The Hierarchy of a Development 2

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Wednesday, March 9th, 2016
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All developments evolve initially through the developer’s desire to turn a profit, and this desire remains the motivating factor throughout the process.

Firstly, the developer purchases either land or an existing building and this becomes the project. In some instances, the initial cost of the land may determine the conduct throughout the building process and eventually the bottom line of profit for the developer.

It should be noted that the role of the developer is crucial to the well-being of the building industry and, while most do respect the industry and the roles of the practitioners, there are some who focus on the bottom line only to the detriment of the overall building industry.

For a compliant project to be delivered, there are many professions involved and the role of these practitioners is paramount to the end result.

It starts with the developer’s purchase of a project followed by:

  • Municipal planners
  • Town planners
  • Architects/draftsman engineers
  • Building surveyor
  • Fire engineers
  • Traffic engineers
  • Builders
  • Plumbers
  • Electricians

Depending on the magnitude of the project, there will be others involved but those listed typically approximate the basis of a compliant project.

Municipal and or town planners will establish the project to be built under the guidelines of the municipal authority and the building code to either approve or reject the project.

Architects/draftsman engineers will document the project and draw all professionals together to ensure compliance dependent on the class of building.

The building surveyor will assess the project based on the documentation and provide a checklist, usually to the architect/draftsman that will detail any shortcomings that need to be addressed and provided to achieve a building permit.

We should be mindful that throughout this whole process, the developer or builder/developer is conscious of the overall cost of the project as he or she may have paid an excess when he or she purchased and will take every opportunity to reduce those costs, which sometimes can be at the expense of compliance or even the addition of an apartment without advising the overarching authority because once sold it no longer becomes his issue.

By this time, builders would have been asked to tender on the project. This tender process can be quite exhaustive and expensive for builders, and they are expected to absorb all of these costs without any recourse for recovery irrespective of whether or not they are the winning tenderer.

The builder is referred to as the head contractor and as such is responsible for the whole building process and the conduct of all trades, including their work. Even if said work falls short of acceptable standards and/or compliance, the head contractor remains the responsible entity at law.

This is the main issue for all of us, as the current onus has far too much focus on the last person in the chain. The Victorian Building Authority (VBA) has shown its ruthlessness with the defenseless practitioner, and they are clearly an easy target. Insurance companies are dragging many practitioners through the courts, as they are an easier and cheaper target.

In the case of commercial buildings and the large construction firms, they enjoy a life free from litigation risk due to the prohibitive legal costs in bringing them to account. In the case of commercial work, the only warranty insurance on buildings – including high-rise towers – is provided by the plumber, who must carry the mandatory six-year Warranty Insurance.

We have seen claims for this insurance when the root cause has been peripheral to plumbing faults.

Many warranty claims have shown that in fact the builder has complied and followed all the design and planning, but the builder has still been responsible at law for any non-compliance and needs to prove his innocence via the courts at an enormous cost.

Many of the players further up the chain have come under investigation, but it is rare for any consequences to eventuate. Recent high-profile building faults in the media clearly show multiple check measures have failed for any of these instances to occur.

Council’s responsibilities in regulating asset protection plans for neighboring properties during construction stages have been found wanting time and time again.

If building surveyors in projects that have major issues had been more diligent, most disasters would never have occurred.

The sooner responsibilities and roles are put back in their correct place, the sooner our industry will move forward, providing everyone with a robust building industry.

The system only went out of control after deregulation in 1997. It never has worked, and the introduction of the Last Resort Builders Warranty Insurance in July 2002 only escalated the issues and provided a veil of secrecy to those who chose to exploit by maladministration, collusion, and corruption as exposed by the Victorian Ombudsman in 2013. Any forecast savings to the community have been only shifted to the courts and brought nothing but heartache and hopelessness to many within our community.

Philosophically, things will only change when a tipping point is reached due to public outcry or a tragedy. In the meantime, our regulators continue to play the role of pen-pushing public servants, and masters of spin and public relations.

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2
  1. John Peters

    Well written
    So simple but made so complex by our current regulators who are undermining a once proud industry. Bring back 1997!

  2. Jesse

    Phil,
    Great article, however you have left out the Land Surveyor as part of your process. The existing conditions survey can have huge impacts on the potential for the development to be successful.