“They are in a very difficult position because, on the one hand, they have been given a responsibility to protect the public interest—that is, the regulatory—and, on the other hand, they have been given a commercial relationship with the client,” noted Australian Building Codes Board general manager Neil Savery before the Senate Inquiry into Non-Conforming Building Products.

The comments reflect on one of the numerous challenges which face the private certification industry in Australia.

The ability of private individuals and enterprises to certify the approval and completion of buildings was instituted throughout Australia in the 1990s as part of a broader agenda of economic competitiveness. Its aims were to generate a more responsive building certification service at a more competitive cost and to promote greater access to appropriately skilled surveyors for those wishing to innovate and capitalise on the performance based nature of the National Construction Code.

Despite the efforts of many diligent practitioners, however, the model has faced challenges such as downward pressure on fees, perceptions about conflict of interest, inconsistent regulation across jurisdictions and, more recently, burgeoning premiums and difficulty in obtaining professional indemnity insurance without exclusions.

Many of these problems have been exacerbated by the controversy surrounding flammable cladding.

Several commentators are calling for change. For years, construction lawyer Kim Lovegrove has talked of quotes for surveyor fees below levels which are needed to avoid compromising the duty of care involved, a lack of auditing of registered surveyors, pressure to sanction performance solutions and cases of some certifiers being too close to their clients.

Changes he has sought include a ‘floor’ on fees, mandatory audits, mandatory continuing professional development, subjecting the approval of performance solutions to peer review, greater oversight power (similar to that in place in New South Wales) and a grading system which regulates the level of work which a certifier can perform (again similar to NSW).

Lovegrove is not alone. Last year, the Australian Institute of Building Surveyors released 23-point plan for broader reform of building regulation. Amongst its recommendations, AIBS would like to see a mandatory auditing scheme, an onsite accountability scheme, a national accreditation and licensing scheme across a broad range of building practitioners, mandatory insurance for a range of building practitioners, a national product certification scheme and mandatory on-site inspection powers.

Subjecting surveyor work to audit, AIBS said, would help to address fee cannibalisation by making certifiers accountable for their work, the AIBS argues. Spreading accountability and the need for insurance throughout the building chain, meanwhile, would promote more holistic responsibility throughout the sector and help to address a current situation where surveyors are subject to a disproportionate share of accountability when things go wrong.

Nationally, reform of some description may be around the corner. Early this year, the final report of a review into compliance and enforcement conducted by Professor Peter Shergold AC and Bronwyn Weir is expected to be handed to the Building Ministers Forum (BMF). Building certification is expected to be a substantial focus of this.

Within the profession, frustration surrounds a lack of consistency in regulation across states and territories. For example:

  • In several states, private surveyors can manage the entire certification process with minimal if any involvement from a local government authority. In South Australia, Western Australia and Tasmania, however, private surveyors must provide documentation to councils in order to obtain building permits and final certification at the end of building work.
  • In New South Wales, inspections are mandated at either three or seven specified stages depending on building class, whilst in Victoria, inspections are mandatory following the stages of foundation and footings, steel reinforcement, framing and completion. By contrast, when it comes to mandatory inspections in South Australia, Engineers Australia National Manager of Policy and Research Jonathan Russell says that ‘as far as we can tell, there are effectively none.’ In Western Australia, Russell says, ‘they are voluntary inspections.’
  • In NSW or Victoria, surveyors cannot be appointed by the builder. This is to avoid a conflict of interest associated with the surveyor being appointed by the builder on whose work they are signing off. In South Australia, however, a builder can appoint a private certifier themselves (with written consent from the owners).

Russell hopes these issues will be addressed in the upcoming Shergold and Weir report.

“We think that national consistency in the compliance and enforcement system (of building control) is one of the primarily issues to be managed by the BMF,” Russell said.

“At the moment, when we look at the different regimes around the country, you go from a place like New South Wales which appears to have quite a lot of mandatory inspection points to a place like South Australia where as far as we can tell there are none.

“We really encourage the BMF to take this opportunity with the Shergold Weir report and look at the evidence that they have gathered to actually work together as a COAG forum to make the processes around the country more streamlined.”

David Blackett, director of Sydney-based Blackett Maguire + Goldsmith, agrees. Indeed, he says, much commentary in respect of private certification attempts to reflect upon the topic holistically yet actually fails to account for the differences in systems across states.

In particular, Blackett says the regime in NSW (where private certifiers are public officials under the Independent Commission Against Corruption Act and public authorities under the Ombudsman’s Act and are thus subject to the requirements of these Acts) is more stringent compared with elsewhere.

“Most states and territories now have a form of private certification in place,” he said. “One of the biggest frustrations is that virtually all of the states and territories have different systems in place. There is no uniform system across the board.

“What is deemed to be an actual or perceived conflict of interest in New South Wales is readily acceptable in Queensland or Victoria where the boundaries of perceived conflict are more flexible.”

Another issue is conflict of interest or perceived conflict of interest. This can arise where surveyors are appointed by builders rather than owners and thus have an incentive to remain on good terms with the builders or where the surveyor has worked as part of the project team. Especially where surveyors depend on a small number of builders for a large volume of their work, there is a perception that surveyors may avoid jeopardising these relationships.

Blackett says New South Wales has addressed this sensibly. First, the law prohibits surveyors being appointed by builders and requires that they be appointed instead by landholders. Second, to prevent builders or others gaining leverage over the surveyor to approve occupancy certificates by refusing to pay them until the certificate is forwarded, the law in NSW requires certifiers to be paid up front.

Another issue is fee cannibalisation or a ‘race to the bottom’ in terms of fees. On this score, Blackett says that whilst most surveyors appreciate what is required to discharge their duties, a small number engage in a low cost strategy which potentially sees them cut corners.

“There are a number of certifiers and firms that don’t seem to have an appreciation for the level of responsibility, liability and accountability that goes with the profession,” Blackett said.

“They don’t have the skill or expertise to run a structured business in a way that competitively tenders for these projects.”

According to Blackett, a further challenge revolves around maintaining the integrity and credibility of the certification profession in the face of constant negative perceptions and negative media commentary. The private certification industry, he said, faces a constant battle in terms of being depicted as an industry which is influenced by the hand which pays them.

Indeed, he says many of these stories are inaccurate.

“We frequently see incidents happen in buildings, whether it’s a fire in a building, a fire separation or an incidence of non-compliance in a building,” Blackett says.

“Quite frequently and quite often, these problems occur in buildings which have been certified by councils. But the immediate perception is that it is a private certified building. Suddenly the article turns into an attack on the private certification industry.

“The biggest frustration is that a lot of these perceptions are based on non-factual situations. Basically, the homework hasn’t been done by parties issuing the articles.”

Beyond that, surveyors are facing a growing crisis in professional indemnity insurance. Speaking again of New South Wales, Craig Hardy, president of the Association of Accredited Certifiers (AAC) says insurers have either left the market or scaled back their exposure especially following concerns over flammable cladding.

In addition to premium hikes, this is leading to insurers demanding exclusion clauses especially in respect of cladding. Since surveyors are required to hold unconditional insurance under the Environmental Planning and Assessment Act, this is placing them in a bind.

Numbers tell the story. In a survey of its members, AAC found that one in five had been offered insurance products which did not comply with the Act, nine in 10 are concerned about their ability to obtain compliant insurance going forward and two in three were considering leaving the profession.

One surveyor reported asking 13 underwriters for PI cover. Of these, 10 refused outright to quote and two more quoted but had exclusions which meant they did not comply with legislative requirements. The remaining insurer offered compliant coverage but at a price which was higher than their previous premiums to the tune of 90 per cent.

Hardy says accountability is required for all within the building sector.

On a related note, he said role of the surveyor needs to be put in perspective. Building surveyors, he said, are not architects or engineers. Nor are they builders who are on site all of the time. Whereas building a house might take on average 680 hours, the surveyor through all stages of inspection would likely be on site for around six of these. Thus he says surveyors can be expected to check critical issues under a general audit approach but cannot be expected to check everything.

Unless things change, he says surveyors will leave the industry and Australia will suffer from a hollowing out skilled people available to check buildings.

“You are not going to have qualified people looking at buildings,” Hardy said. “They are walking away. The big worry is that houses are going to be built and you will have no one looking at anything.”

Blackett, meanwhile, would like greater efforts to promote awareness about what surveyors do and the precise nature of their role. He says the role of surveyors is not well understood within the general community.

He would also like a tightening of accreditation processes. Whilst the Building Professionals Board imposes several requirements for various levels of accreditation, a number of certifiers are practicing with unrestricted levels of accreditation who perhaps should not hold unrestricted accreditation. Tightening these processes, he said, would help to further raise standards within the profession.

Blackett says the importance of building surveyors must not be underestimated.

“In the absence of the private certification industry, the whole development and construction industry will wobble at the knees,” he said. “It will not be sustainable.

“I think its in everyone’s interest to make this industry work. Everyone’s open to good ideas.

“The scrutiny and perception of the industry I think needs to slow down to give the industry an opportunity to show the benefits that it is offering.”