RICS 2020 Building Confidence Conference held in Sydney, 23rd November was another 2020 occasion - an empty function centre and everyone on line. Murray Coleman OAM - Chairman of the RICS Oceania World Regional Board had the challenge of chairing this conference. It was a mighty effort. I presented a keynote.
The key themes I explored were
- the growing interest amongst developers, builders, certifiers, financiers and insurers in tackling the being rated as a trustworthy player challenge and,
- the changing nature of regulators and assurance professionals in a digitally enabled, global market place
Both themes were directed to how rebuilding consumer confidence in our industry should open up amazing new customer facing value propositions, new career trajectories and rewards. The writing is increasingly on the wall, for those who still do not get the changes on foot in the NSW construction industry. Being the best we can be, is becoming the new game in town. This transformation will take to 2022 to bed down, but the movement is on.
Financiers and insurers please note the article box inserted below.
An edited extract from my keynote address – ‘Trustworthy buildings are a right’
My journey as NSW Building Commissioner started just over a year ago. An early public role was to speak at the inaugural 2019 RICS Building Confidence conference. So, it was fitting that I report back on progress since. At the start of the journey, the focus was dealing with the riskiest players and the buildings with serious defects that they were making. Some pushed back on the need for the establishment of the Office of Building Commissioner (OBC as it is known) and my appointment. Some argued that had it not been for Mascot and Opal Towers, that there would be no need for the Construct NSW strategy.
Those that pushed back claimed that the NSW government’s reform strategy would drive up the cost of construction. This may be the case for the riskiest, who were in effect cost shifting and attempting to pass on the cost of their flawed buildings to purchasers at a future date. The better players re-joined that their costs would not go up, as the cost of delivering compliant construction was already in their pricing matrix. This is now being evidenced.
Others added that the costs of projects may go down when the insurance industry returns to a less risky construction landscape. Some pointed to the benefits of a more level playing field, when trustworthy developers compete to buy sites against the riskier players who tended to over bid on fair land value with a predetermined strategy to strip the cost of over bidding for sites, out of their construction costs. Who knows?
Construct NSW transforming the Building Regulator’s future
A year on, there should be no doubt that the government’s reforms were needed as the recently initiated OC Audits reveal on a daily basis. Minister for Better Regulation and Innovation, Kevin Anderson spoke before me of the leadership role his government had committed to over the last year via new reform legislation and the Construct NSW strategy.
The Minister spoke of the journey that the regulator is making towards becoming a future fit player with multi-jurisdiction project sourcing and compliance governance capability, enabled by powerful data driven analytics tools. He pointed to what the regulator’s transformation would look like and how more public facing accountability will evolve as we move to 2022. The Design and Building Practitioner’s Act is the next big step. The Construct NSW 6-Pillar strategy is the centrepiece.
Incentivising the Construction industry to value Trustworthy
I pointed to what a transformed industry may look like. How it may be measured and how this must deliver a better deal for the customers of NSW buildings. The measures we adopt must be authentic, they must convince the public that this one time reset of our industry has a durable momentum that will underpin its future. Otherwise, the pain will be to no avail.
We are now canvassing industry about what they want it to look like towards the backend of 2022. There would be little value in having a corner full of crumpled risky players and nothing else. We have an obligation to deliver more. We have commenced the conversations to define a trustworthy building. In the end that’s what consumers want. And then, that narrative must put some hard definitions on how trusted players are distinguished from the untrusted. We are now working with industry to build out this narrative.
While doing this, we are always mindful that the role of small and medium sized enterprises play. They are our industry’s heartbeat. We are not looking to build difficult barriers to entry for tomorrow’s trusted entrants, or to lock down an unchallenged cohort of big players who could hold the industry back over time. That was the reasoning for our recently completed digital capability survey that sought to benchmark where the state’s designer and constructor capabilities lay. Pointless to put in front of them unreasonable requirements.
This survey was the first of its type and it has provided many interesting insights into how we can work with industry to lift its digital capabilities. This report will be released shortly.
Reshaping the Finance and Insurance landscape
We have set an aspiration that all purchasers of multi-unit residential buildings should be able to purchase apartments that offer a 10-year underwritten warranty that covers serious defects that may arise in the critical elements of their strata building’s common property. We are looking to deliver a value proposition that such defects should be remedied without resort to costly legal proceedings and the compromises which follow. This is the customer journey that we feel should now play 20-years into the 21st century. We feel it is time that unsophisticated customers can be confident to purchase sophisticated buildings, to invest their savings and assure the wellbeing of their families and friends with confidence.
So do a growing group of good developers. They are over the vexed process of defects claims and untangling these through the courts. This is an unproductive impediment to rebuilding confidence, making risky players accountable and rewarding the good players.
Over the last year we have shifted the OBC narrative away from just the risky players. They are easy enough to identify. Early identification of their presence and the serious defects they have or are causing will always be our main focus. But there must be a bigger picture.
We therefore need to give attention to the most trustworthy. Our view is that a one size fits all regulatory posture, is an antiquated approach. Better we feel that the trusted players should enjoy privileges or earned autonomy. And that the risky or untrusted should be burdened commensurate with their riskiness. To achieve this, trusted player credentials must be defined and measured. There should be a transparent line of sight to the criteria involved.
This criterion can then set the benchmark for those who want to go on this journey, even for those who want to leave a less glorious past behind. Raising the bar is in the end what reforming our industry is about. It is not just about the bad guys. Unless there is a worthy place to be as an alternate to unworthy, the industry will quickly revert to its past practices.
The importance of the built world ‘assurer’
This conference offered an opportunity to broaden out the conversation to a very important cohort of players who should be at the measuring and assurance front line. Work on this subject has been the reasoning of a community of practice working group hosted by Western Sydney University’s, Centre for Smart Modern Construction over the last year. This group of what I call assurance practitioners are working to define the capabilities and ethical standards that worlds best practice assurers should offer their customers.
I was pleased to acknowledge the leadership that RICS is bringing to the table in this context. RICS have made an impressive commitment to becoming professionally recognised in a Professional Standards Scheme in Australia. They are already delivering their members a more viable professional indemnity insurance future. Others should take note. I know that my views on this subject are often challenging, but they are timely.
Assurer services do not relieve developers, designers, builders and strata owners of the duties of care they have to make or maintain trustworthy buildings.
Challenging the assurer landscape
The Western Sydney University community of practice is throwing up many challenges as the players consider their future roles in projects where the components of financing, insuring and ownership structures these days are drawn from multiple jurisdictions.
They face the same challenges that regulators have in shaping their future functions, to face beyond the single jurisdiction in which they reside. They face the same challenges to embrace powerful new technologies and business processes that they have been sheltered from for far too long. Other 21st century industries have made huge changes to their business models to deliver smarter, faster, cheaper and more assuredly than in the past. Post Covid-19 impacts may accelerate new business models that will further shake the status quo.
As the forces of change take charge, it is becoming clearer to some in the community of assurance practice conversation, that the distinctions between their traditional professional demarcations are blurring. The definition of a modern, trusted, global facing assurer is pointing to the need for more agile and value driven service propositions. This realisation is also asking the current players, which of their capabilities might be better delivered from a shared pool of competencies. There seems little value in duplicating the delivery of these capabilities through traditional learning structures that sustain old service models.
Should this community of assurance practitioners land on a formula that enables new investment in modern core capabilities to be delivered and shared across institutions, then the opportunity will present for exciting new specialist capabilities that could sit behind new compelling, relevant customer facing value driven assurance services.
Our industry is in urgent need of a modern narrative that is just as compelling to its customers as it must be to a future workforce. There is no time to waste on this mission. Every young person who will have a choice to become part of our industry by 2030 is already 10-years old. We must present worthy and rewarding career trajectories to this cohort and most importantly their parents, who may not view us at well, just now.
Aspiring to build trustworthy buildings is a worthy career rationale
The public put their confidence in our industry to deliver a trustworthy built world. Understanding and managing the harms that may impact unsophisticated customers is our challenge. This is our purpose.
The NSW Building regulator is now embracing this conversation in shaping its 2022 business model. We must all own the understanding and aspiration of trustworthy. This aspiration differs to quality. Quality is about the selection of amenity and features. They are consumer choices. Trustworthiness is a consumer right. We are canvassing the following definition of trustworthy. Such a definition could reinforce our future ethical foundations.
How will this inform tomorrow’s Regulator and Industry?
This conversation is now receiving a lot of attention. References are being sought on the many facets of a Construction 4.0 and what next?
Buildings are becoming smarter. They will need to become more resilient and dynamic. They will start to make many decisions for their users. Our covid-19 experiences have seen a shift to non-traditional working. We have seen rapid deployment of healthcare to the home. Prior, we were seeing changes in the way people age in their homes and how people with disabilities can look forward to futures where they live, work and play in mainstream homes where their dignity and their full potential can be embraced. These are amazing times.
Buildings will need to become seriously more environmentally conscious. They will need to have digital sensors that record their carbon impact from making to use and eventually change of purpose. These are all areas where regulators and assurers must be ahead of the game. We need to move away from defending the status quo and how accountabilities can be ring-fenced. Old institutional models will also need to imagine more agile career trajectories to excite and hold new entrants. They must be given sound foundations upon which to build.
I put the following challenges to those who the attended the conference on-line,
· What harms will we all abate between 2023 and 2025
· How will we deal with the residual harms?
· How will we imagine and deal with new harms?
I hope we can report positive progress in all of these areas by the 2021 RICS Building Confidence conference. Hopefully back together so we can engage in these conversations face to face, as we work to create a capable and inspired customer facing modern industry.
David Chandler OAM – NSW Building Commissioner
Stay in contact with the NSW Office of Building Commissioner
This article was originally published on LinkedIn by NSW Building Commissioner David Chandler OAM. Republished with permission