Non-conformance: An Industrial Disease 6

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Wednesday, March 9th, 2016
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Product non-conformance is a first-world industrial disease.

It is a widespread issue in the built environment, poses real and immediate risks to body and property and degrades the value of assets.

The problem is complex however a significant gap exists between current regulations and effective policing and between manufactured product and construction activity. The global marketplace and digital supply chains are challenging our traditional regulatory framework. Dangerous, or at best, poor quality goods enter the supply chain and are then used by unsuspecting consumers.

There is an Australian Senate inquiry into non-conforming product, which is due to report on the 16th March. Over 70 submissions and a number of public hearings paint a grim picture of the implementation of existing regulation.

When I look around, every thing I see is a manufactured product. These products are parts of the built environment that is the roads and transport systems and office towers and churches, houses, schools and hospitals we use everyday. This is where we live and work, all built from manufactured products.  In Australia almost 90% of us live in urban areas. That figure is over 80% in North America.

The regulatory framework for buildings is a fragmented network of three levels of government, domestic and international standards, codes of practice, third party certifications and industry associations, represented widely across both manufacturing and construction industries, all contributing to make up the framework that the construction industry operates under. All of these bodies have a role and some level of responsibility in addressing the complicated problem of discrepant product, which does not meet intended purpose or is put to use incorrectly.

Duplication and gaps occur with so many organisations and interested stakeholders; this creates confusion in the system, and so deprives public trust.

Those businesses and organisations wishing to conform and deliver good product are penalised through costs of compliance, testing and competing in an uneven market place. This in turn leads to job losses, loss of skills and undermining of responsible business practice.

The consumer, the public, all of us assumes that the regulatory systems work and we rely upon them for our wellbeing.

As consumers, we are ultimately the ones who pay. We don’t know what is in these products and we are currently powerless to find out or to influence supply.

We place trust in our governments and trust in the businesses that manufacture and build.

Product non-conformance is a symptom of failure of governance and a failure of regulation to be enforced in the market and it weakness urban systems, which are critical to sustainable development. We can expect it to become more prevalent in the Australian and North American built environments as global trade accelerates through traditional channels, free trade agreements and digitally enhanced supply chains.

Something different needs to be done.

Legislation and regulation adapt to change slowly, and are modelled on the presumption that they will be enforced. We assume that the market will be responsive to the law and a level of self-regulation.

As competition grows more intense it becomes the inclination to push boundaries and cut costs and supply product that may not have the designed properties or quality that is specified and expected by the customer.

We need to feel safe in our homes and the buildings and infrastructure that support us. Our investments must last and retain value and the risk minimised to body and asset. A repeat of the Infinity cable saga, where tens of thousands of homes and residents are at risk of electrical and fire harm. We need not see high-rise fires like Lacrosse where external cladding fuelled the fire and owners were ordered to foot the bill of tens of thousands of dollars each through no fault of their own.

Additional regulation may serve only to add more complexity, more administrative burden and more confusion.
A remedy to this industrial disease calls loudly for clarity in product disclosure.

Technology and systems that facilitate the use of existing regulations and restores trust, safety and security in the market, should be explored.

Can market mechanisms replace enforcement regimes to bridge gaps between product and construct and use?

Can we innovate systems that supplement the existing tools of control and provide agility and balance in this changing market place?

Will governments have the courage and foresight in policy and practice to create the opportunity for suppliers to compete on transparent and level footings?

Will commercial, public and private consumers demand and respond to greater clarity in selection and choice in procurement as has recently been implemented through government supported food labelling, energy supply and financial services?

By providing firm boundaries and benchmarks of minimum disclosure, can governments encourage market responses that are faster, more agile and efficient than drafting barriers to technology or adding regulatory burden?

Raising public awareness and increasing scrutiny of product claims, may provide a more efficient barrier to the delivery of products that are not fit for purpose. If consumers are empowered, the market for non-conforming product will falter.

It is part of the new economy paradigm where a carpet weaver in Africa can deliver into a lounge room in Toronto or Melbourne or Boston and bypass regulatory control. This is a feature of digitised globalised supply chains, supply-side efficiency and consumer choice.

It is at this interface of manufactured product entering the places we live and work, the interface of international supply and local law, of traditional command and control regulation and the new economy where innovation, new business models and enlightened consumers disrupt what does not serve. Where regulation and codes of practice fail, technology has a role in linking, cross-referencing and closing the opportunity for discrepant product entering the market and so offering clarity to the consumer.

Addressing non-conformance and supporting good design will retain skills, jobs and raise productivity along the way.

Government is best positioned to lead responsible procurement as it spends upward of 20% of GDP in Australia and North America.  It is hoped the Australian government recommendations later this month seek innovative solutions that address past discrepancies, restore trust and encourage disclosure.

Our buildings, transport systems and infrastructure need to outlast us.  We need secure investments with distant horizons that other generations can use and enjoy. And we need to minimise the immediate risks to people and the environment.

Perhaps we do not need more bandages and bitter pills to cure this industrial disease.

We need light and clear air.

 

 

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6
  1. Anne Paten

    Peter, you are correct in calling this a disease. The manufacture and supply are a problem, and as we found at the recent Senate Inquiry, whether at the point of production, import or supply, none of the Government agencies saw a role for them! Border Protection’s response – “not something we could manage” and the ACCC’s response – “it’s an issue for the states!” The 'someone else's responsibility' reigns supreme, with the only agency to speak out, to sound the alarm and be critical of the non-existent 'regulation' was the MFB. As for installation, these products are cheaper, cost the bottom line and it seems the only consideration.
    The signs and symptoms have been demonstrably clear for almost two decades. All in positions of power have chosen to ignore and thus fuelled the spread of the disease. We know that the issue of sub-standard, non-conforming products was raised in a widely read report titled 'National Review of Home Building' by Percy Allan in 2002. But Governments and their 'official advisors' have elected to dismiss the issue and the consequential harm to all Australians. Worst of all, there is little sign of any change in Government policy because the pollies and public officials were long ago captured by the vested interests.
    As you rightly point out, this is something that concerns us all – our buildings and bodies are at risk. As for buildings that will last and maintain their value, this also not factored into the equation. Reform from the top down would provide the solution, but instead the top is the biggest part of the problem. The only way forward is for the public to become properly informed and force change from the bottom up. However, this is a big ask against the all powerful.

    • Peter

      Hi Anne, Thanks for your comment and support.
      Thanks also for your contribution to the Senate inquiry.
      What an important part of our open democracy.
      The report of inquiry is due out this week and it will be interesting to read the findings and the recommendations.
      Critically, responsibility in addressing NCP must be shared if to be sustainable and effective.
      Empowering the consumer may be the answer.

  2. Mark Whitby

    Good article Peter. I see the problem as being one of negligence as well… the human factor.

    Someone oversaw what was specified or used. And someone specified the non-conforming materials or changed what was specified to an inferior (usually cheaper) non-conforming product.

    Penalties need to reflect the seriousness of the perpetrations or the system is a joke.

    Negligence needs to be policed and the current penalty points system removed. 6 strikes and you're out for a few months needs to be far more strict. VCAT gagged order misdemeanour findings need to be passed to the VBA for action. It seems to me that our Common Law is a large part of the problem.

  3. Les Williams

    The paramount reason for building codes and regulations is public safety. Non compliance with codes and regulations undermines the public safety Every consumer has a rightful expectation that any property they purchase is built in accordance with the building codes — that is what we have them for and what we have regulators for. Non compliance here has provided financial windfalls to some at the expense of many and all undermines consumer sovereignty . Look for cosy associations between the government advisors and the regulators. Look for industry groups seeking preferential legislative treatment and getting it.

  4. Bruce Christopher

    Peter, agreeing with all you say and adding that I expect it continue difficult to engage the bulk of the public enough to accelerate a solution. Examples of potential harm from non-conforming electrical cable and high rise cladding have caused a problem to a relatively small number of people compared with the whole population. Incidents are sporadic and a forgotten flash in the news as it "happened to someone else". Unfortunately it is not till reaching serious harm or death, such as the insulation debacle, that greater interest endures. This is why formal and effective compliance tests are required, along with having penalties for breaches which are mandatory and harsh enough as a real deterrent. The process does not need to be complex or time consuming and will certainly pay dividends compared with the increasing risk of harm and financial remedies.

    I wrote a few articles in the past to highlight an often forgotten issue. It was aimed at the professional ethics of engineers through the various organisations of the supply chain which should form a solid unified agreement in becoming more assertive and collectively solving this problem. The logic applies across other professionals with codes of ethics such as architects, accountants and lawyers to underpin a commercial check-point. I believe higher expectations to speak up for compliance and safety by those who should hold their professional reputation higher than any one project or employer would make a notable difference.

  5. Branko Mladichek

    Great article Peter. it is difficult not to agree with what you say but in one respect. Non-conformance is not a disease, it's a symptom of a disease. The disease is greed and there is no cure, it can only be managed with a balanced system of punishment.
    What you are seeing as nonconformance is really production system failure from lack of quality control at critical points.
    Why is there no quality control? Because it costs money to implement and maintain and it is far too easy to divert the money into directors bonuses, screw trades on site and leave everything to them on site to sort out. So they do what's easiest for them, never mind about compliance, if the builder does not care why should they?
    I speak from experience having been at the coal face of building defects for over a decade and having to deal with disreputable things done by reputable builders on a weekly basis and it's all done in the name of greed.
    I have just done an assessment on a new occupied apartment building where all fire doors are undersized, are not fitted with smoke seals as specified and all fire collars to floor and wall penetrations are missing. How did that get occupancy certificate? Builder is not stupid, just greedy. Even a most rudimentary critical point check would have revealed problems early on but guess what, developers did not want to pay. Heaven forbids if people and children die in a fire.
    Our domestic building industry is a giant shipyard and we are building Collins class submarines and fast sinking into third world status. We are building national housing stock without quality control. You figure.
    If we are going to be serious about fixing our failed building control we need to send worst offenders to jail.