Why We Need a Floor on Building Surveying Fees 2

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Monday, October 21st, 2013
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As the class of professionals responsible for certifying that a building is complete and fit for occupation and (if not done by a Principal Certifying Authority) issuing building permits or construction certificates, building surveyors are an integral part of building control in Australia and their importance cannot be understated.

Toward this end, an increasing number of stories about surveyors undercutting or submitting unreasonably low quotes in order to secure work are extremely concerning. Notwithstanding the overall levels of professionalism on the part of the vast majority of individual surveyors, such tendencies inevitably create downward pressure on fees and lead to corners being cut.

At the same time, risks faced by surveyors, who have become attractive targets in litigation, have intensified – a situation not helped by legislative amendments introduced a few years ago which removed a requirement for builders to provide insurance cover for residential apartments exceeding three floors but did not apply to building surveyors.

All of this creates a problem. In order to effectively deliver on their function, individual surveyors need to be able to earn an adequate financial reward which is commensurate with the value of service provided and expertise required, the cost of providing the service and the risks they assume in terms of litigation.

Especially at a time when these risks have become greater, a continual race to the bottom is unsustainable and will inevitably impact upon the quality of service provided, the number of building defects which occur and the end safety and quality of finished buildings.

The solution is obvious: mandatory minimum fees set at a level which ensures prices charged cannot fall to the level which would allow this to occur.

Granted, some no doubt feel surveyor fees should be subject to market forces without special treatment. This, however, is wrong-headed.

For one thing, surveyors are a special case in that the functions they perform are largely statutory and regulatory in nature, and indeed were once the domain of regulatory authorities. Even now, legislation such as the NSW ICAC Act, for example, defines an accredited certifier as being a public official of sorts.

Moreover, any corner cutting increases risks associated with building defects, which not only affects confidence levels regarding the final as-built product but creates more litigation and drives up insurance premiums – vice versa in the situation in which a price floor allows ample scope for the work to be performed adequately and diligently.

In the longer term, undercutting on the part of surveyors hurts everyone involved. There is a simple solution. It is time Australia acted.

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2
  1. Dean Wilson

    Totally agree with you Kim. I know we have discussed this previously. I note that the AIBS is reluctant to publish recommended fees due to the perceived ” big stick” of the ACCC but it is possible for State Governments to put a detailed case together for the legislation of minimum fees. Provided the reasoning is complete, sound and doesn’t discriminate against the client an agreement could be reached with the ACCC which would be a big win for the industry. The other way to help in this area would be to remove the ability for the builder to appoint the building surveyor. The builders seem to be the ones pressuring prices down, yet continue to charge their clients an excessive fee for the organizing of the building permit. If something isn’t put in place soon private certification may disappear in the not too distant future and there could be many flow in effects to property owners….and builders.

  2. Laurie Farrugia

    Fee undercutting is a real issue. Most practicing building surveyors/certifiers would agree with minimum regulated fee scales. New players come into the market, how do they start to build the business? They quite often undercut fees of nearby competitors to poach work. This can create a viscious cycle of fee undercutting which in the end can lead to lowering of oversight with the need to pump out approvals to make ends meet.