A Wake-up Call for Building Consultants 16

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Thursday, January 21st, 2016
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Building consultant opinion report writing on new projects in particular needs a complete overhaul, not just licensing and regulatory control.

The process of building consultant opinion report (pre-purchase or stage-construction) on new homes, units and additions under warranty in Victoria needs a complete overhaul, not just licensing and regulatory control.

In case you’re wondering, I have personally carried out more than 5,000 inspections, with well over 500 of them on new work.

I should point out, that in Victoria at least, building consultants are wrongly labelled building inspectors by the public and virtually everyone associated with the residential building industry, including the building consultants themselves.

Building inspectors (certifiers), in Victoria at least, are actually people who passed a prescribed course on construction techniques and regulations in order to become equipped to carry out certified reports on the various stages of a building under construction (as part of the building permit process). This work is carried out at the request of the relevant building surveyor for the project.

Recently, several commentators have spoken of the sad lack of regulation on opinion report writing. They all concluded that compulsory registration (along with its associated professional indemnity insurance) would make it fairer for the public. I think everyone agrees, but they didn’t say that their upgrading idea would come at a considerable cost to consumers.

The cost of PI insurance to include opinion report writing is between fourfold and tenfold of policies without that inclusion (on a fees earnt basis), to the best of my knowledge.

In Victoria, most building consultants are already registered building practitioners (RBPs). Many, if not most, don’t carry PI insurance for their opinion report writing because it costs much more.

But there is a far larger problem with opinion report writing (at least on new houses, units and additions), that is rarely mentioned. Report writing by building consultants on new homes and additions is failing to find (on average) over 70 per cent of the actual defects in virtually every completed project. Registration and its associated PI insurance are not going to cure this.

How can they find even 50 per cent of the defects when they look at less than 50 per cent of the building due to their disclaimers? And how can they find much more than 50 per cent of what’s left when they have only a half-baked idea of what a defect is?

More than two thirds (17) of the 22 random building consultant defect inspection reports I was asked to assess were done by RBPs, with all but one failing to find the majority of defects in those houses. The one that fared the best found three-quarters of the defects, though those were worth just 54 per cent of the rectification costs. One missed over $150,000 worth, another over $90,000 worth. Registration did not make those RBPs experts.

Good training, experience and considerable knowledge of the basics, together with hard work, minimal disclaimers, caring and an enquiring mind are all equally vital components of a building consultant’s total expertise.

About 75 per cent of 400 completed (builder-built/building inspector-certified) new homes, units and additions that I inspected, were what you would call ‘defect-riddled.’ Many were ‘shockers’ and two of the worst of these were inspected and approved by (still practising) relevant building surveyors!

Also, nearly all of the 400 building inspector certifiers and the 400 builders of those defect-riddled projects are still practising thanks to our Common Law system and associated (owner-accepted) gags (signed to avoid the cost of a VCAT hearing). The authorities have not placed even a handful of these 800 offenders on good-behaviour bonds as would have been right and proper. Was it just the gags, a pro-business system, or something more sinister?

Negating building consultants representing builders or insurers in VCAT have often stated in writing that alleged defects (say at two years old), such as roof tile flexible pointing coats applied well under the required thickness, un-primed external non-durable timberwork and non-existent wall-tile junction joints in bathrooms are not defects, because they have not yet failed. It is the same approach as that of the HGF (the past insurer run by the Victorian Government). This approach denies well over 50 per cent of legitimate defects by ignoring what is very likely to fail prior to reaching a reasonable life expectancy.

Denying is simply done because it is well known that most home owners give up when a VCAT hearing seems inevitable. It’s called ‘corporate reality’ – talk about an unfair system.

It is generally accepted that the typical VCAT scenario is where both sides lose, because neither side had a building consultant who was an expert. This allows the negators and their legal cronies to stand their ground, whereas a capable building consultant would reveal the inadequate knowledge of the negating building consultants and their over-simplified definitions of defect.

If both sides were represented by capable building consultants, firstly they would agree on what defects existed, and secondly there would be no need for a VCAT case other than to resolve the price to rectify the agreed defects in a workmanlike manner in accordance with an agreed scope of works. Resultant savings in VCAT hearings would be enormous, and far greater savings than the proposed repressive changes to the present system that introduce a further level of virtual-adjudicators.

Just once did an opposition consultant agree with my list of defects – all 142 of them – but his scoping was found to be inadequate, resulting in his unfair price. The hearing was over in under a day.

With all this in mind, why has no building authority, no association of builders, no building consultants, architects, building surveyors or lawyers, ever publicly condemned poor quality opinion reports carried out by building consultants on new work when 70 per cent of the defects are missed by most of them?

The silence has been deafening! It warrants another Auditor-General investigation.

When defect reports are commissioned by home owners, building consultants are hired to find all accessible visible defects – simple as that!

So why do building consultants find less than 30 per cent of the defects in new houses and units? The pertinent Codes are partly responsible:

  1. The 2007 version of the Code for Pre-Purchase Inspections – Residential Buildings AS4349-1 has a one-liner definition of defect, plus another five definitions relating to degree or type of defect (appearance, minor, major, serviceability, structural). These are all grossly inadequate for new work at least, by not addressing the implied warranties of reasonable life expectancy, compliance with manufacturer requirements or adequacy of alternative solutions.
  2. This code does not specifically mention poor workmanship, although ‘intended condition’ hints at something of the sort.
  3. This code does not mention the ‘Guide to Standards and Tolerances,’ which spells out some of what are and what are not defects.
  4. The code has an impressive list of exclusion items in Appendix D, including adequacy of insulation, framing and installed roof drainage.

But there are four bigger reasons why most defects are usually not discovered:

  1. The whole industry has been dumbed down by the majority of house project specifications containing no workmanship clauses for years.
  2. The ‘Guide to Standards and Tolerances’ states what are and what are not defects on so many issues that other defects are ignored.
  3. The code AS4349-1 allows too many disclaimers to form part of reports, so that large sections of the building are seldom inspected based on over-the-top interpretations of ‘sufficiently safe and reasonable access.’
  4. Nobody seems to want to know what a defect really is. Consumer Affairs comes closest, but fails to spell it out in detail.

The definition of defect (not registration, not regulation) would cause a return of quality to the residential building industry. And it would reduce the cost of disputes far more than what was tabled in December 2015 whilst at the same time returning fairness to disputes. On behalf of consumers and unfairly charged builders, is this why it has never happened?

Many building consultants may need to start again, because only one of the 50-plus RBP opinion report writers that I’ve had occasion to critique, displayed what I would call ‘expert status.’

Re-education in the following areas is necessary to raise the quality of opinion report writers to expert status rightly expected by the community:

  1. A proper definition of defect (to include reasonable life expectancy, inferior substitutes and compliance with manufacturer requirements),
  2. What constitutes good workmanship, and
  3. Why so many disclaimers are inappropriate.

If building consultants are expected to safeguard quality, then the residential building industry will need to:

  1. Rewrite all three codes for inspection of buildings,
  2. Upgrade building contracts to spell out thoroughly what defect means,
  3. Redefine specification to once again include workmanship clauses (using NATSPEC or MBA as a basis say), to eradicate commonplace defects.

Then we can not only drastically reduce the cost of disputes, we can also stop the current poor quality residential building blight in its tracks and make disputes fair.

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Discussions
16
  1. Charles Litho

    Quality comes at a price.
    Good builders charge more money because they spend more money on building a house.
    Quality outcomes start from the first day of discussions about a project.
    The building industry represents the whole of a society, there is a big difference in skill levels and the highly skilled people charge more money because they do spend more time. I have seen house frames so good in every way I thought it was a sin to cover them with cladding, but the ex-engineer / carpenter took for ever to do the work.
    Roof plumbing that is a work of art I photograph and keep, I thank the plumber and I have at times even hugged them.
    Generally the consumer gets what they pay for; but to improve the situation we need less consultants looking at problems by training the workforce to avoid the problems. We spend too much money paper shuffling in every industry in Australia for very little benefit. We need less people with their hands out for a share of the building budget. Recognising talents and using them to train others is the way to go.
    Our education system has many holes in it; and the building industry is seen as the natural dumping ground for all those that were so bored by school they escaped at the first opportunity. Today there should not be a place for anyone in the industry that does not have high school Mathematics and English passes, plus trade training by permanent Professional Teachers who love what they do. Trade training by temporary teachers who are treated badly in every way does not work. In Australia 60% of the population is effectively illiterate. If some of those people build your house and there are a few problems is it really a surprise. Building today is too complex for simple minds.

    • Mark Whitby

      Some good points (alas) for the longer-term Litho: but not the way to go in the short-term at all in my opinion. There is no need for the trades and building supervision to improve at all when consumers cannot enforce good workmanship anyway… so lowest price will continue to rule the day. In such a climate there is no incentive to do a thorough job… and big business will rule.

      What we need is just a few home owners with horror houses to fight all the way; owners who will not accept the gags that opposition barristers offer to make their cases vanish from public scrutiny.

      And we need those same home owners with their horror houses to acquire the services of real expert building consultants (with a full and proper definition of defect), to totally quash the negators rife in the courts; so that sufficient embarrassment occurs publicly to make proper supervision occur once more… and encourage what you propose to occur.

      There must be naming and shaming it seems to make the problem go away. Otherwise the powers that be will continue to rule a shameful low quality workmanship laden residential building industry.

  2. William Puls

    Once again a call to action over building standards will probably be ignored by those with plenty to gain from leaving the present sloppy system in place. Mark Whitby has shown the steps which are urgently required.

  3. Branko Mladichek

    Great article for discussion Mark
    I have a different perspective on the issues you raise. You complain that AS 4349.1 has too many disclaimers and exclusions but there are very good reasons for that. OH&S is the law and AS4349.1 is not. The law requires employer to provide safe work place (work practices) hence limitation of inspections to safely accessible areas. What would you tell me if I employed your son/grandson and he got killed or injured because I ordered him to access unsafe area? The other exclusions are there because building consultant regardless of expertise is not expert at everything. Therefore other reports as well are recommended. I think that proper and healthy way to view pre purchase reports is that it is risk reduction and not a guarantee. Of course, there is no room for laziness and all safely accessible areas must be inspected.
    Pre purchase report is not suited nor it is designed for new home construction, therefore, your building stage inspection reports should be based on AS4349.0
    As for definition of defect I have never had any problems because I have developed my own laws to test against
    Builder is by law required to execute building works with skill and care in a workmanlike manner, hence:
    1 Subject only to prevention there is no excuse
    2 If it looks wrong it is – it's a defect
    3 Would you expect tradesman ordinarily skilled in his art to do better? If yes its a defect.
    4 Remedy? Demolition and reconstruction

    By the way I am declared mortal enemy of Guide to Standards and Tolerances, not because it's a bad document but because it is misused by builders to justify defective work they would not have in their own home.

    • Mark Whitby

      Hi Branko,

      You obviously talked to someone else in OHS from me … or asked different questions.

      There is a big difference between hard physical work and just looking. And obviously the building consultant must be careful not to go on the roof when it is 60 years old or in high winds or in the rain or just after rain. There is far more risk in your getting your employee to drive his car to the building site, than carefully walking slowly around on and in a cement tiled roof.

      As to your definition of defect, it seems to be lacking in at least the compliance with manufacturer specifications (for instance thickness of very neatly finished final pointing coats on tiled roofs), compliance with the soil report, the aspect of time… as regards inferior alternative solutions and whether something will last a sufficient time as built and therefore be likely to perform. Also VCAT does exist; and they do look at the Guide to Standards and Tolerances as their basis for assessment (a tome which I also do not entirely agree with either and have had the supreme court over-rule on occasion), so ignoring that tome might mislead you client who wishes to take the matter further.

      Finally (just one instance), we may well not be expert in metal roof construction, but anyone who cares to find out can tell if a roof is pitched too low, or flashings are likely to leak, flashings are likely to corrode the roof cladding, gutter clips are spaced too far apart, roof fixings are inadequate and many more aspects. So why is it OK for larger building consultant firms (with employees) not to inspect metal products.

      The idea is to find all of the defects that reasonable access affords. And obviously those carrying out inspections should be fit.

  4. Andrew Tuma

    While a system that provides more protections when buying a kettle for the kitchen than the building that the kitchen is installed within remains these issues will always exist.

    While a system where structural engineers are considered to provide a preferrable opinion as "experianced and qualified" in areas of NCC compliance and qulaity of workmanship over a project manager/building surveyor then the consumer will never be provided with appropreate protections.

    So yes, lets set a broader definition for defects and non-compliances, a minimum standard of skill, experiance and qualification for "building consultants" , a minimum requirement of PI insurancefor these consultants and for goodness sake, make sure they are both registered/licenced and AUDITED to ensure quality and benefit to the consumer.

  5. Gabriel Barnes

    It appears your self proclaimed "Expertise" has you practicing at a level well above all others, that may make you a very rear exception rather than the rule in the "Quality" of Building Consultant/inspector…. Yes you should have PI insurance for opinion writing especially when as you have so eloquently demonstrated in this "Opinion Piece" your willingness to throw self serving unsubstantiated allegations and claims of professional misconduct on an entire profession. Further you article demonstrates a significant lack of understanding of the role of a Statutory Building Surveyor as opposed to the role of a Building Consultant, Project Manager/Supervisor or Clark of Works

    • Mark Whitby

      Alas Gabriel, you seem to have missed the point. The article was not about Building Surveyors at all. But 2 of my sample of 22 building consultants, whose reports I was shown after I inspected those same houses, missed over 90% of the defects in the houses they inspected.

      The whole idea of a pre-purchase inspection on new homes is to discover as many of the defects that are able to reasonably be found. So when you have a half-baked definition of defect which ignores time and therefore performance, reasonable life expectancy plus manufacturer specifications, you run the great risk of only half of the defects being discovered. And when disclaimers stop the building consultant getting on and in the roof, another swag of defects are missed.

      When you raise the bar for new home pre-purchase inspections to a new level, you will obviously raise the expertise of building consultants.

      So the point of what I am saying in this article, is that a proper definition of defect and less disclaimers would raise the expertise of building consultants to the level it should have been 20 years ago, because defect was never properly defined in the legislation, or by the HGF, or by Consumer Affairs… or the Code for Building Inspections.

      Obviously when over $100 000 of defects are found in an inspection, the building supervisor has failed to stop these defects from occurring during construction. I have inspected dozens of such houses in just a 500 sample.

  6. Dr Sharon Harrison

    Minister Wynne’s proposed legislative changes, currently before the Victorian Legislative Assembly, will only add an additional layer to the VCAT lawyers’ picnic. Building consumers will be compelled to engage with a dispute resolution services run by the Victorian Building Authority (VBA). A regulatory authority, which has failed to regulate Victoria’s building industry since its inception. Numerous reports by the Victorian Auditor-General’s Office (2011 and 2015) and the Ombudsman Victoria (2012) have documented the endemic problems at the VBA.
    Building Surveyors are the lynchpin of the inspection system. However, VAGO found that ‘the registration system does not ensure that the only practitioners who are registered are those who are qualified, competent and of good character’. VAGO also found that ‘[Building Surveyors] are over-represented in disciplinary inquiries, registration suspensions and cancellations, and reoffending’. This was certainly the case with the Building Surveyor who signed off on re-stumping work that had not even been inspected at our property. By the time the Building Surveyor faced a Building Practitioners Board (BPB) Inquiry in relation to our site, she was facing her fifth Inquiry. The BPB did not cancel the practitioner’s registration until she faced a sixth Inquiry.
    While I agree that inspections undertaken upon completion of building project are important, as are high standards and clear guidelines with respect to what represents a defect, it is far more important that building work is inspected throughout construction. In our case, the Municipal Building Surveyor’s staff found defective stumps that never would have been identified at a later stage. It is a question of ‘What lies beneath?

    • Mark Whitby

      I totally agree. And trained experienced eyes as supervisors are what will ultimately cure the problems. And the only way I can see it happening is for the words specification and defect to be thoroughly defined, so that the cure to poor quality will begin from within… where it should.

  7. Keith

    The construction industry should be ashamed of the current situation. Poor quality workmanship, a sloppy inspection system and an ineffective dispute resolution service is just not acceptable. We are supposed to be a first world country but we are behaving like a tin pot third world country.

  8. Branko Mladichek

    Perhaps Mark you would like to enlighten us with your definition of defect.

    By the way, no amount of definition will change the fact that some builder just have no quality control and know they will get away with it with impunity.

    So if you are looking as to why building defects occur you are looking in then wrong place

    • Mark Whitby

      Hi Branko, You're right about the "with impunity" bit… aided by barristers who see it as their role as support the negators. As to definition… if you click my photograph you will see that I have written a book about DEFECT.
      I can see you are one of the caring people out there. You'll have to wait for the next exciting episode.

  9. Branko Mladichek

    Building defects are a symptom of a failed production system. Finding more symptoms whilst useful does nothing to cure the system. Can anyone seriously believe that three mandatory inspections in home construction is sufficient?
    We are a first world country building housing stock without a QA system. On top of that what little regulation we have is not enforced. Builders know it and that they will get away with impunity.
    The money that should be spent on training supervisors and maintaining QA is instead pocketed by the directors as bonuses

    • Darren Love

      Dear All,

      I agree with Branko and others in part. The system is a failure in its current format. I also agree that all building consultants should be registered. However with registration comes a process of rectification compliance that the builder must comply with.

      In relation to opinionated reporting, that must stop on new homes. The Act and Contracts are clear that the builder is to build to the legislated framework – BCA/NCC, Australian Standards and the like – which if applied correctly and documented in a manner that points out the noncompliance, then there is no opinion.

      Pre-purchase is mainly opinion and hence not much can be accomplished there in relation to a framework.

      I support change and hope that it is forthcoming as both Branko and I would more that likely agree, some of teh newer building professionals – Self Appointed – have no formal qualifications and are not fit to conduct said inspections.

      Please not that any change must be for the betterment of the process for the consumer. That is who we are all trying to protect in a very hostile environment. Your comment on "iimpunity" sums up the whole of the current system.

      Darren

  10. R. Jones

    The other big problem is the builder can ignore an order from consumer affairs then ignore a vcat. order of payment and the costs to take further action are more than the repairs will be. The only good dept. is the plumbing division of VBC. there man Clint. ( Geelong area ) did a great job. R. Jones.