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.