Apartment Defects Continue to Disappoint 9

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Monday, October 26th, 2015
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A recent study has identified the number of building defects being reported by apartment building owners.

UNSW research of 1,550 strata owners showed that 72 per cent had building defects in their properties. This statistic jumped to 85 per cent for apartments that had been constructed after the year 2000. The study captured building completion dates ranging back to 1920 through to 2011.

The data is both alarming and incongruous. Used as a direct metric of the quality of residential apartment construction within NSW, it is simply appalling. You could reasonably expect that ‘older’ apartment building stock would have a greater number of building defects by comparison with newer buildings. Such latent defects could be the anticipated consequence of the building life cycle factors and the associated repair and maintenance regimes carried out to structure, fabric and services.

You would also be entitled to expect that the building fabric and components of apartments constructed in more recent times should theoretically be in a far superior condition and therefore subject to fewer reported defects. But this is clearly not the case. So what reasons are there that might help explain this apparent anomaly?

Without going into the detail of the extensive studies, which are worth examining despite their primary focus being on strata management, there are three specific factors that require examination. They include the professional skill of the builders responsible for construction of the apartment buildings, the new technologies that have introduced higher complexity in building construction over time, and the implementation of an extensive regulatory regime in terms of building performance and compliance outcomes.

Within the parameters of the data mentioned above, pre-2000 built apartments might be categorised as ‘older’ even though we probably all feel like the Sydney 2000 Olympics wasn’t that long ago. More importantly, the majority of suburban ‘apartment’ buildings dating from the 1920s through to the 1990s consisted primarily of small to medium sized blocks of ‘flats’ or ‘home units’ colloquially referred to a ‘two and three-storey walk-ups’. Their construction is typically of in-situ concrete, masonry brick and pitched tiled roofing. Characteristically, they utilised simple, basic construction techniques and standard materials that were replicated in scope from works performed in normal ‘cottage’ construction projects of that time.

It is interesting to note that there were no statutory requirements for builder licensing in NSW until the introduction in 1972 of The Building Licensing Act. Under normal circumstances however, many carpenter and bricklayer tradespersons who managed to accumulate ‘successful experience’ within the house construction sector might reasonably have been expected to become proficient apartment builders using the same simple construction techniques, basic building materials and limited design parameters.

Toward the end of the twentieth century, apartment buildings, particularly those constructed within cities and large suburban precincts, had become much larger and far more complex in their design and construction. The ‘old’ model of low-rise, simply constructed apartment buildings largely based on ‘domestic’ design principles gave way to medium to high-rise apartment complexes often integrated with other mixed use developments at street level. The rapid complexity in the construction of many apartment buildings would be further amplified with the necessary increase in building services technologies, composite construction materials and building techniques and the need for stricter adherence to compliance standards.

Put simply, the apartment construction game had rapidly moved on. And yet the educational and qualification standards required for a NSW builder licence remains firmly trapped in the distant past. It completely fails to recognise the massive differentiation in the demands between what ‘home building’ may comprise when comparing the organisational, supervision and oversight skills required for a single-storey, brick veneer home sitting on a raft slab to that of a 40-floor building with 160 apartments constructed above a podium of shops, offices and four levels of basement garages. A single, one-size-fits-all approach is viewed by the NSW government with the continued issuance of a single class of builder licence that relates only to home building – whatever that might mean.

While the person who finishes a Certificate 3 level trade qualification in carpentry or bricklaying and Certificate 4 qualification in building might be sufficiently trained to take on the role of a ‘licensed builder’ for a home extension or new freestanding home, the level of formal training and educational assessment that they have received will be entirely insufficient to satisfactorily manage far more complex and challenging building construction projects.

The end result is, of course, what is reflected by the survey. More complex buildings are being built by persons without the requisite higher levels of professional training. This will inevitably result in more errors, mistakes, omissions and subsequently, building defects arising as part of the poorly supervised and managed projects.

Progressive states have worked this out. Incremental licensing levels, such as those used in Queensland and Western Australia. There, the prospective builder of low to medium-rise three-storey residential apartments is required to undertake a Diploma of Building and Construction (Building) or, in the case of Queensland, an Advanced Diploma of Building and Construction (Management) in order to obtain their ‘Open Class’ licence to construct the modern apartment complexes of today and the future. But not here in the ‘premier’ state of NSW. It seems we are stuck in 1972!

So what is the Baird government’s solution to our avalanche of shabbily constructed residential apartment buildings? Well, at least they know the problem exists. Recently, the Minister for Innovation and Better Regulation, Victor Dominello, proposed a two per cent defects bond on new apartment blocks as a security fund to ensure building defects are fixed. He is quoted as stating “A defect bond will provide a two per cent security to enable most of those defects to be cured.”

Note that he said “most.” That’s hardly an iron clad assurance from the Minister, is it? Caveat emptor, as they say. Don’t bother going into the detail of why the main form of home building security – the lamentable ‘Home Warranty Insurance Scheme’ now re-branded as the ‘Home Building Compensation Fund’ – doesn’t work easily and never applied anyway to apartment buildings over three storeys in height. That’s a disgraceful story of bad governance in its own right, but to be fair, every other state and territory got it wrong too.

When I was studying Building and Construction Management all those years ago and then tried to implement what I learned from a very good TAFE and university education within the construction project and asset management sectors, one thing always held true. Developing proactive rather than reactive strategies will make you a better project manager and will invariably produce a better outcome.

If NSW wants better buildings to be constructed, forget about tinkering with retrospective security bonds to try to ‘fix’ all the errors. That’s a surrender strategy that will fail miserably. Re-engineering built-in mistakes should always be viewed as the last resort. A sensible, proactive approach would be firstly to make sure that we have better, well trained and appropriately qualified builders in the first place. The NSW government can take this step by simply emulating the progressive builder licensing regimes from those other states which have already adopted this strategic management approach.

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Discussions
9
  1. Barry

    Timely report – the problems of shoddy building practices – in particular the use of cheap, low-quality imports, as well as a shortage of adequately qualified professionals are already widely known within the strata sector.

  2. David Chandler

    Good article Brett.

  3. Peter

    A timely article & an indictment on governments Federal & State, who have allowed a system of self regulation to flourish without adequate oversight or licensing.

  4. Chris Arnold

    Brett has hit the nail on the head, almost all multi res now are fitted out with very poor quality imported product ,which the big builders are seemingly starting to finally realize is false economy due to high maintenance issues ,time will tell.

  5. Howard Ryan

    As a building expert and Lic Builder since 1980, it is my belief that certain types of individuals borrow a Blds Lic, build a complex then go into receivership. This is actually proven over time. This is mostly due to complexes over 3 levels not needing warranty insurances. Strata insolvency is ripe and to an unsuspecting unit buyer they will fall into the trap of having to pay a "Strata Levy Fee" later on to assist in the payments of the complexes defects rectification.

    • Brett Bates

      Congratulations on your long standing career Howard. The one thing I am certain of is that for you, like me and others, to get your builder licence back then you had to jump through some pretty significant hoops. If you studied for the Clerk of Works or Building Certificate from our TAFE system back in the 1980's and 1990's you had to have some capability in learning and applying structural concepts, estimating, planning and managing building construction. The curriculum was extensive and the major examinations all externally set and marked state wide. If you got your qualification, you had well and truely learnt and earned them! Now despite our buildings becoming far more complex, the rigorous training and education to obtain a building licence in NSW has evaporated. High publicity celebratory 'performers' paid by several private training providers are openly touting to anyone who has ever picked up a hammer to get prior skills recognition and fast track their way to a building qualification (and then licence) in just a few weeks. It is a disgrace that the NSW government should be ashamed of as building consumers will suffer as a result. Bruce Baird should intervene RIGHT NOW and stop OFT issuing any building licences to those who cannot pass an external examination to weed out the frauds.

  6. Branko Mladichek

    Great article Brett, but only if building defects were due to human error or qualification/licensing limitations. They are not. There is a bigger Elephant in the room called Greed and it feeds on cost stripping. What's that? Its systematic cost reduction by any means possible including unconscionable conduct.
    It starts by getting building designed but not retaining architects for construction stage thereby denying site management access to detailing and design support, leaving decisions in the hands of subbies that have been screwed on price.(isn't that why buildings leak?) Naturally they will do what's easier for them. Then it follows on with systematic omission and substitution for cost reduction where original intent is barely recognised. It finishes with building without QA why? because implementing and maintaining QA costs money.
    I have seen a development (40 units)where cost stripping netted $1.6M over and beyond normal profit and it had nothing to do with builder/developer skills and everything to do with greed.
    1 Noncompliance is supposed to be picked up by statutory control but isn't.
    2 Nonconformance is not picked up by anyone.
    Buyer beware- get professional building inspection before settlement.

  7. Phil Dwyer

    Brett, we concur with your writings and congratulate you on a very good article. You mention the NSW Government is considering a 2% levey on apartment buildings to protect some consumers!!!

    This was to take place back in 2002 when the Warranty Insurance Scheme came into effect under point 4 of the 10 point plan but was never implemented due to big business lobbying.

    Just as well as the Last Resort Home Builders Warranty scheme has been and remains a disaster for the consumers who suffer defects.

    As "Choice" have stated the Last Resort Warranty Insurance scheme are junk policies making a mockery of consumer protection.

    Enough said, very good article Brett.

    • Brett Bates

      Thank you Phil. I very much value your comments here and always enjoy reading your articles. I agree. The insurance systems for residential building have been basically junk systems designed to make money for the insurers.