1. A steering committee of hand-picked individuals who will act in the common good, devoid of partisan interest. They must set up the framework for and appoint a chairman to each of the Building Governance Bodies (C1-C15) to set the rules for each Discipline. DICA……a working system built around the Lambert Report of 2015 and the MDC of Engineers Australia report of 2013.

2. The Chairman for each of those fifteen Disciplines to bring together a body of persons respected in that Discipline to set mandatory rules for design, inspection and certification.

3. Revise the current system of building control in New South Wales (and Australia in due course) to be built around this key issue. DICA.

• The Trades

I would like to see each Building Governance Body to include representation of the “Trades” for that Discipline. The current industry does not respect “the Trades”. Years ago, with the Building Services Corporation, we had “building supervisor licences” as well as building licences. We need to put respect back into the Trades and in that way get young back people back into the TAFE Colleges which lie empty through Sydney.

• The Training of Young Architects and Young Engineers

The current system of professional education in the area of building controls and disciplines is disrespectful to young people entering the industry. I would like to see each Building Governance Body be given the power to influence curriculum content in the Universities together with post-graduate training in the industry. The professional institutions did this for 200 years. We need to re-create the same sense of purpose and idealism through a re-vitalised and thoroughly reformed building industry. There are still some of us who remember how things should be done.