Will Compliance Pay Off? 1

Friday, March 18th, 2016
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With new home building approval figures showing decline in early 2016, feedback I have received from building supervisors is that the majority of builders around Perth are encountering a slowing-down in construction start-ups.

In reaction to this, many builders will have to adopt a shift toward their processes in addressing the keeping of their market share and profitability.

Last week I encountered these reactions first-hand.

The first inspection I undertook was on behalf of a client building with a standard project builder; let’s call them builder A. Whilst I was explaining to my clients that vanadium staining was not included in the contract documents as being defective, and that most project builders will provide treatment to the staining as part of the defects liability period if the staining has not passed, I was informed by the supervisor that the builder no longer offers this service.

As the inspection continued, I also learned that the supervisor was only able to visit the site one or two times a week due to being ‘spread too thin.’ I was intrigued as to why this was the case, and enquired as to whether he was still feeling these stresses given that construction activity had perceivably slowed in the new year. It appeared the builder’s response to slowing times had been a series of cost-cutting exercises, and the supervisor was also worried about keeping his job.

I bet you can guess the quality of workmanship associated with builder A’s work on that day.

Later that day, I had another practical completion inspection to undertake. This time the client was building with a different builder, competing in the same market as builder A. This builder, who we’ll call builder B, had also recognised a slowing down of sign-ups since the turn of the year. However, his reaction to this was markedly different to that of builder A.

Builder B had decided to promote one of their leading supervisors to become their ‘quality control officer.’ In essence, the quality control officer’s role was that similar to an independent building inspector’s; they were engaged to compile a report at each stage of the building process and ensure the finished product was both compliant and finished to an acceptable level of workmanship. Builder B saw the current slow-down as an opportunity to focus on quality and address many of the items of concern raised by the building commission through recent audits.

You guessed it: builder B’s quality of work was of a much higher level than builder A’s.

I hope more builders have the same attitude as builder B, and that builder B’s approach will reap rewards. Concerns I have in this approach are as follows:

Will the client be able to recognise quality?

This for me is probably the most important point. From a marketing perspective, it is virtually impossible to market yourself as compliant, as quite rightly this is an expectation from a client as opposed to a point of difference. Unfortunately, the reality is that producing a compliant home is a point of difference in our current industry’s state. Compliance can also be difficult to explain and boring from a client’s perspective. From my experience, compliance doesn’t sell.

Can the builder compete on cost?

Quality assurance costs money, as do the additional fittings and fixings that are often omitted by builders looking to cut costs. Is the builder able to justify the additional cost associated with quality when quite often the builder’s sales representative is unable to answer many of the questions associated with compliance?

Can a builder ‘heal from within?’

The approach taken by builder B definitely deserves praise, although it does pose the question, if a better quality of finish was able to be achieved from within the company, then why were these systems not implemented earlier? What’s more, when areas of non-compliance are identified, how influential will the quality control officer be on ensuring that rectification is undertaken?

Will the builder be able to maintain this strategy over the long term?

When construction activity picks up again, our industry is usually flooded with unqualified tradesmen and tighter scheduling. Add to this the inevitable temptation to increase profit margins, and it is worth asking, will the builder be able to stand strong and continue to produce quality when other less reputable builders are realising greater profits with less focus on quality?

Although there are still a few issues that still need addressing, I strongly believe builder B’s adopted approach to the slow-down in construction approvals can produce long-term success. I just hope that the public can also recognise this; I will be keeping my fingers crossed for builder B.

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  1. Brett Bates

    Thanks for your interesting article Lewis. The building construction industry would indeed be far better off and maybe even considered as a 'profession' if there were lots more young people such as yourself entering into it. As far as 'compliance' goes you may have answered your own question with your observation "When construction activity picks up again, our industry is usually flooded with unqualified tradesmen". See that's a huge part of the problem. Compliance from the regulatory authorities who decide on what level of professional training and educational qualifications someone needs to get a builders licence in the first instance. As in every other vocation or profession if you raise the bar you will raise the standards of the outcomes being delivered. Not universally, but a cohesive and strictly adhered to set of national training qualifications would turn out cognitive, highly skilled persons such as 'Builder B' far more frequently than the current mess of state and territory licensing bureaucratic regimes all busy protecting 'their patch.'