Report revealed big problems in building and construction industry

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It’s hard not to conclude the cracks at Sydney’s Opal Tower were bound to happen.

When they first appeared on Christmas Eve, the problems within the building and construction industry were already well known.

In fact almost a year before, a report looking at the industry had already identified concerning gaps in how properties were being constructed, particularly high-rises.

Commissioned by the Building Ministers’ Forum, a group consisting of federal, state and territory ministers, the Shergold and Weir report was released on 22 February 2018 and contained 24 recommendations.

Released in the wake of the 2017 Grenfell Tower fire in the UK that caused 72 deaths, and a similar fire at the Lacrosse building in Melbourne’s Docklands in November 2014, it was already clear there was a problem.

Related: Opal Tower: Builder defends gutting Sydney units

Related: Opal Tower: Tower built on ‘bargain basement prices’

Related: Opal Tower: Opal Tower evacuees plan to fight back

Worryingly, the report noted some of the problems identified in the UK review after the Grenfell fire were “strikingly similar” to those in the Australian building and construction industry.

The Shergold and Weir report Building Confidence was completed by Professor Peter Shergold, a former secretary of the Department of Prime Minister and Cabinet and now chancellor of Western Sydney University and lawyer Bronwyn Weir, a former member of Victoria’s Building Regulations Advisory Committee.

It found reports of “serious compliance failures in recently constructed buildings” including non-compliant cladding, water issues leading to mould, structurally unsound roof construction and problems with fire safety.

It also noted that until recently there had been almost no effective regulatory oversight of the commercial building industry by regulators.

“Those involved in high-rise construction have been left largely to their own devices,” the report stated.

“Where there has been supervision, this has generally been by private building surveyors (also known as certifiers) whom critics argue are not independent from builders and/or designers.”

The report suggested that compliance and enforcement systems were not good enough to stop problems from happening and they “need to change as a matter of priority”.

In the past 30 years there has been a significant increase in the construction of multi-storey buildings and numbers have almost tripled in less than a decade, according to the Australian Bureau of Statistics.

Yet laws to protect those who have bought these apartments have been slow to keep up.

Australia has a National Construction Code (NCC) that contains the technical requirements and standards for construction of buildings and plumbing work but this is implemented differently in each state.

It’s been suggested that large numbers of those working in the industry either lack competence, do not understand the code or have not had proper training on how to implement it, the report noted.

“We have heard that there is a high incidence of building products in the market that are not compliant with the standards set out in the NCC, resulting in inferior and sometimes dangerous products being used in the construction of buildings,” the report said.

“We have also been told about products being used in a non‑compliant manner which can result in unacceptable risks to safety.”

Related: Flawed process that approved Opal Tower

Queensland Housing Minister Mick de Brenni told news.com.au maintaining confidence in the building industry, which is worth $46 billion a year to the state, was paramount in the wake of concerns raised by the Opal development.

He said while questions have been raised about the builder and certifier in the Opal case, the whole system needed attention.

“The building and construction industry in Australia has seen decades of deregulation, largely in the pursuit of productivity.

“That has created a race to the bottom and as a result, confidence in the building integrity system has been undermined.”

Here are some of the problems indentified in the Shergold and Weir report.

‘DESIGN AND CONSTRUCT’ CONTRACTS

Recently the developer of the Opal Tower, Ecove Group, revealed it had a “design and construct” contract with the builder Icon.

These types of contracts have become popular but mean many aspects of the design change after the initial planning approval is given.

Once developers get the go-ahead for their early designs, they hand the project over to builders to deliver a completed building at an agreed price. Builders will refine the design and work to find efficiencies and cost savings.

This process means the building that’s actually delivered — the “as-built” building — can be very different to the one approved in the initial plans.

“Changes to approved design occur frequently, at the discretion of the builder, project manager and/or contractors and without independent certification,” the report said.

Crucially specialists, like fire safety engineers, can be hired to work out design solutions before details plans are finalised. Yet once materials like cladding have been selected, they are not consulted about the impact.

This was one issue identified in the selection of combustible cladding.

The current planning system struggles to oversee this type of ‘design and construct’ approach and some states and territories don’t require building certifiers to approve changes.

The report has recommended design development, variations and product substitutions should be approved by building surveyors/certifiers before work is done.

POOR DOCUMENTATION

Very few states require that designers document how the proposed building will comply with the code. Poor quality documentation can lead to builders improvising or making decisions that do not comply and allow builders to cut costs without the owners being aware of it.

When changes are made, not all of these are documented and not all surveyors/certifiers insist on amended plans being supplied.

In some states, as-built plans are not required to be lodged and even if they are, the documentation can be very poor, making it harder to identify who is at fault when something goes wrong.

Once a commercial building is completed a full set of final documents relevant for the ongoing management of the building is not usually collated and given to the owner or purchasers.

This makes it difficult for owners to verify how decisions were made and to adequately ensure that safety systems are properly maintained over the life of the building.

It is frequently difficult to access relevant documents about the construction of a building, especially when it has been sold.

The report suggests information about the construction of buildings should be lodged as they happen and preferably stored in a digital form.

PRIVATE CERTIFIERS

There’s been a shift towards private certification across Australia since 1993 but their regulatory oversight has been patchy.

Without reform, the report noted there would be “significant danger” the privatised building approvals process would lead to an ongoing decline in compliance standards.

At the time the report was released, five states and territories didn’t have a code of conduct

for building surveyors/certifiers.

The fact that only two states/territories had suspended or cancelled the registration of a small number of certifiers showed oversight had been limited and ineffective.

The report found there was a significant potential conflict of interest in the private certifier model because the designer or builder hires the certifier to sign off on the building.

Certifiers are sometimes reluctant to use their enforcement powers against their ‘clients’ partly because of the commercial relationship.

Certifiers have also complained about a lack of support from other authorities when they do try to enforce building codes or when they referred problems to state, territory or local government. Some said they were ignored, or the found their own conduct criticised or complained about.

The report suggested all parties should collaborate and share information, and a new or existing body be established to monitor builders.

It said surveyors/certifier should also be given powers to issue directions to fix or to stop work.

On complex projects, it suggested designers consult a surveyor/certifier to help them during the planning stages and a separate, independent certifier be hired to issue the approval.

Private certifiers are not experts in all aspects of building design and they often rely on engineers or others to design parts of the development.

Despite this, with the exception of one state, these designs don’t have to be looked over by an independent person so in many cases they aren’t.

The report has recommended a third party review be done by either a panel of experts, an independent expert or is appointed from a list of approved reviewers.

LACK OF INSPECTIONS

With the amount of complex work that goes into constructing a building, it’s almost unbelievable that some states and territories do not require any type of inspection during construction for some types of buildings.

Very few require that inspectors be registered and the report noted reports of some inspections being carried out by builders or unqualified council officers, who took photos of works and sent them to the building certifier for review.

For some commercial buildings, it’s up to the certifier to decide what inspections are appropriate. This makes it difficult for regulators to know what oversight is happening and whether it’s enough.

Until recently no state or territory required a registered fire engineer to inspect building work to ensure fire engineering design had been constructed as intended.

“Controls required over the design, installation and certification of fire safety systems in commercial buildings are not sufficiently strict,” the report stated.

The report said more inspections were necessary but there may not be enough qualified people to do them.

RECOMMENDATIONS:

The report recommended the changes be implemented over a three year period.

The Building Ministers’ Forum at its last meeting on August 10, 2018 directed development of a paper that sets out a plan for reform. These recommendations will be considered at the next meeting in February. Recommendations include:

• A nationally consistent approach to the registration of building practitioners, so that builders couldn’t take on work they didn’t have the skills for.

• Better collaboration between private building surveyors, also known as certifiers, and state and local government to audit building work and take action if there were defects.

• Fire authorities should be involved with giving feedback on designs from an early stage.

• There should be a code of conduct for private building surveyors/certifiers and their role should be made clear.

• There should be better documentation from designers showing buildings will comply with national standards and these plans should be reviewed by others.

• On-site inspections should be required for all building works.

• A comprehensive digital building manual should be created for commercial buildings so that later owners have copies of as-built construction documents, fire safety details and maintenance requirements.

• The report did not make a specific recommendation about cladding audits but said a position should be reached about some type of compulsory product certification system for high-risk building products.

STATE RESPONSES

In the wake of the Opal Tower’s Christmas Eve evacuation, NSW Better Regulation Minister Matt Kean announced a crackdown on “cowboy” certifiers.

Under the new strategy, 30 per cent of the industry will be audited every year and corrupt certifiers or ones who are negligently signing off on unsafe buildings will be kicked out of the industry.

Any certifiers who have breached the code of conduct in the previous 12 months will also be unable to work on new strata developments.

A name and shame register will also be made public so people can check their building’s certifier and the quality of their work.

It comes after the NSW Government also passed laws in October to close loopholes in the system, including making it illegal for a certifier to have a conflict of interest in a project. Those who accept bribes or issue false or misleading certificates face up to two years in jail or a $1.1 million fine.

New enforcement powers were given to the Secretary of the Department of Finance to suspend or cancel a certifier’s registration and take immediate disciplinary action. Fines were introduced for those who don’t have adequate insurance, of up to $110,000 for body corporates and $33,000 for others.

The NSW Government also passed a law in December 2017 to protect individuals against unsafe building products, which the Commissioner for Fair Trading used to ban unsafe aluminium cladding.

It also introduced a Building Defects Bond, which will obligate developers to put aside 2 per cent of the value of the development to cover any potential defects.

“We now have the toughest audit program in the industry’s history. We are also considering further changes to clean up the sector,” Mr Kean told news.com.au.

“The NSW government has also helped to protect residents with tough statutory warranties that give owners up to six and a half years to claim for major building defects.”

In Victoria, the government has banned dangerous cladding materials.

The Government has asked the VBA to increase its inspection regime so that it inspects at least 10 per cent of building work every year.

In Queensland, the Palaszczuk Government established the Queensland Building Plan (QBP) in 2017 to reform the building and construction industry.

In 2019, reforms to strengthen the independence of certifiers will be introduced.

“We will enhance the regulatory oversight for certifiers including making improvements to the disciplinary framework, we will end the practice of builders being able to shop around during a project to get the answers that suit them and ensure that the sector has a highly trained and skilled workforce,” Queensland Housing Minister Mick de Brenni told news.com.au.

The Queensland Building and Construction Commission was recently given stronger powers to investigate and take disciplinary action against building licensees.

These chain of responsibility laws hold everyone in the supply chain responsible — from product manufacturers, distributers, installers and suppliers — for making sure all building products used on Queensland’s buildings are safe and fit for purpose.

Mr de Brenni said the QBP reforms put Queensland in a strong position following the findings of the Shergold and Weir report.

“Queensland had adopted all the recommendations in the report, noting that in most cases our standards were already at or above those proposed in the report, and where there are gaps, these are identified and will be rectified through the implementation of the QBP in 2019.”

Continue the conversation @charischang2 | charis.chang@news.com.au



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