This conversation is directed to developers and builders.
There are so many signals available to help point to a project’s conduct and likely non-compliance with the construction contract and the Building Code of Australia. And don’t imagine, that there aren’t some pretty poor examples amongst players who you would have thought that 21st Century amenities might be a reasonable expectation for the on-site construction workforce by 2020? Observable site safety and the the amount of mixed rubbish being sent away are also indicators in my view.
To finish my point on site amenities and safety. I believe that it is time for the industry to reimagine many of the facilities in use including site offices. The days of the old portaloo must be numbered. Most I have observed are filthy, when serviced they are not much better, they lack recognition of a workforce where women play an increasing role and they stink.
So back to Developers and Builders now we are 2 months into the NSW RAB Act era
Almost without exception when I accompany our Occupation Certificate Audit teams onto projects we are met with enthusiasm for the new reform legislation in NSW. The centrepiece is the Design and Building Practitioner’s Act which will take effect on the 1st of July 2021. When I ask who has read it, the responses are fewer than 20-percent. There is a growing awareness of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act, but not a lot of knowledge of the potential implications for developers and builders. Especially in how the Act could play out in the pre and post Occupation Certificate periods.
This is despite many claiming to have sat in on the frequent industry briefings I have given. The selection of projects for Occupation Certificate Audits has identified many developers who adopt a low visibility on their projects. They leave that running to contractors who have been engaged to undertake the completion of design and construction. They also imagine that the certifiers and other consultants they have appointed, such as project managers and quantity surveyors are adequately representing their interests. When these players are selected using the lowest cost and mostly questionably capable parties the results should not shock them. You get what you pay for, no more. These developers should be more hands on.
The role of Developers has changed in NSW. They must now engage qualified designers and contractors to undertake their work properly, compliantly and declare so. The confused role of Certifiers has also been clarified. Past customs and practices will not be accepted. Developers on projects I have attended during the early OC Audit process are seemingly shocked at what we are uncovering. They plead ignorance and struggle to come to terms with the fact that their procurement and progress payment practices leave them exposed.
Developers do the business with apartment purchasers. No-one else in the supply chain
Developers create projects. Thats a good thing. But this is not a license to engage designers, builders, certifiers and others in the supply chain to deliver anything other than a compliant fit for purpose building that reflects what was sold to customers – by them. No-one else. In NSW developers are unable to require their purchasers to settle on an apartment until they have achieved an Occupation Certificate. There have been poor examples of this process in the past. As the new legislation increasingly takes effect, unacceptable construction outcomes are being challenged. The powers of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act enablers this. My last post covered this subject.
We are now informally testing the market for a 10-year warranty insurance to cover multi-unit residential buildings. Here developers are the centrepiece.
The models being explored would not be mandated by legislation albeit there may be legislated recognition of those who could offer such and insurance product versus those who are unable. The goal would be to bring this product to market in collaboration with first mover developers who would see this benefit giving them better standing with consumers, regulators and financiers. The goal is to design a product where a minimum viable start up representation of 40 to 60 percent of developers may participate with this growing to 80 percent in a few years. Of course, there must be fair market entry pathways for good new players. On the other hand, participation in such products should not be possible for untrusted players. Here developers will need to anticipate what this may involve.
The early conversations we have had so far, are positive. We have sought to show some of those players who may not have had a glowing past, how they may transform and join in the journey. Most we have spoken with, appreciate that the next 2 to 3 years in NSW will be vital to how their development business may be directed to becoming a trusted player. One able to qualify for insurer acceptance for the 10-year insurance product we have in mind. These developers acknowledge that they will need to recalibrate their business models and develop more skills to specify, procure and govern the projects they will make from here on.
Of course these conversations need to be conducted firmly and respectfully. They need to be practical and accomodate those committed to transformation and that each journey may be different. We are also acknowledging that in the right hands and with transparent governance protocols, that the use of Special Purpose Vehicles and Design and Construct contracts are legitimate methods of organising and delivering projects. The Office of the NSW Building Commissioner is up for this. However there will be a few ground rules. As a first cut;
- It would be unlikely that players (including developers, builders and certifiers) who have left a trail of un-rectified buildings with serious defects could aspire to a trusted rating
- It would be more likely that a player who has entered into a formal agreement to rectify serious defects in past buildings could aspire to a trusted rating as long as this was no longer their operational norm. We will be firm on this and the bar may raise.
These conversations may initially be confronting for developers. In the end working through this will be good for them and most importantly the customers who buy apartments from them. Developers will need to accept single point accountability for their projects. How they engage designers and contractors under the Design and Building Practitioners Act will help them navigate the once mirky waters of accountability. It will no longer be possible to blame those they have engaged and paid for performances that should have been properly delivered. Ignorance will not be a defence, just as one defence made to me this week that sought to allocate some blame to their financier’s quantity surveyor for allowing him to draw development progress claims without doing more checking. Certainly financiers can do more as I have presented in the financier briefing referred to above. But blame shift, no.
So why is the site dunny relevant for developers?
I have suggested to consumers that they could undertake a little due diligence of the developers that they are considering buying apartments from. They could ask to see prior developments, be shown over them and to ask their owners a few questions. There are plenty of advisers who could assist purchasers who are making these decisions, just as there are those who might do some due diligence on behalf of developers before they engage designers, builders and certifiers. For those developers considering self-performing the construction of their projects, there are many opportunities to visit the sites of best practice players and to benchmark if they are good enough. The dunny test is another.
This article was originally published by NSW Building Commissioner David Chandler on his LinkedIn page.