Australia: NSW construction industry — an expert perspective on building defects (part 1 of 6)

Last Updated: 7 June 2019
Article by Helen Kowal

Interview with Peter Karsai - Cladding specialist

Over the coming weeks, I will be releasing a six part article series. The articles will document my discussions with building consultants who are in the know when it comes to the current state of the NSW construction industry and the high percentage of properties which are found to contain building defects arising from original construction works.

These experts will give their perspective on the current situation, the failings, the positives and their views as to what can be done to implement change and help builders, developers and consumers alike.

Presently, in place is the National Construction Code (NCC), implemented with a goal of achieving a 'nationally consistent, minimum necessary standard of relevant safety (including structural safety and safety from fire), health, amenity and sustainability objectives efficiently'.

There is apparent work to be done to achieve the goals of the NCC.

Peter Karsai

What is your area of expertise?

Cladding specialist (developed from a structural consultancy background).

How long have you been involved in the construction industry?

Since the early 1980's.

For what length of time have you been providing expert witness reports in building defect claims?

For over 20 years.

With the NCC in place, why do you think there is still a high rate of defective work arising out of residential construction in NSW?

The NCC appears to be out of sync with modern building practices and competencies, and as a result the NCC often omits the checks required to guard against well-known weaknesses in the construction industry.

Put simply, the structure of the NCC does not appear to be focussed on achieving the delivery of successful building projects. These shortcomings lead to confusion amongst industry players, which in turn often results in people not knowing what to do or how to do it.

To understand these apparent weaknesses in the NCC's structure, one needs to consider the basic procurement strategies that are used in construction.

Traditionally, a prescriptive approach formed the basis of all construction projects, in which the client's consultants defined what materials were to be used, how they were to be assembled, and how the consultant would verify that both the materials and assembly were correct. This prescriptive approach was mirrored in the previous building code (which was known as 'Ordinance 70').

As new materials and construction techniques became available, the prescriptive approach was found to be too restrictive and unable to adapt to the growing complexity of modern construction. This led to evolution of Ordinance 70 into a performance based building code (the BCA, now known as the NCC).

However, the performance based structure of the NCC does not mirror the approach taken by the building industry to performance based procurement (commonly known as the 'Design and Construct' process). Under a Design & Construct process the client's consultants defined the performance requirements and the minimum requirements that the contractor needed to achieve, together with the verification checks that both of these requirements had been met.

The underlying premise of this approach is that the contractor undertakes the detailed design, and the fundamental prerequisite of this approach is that the contractor is capable of undertaking the design.

In essence, performance based procurement will struggle to deliver successful outcomes if the contractor does not know what he is doing (no surprises here).

The NCC adopts a different approach which, whilst stating that it is performance based, does not stipulate much in the way of minimum requirements, and contains ambiguous and sometimes confusing requirements for verification.

In addition, the NCC contains an alternative demonstration of compliance known as the 'Deemed to Satisfy' approach. Earlier versions of the NCC inferred that adoption of the Deemed to Satisfy requirements would be accepted as a discharge of the performance obligations. However, the current NCC now appears to infer that regardless of the adoption of a Deemed to Satisfy approach, the performance requirements still need to be met (which raises the question of what is the point in having Deemed to Satisfy requirements?).

Lastly, the NCC appears to promote alternatives to the verification of its requirements by design professionals (via the acceptance of test reports, certificates of conformity, certificates from 'appropriately qualified persons', and 'any other form of documentary evidence'). In effect, it appears that all of the NCC's requirements can be fulfilled in the absence of any design professionals.

What are some examples of the confusion arising out of the current system?

An example of the confusion presented by the NCC is its requirements for weatherproofing. The performance requirement is straightforward (habitable structures need to be weatherproof), the minimum requirements are unstated (how long should the weatherproofing design perform, 6 minutes, 6 hours, 6 months, 6 years or 60 years), and the verification requirements can be as low as a certification by an 'appropriately qualified person' (without any clear definition of what this means).

But, should the construction team seek to adopt a Deemed to Satisfy approach, then the NCC leaves them adrift (there are no Deemed to Satisfy solutions offered by the NCC for commercial buildings).

Perhaps the most unsettling aspect about the NCC's approach is that it assumes that the industry knows how to weatherproof modern buildings (i.e. that the industry knows what it is doing), and so there is no necessity to require that a designer be engaged (to work out a project specific holistic weatherproofing design that will meet the performance requirements).

This approach is repeated for condensation issues and combustible cladding issues.

In your view, what are the shortcomings?

To say that parts of the industry are in a mess at the moment, would be an understatement (particularly with respect to weatherproofing, condensation, and combustible cladding issues).

However, the majority of our problem projects were designed, constructed and certified in accordance with the regulatory regime defined by the NCC.

I suspect that the shortcomings of this regulatory regime were, for many years, overlooked by the industry players on the basis that "as long as our buildings are safe, we can live with it". However, we are now experiencing the types of structural failures that previously were only seen in news reports from third world countries.

In my experience we are not only seeing poorer performance in current building projects (compared to 30 years ago), but the rate of defective work appears to be increasing.

What, in your opinion, can be done to improve the increasing numbers of defects arising out of construction work in the residential sector?

There appears to be concern within the regulatory authorities about putting an additional cost burden on the industry to get things right first time, which is beneficial for the developer (who pays for the project once), but often quite a burden on the individual owners (who pay once to purchase, and then again to repair).

One good thing is that the recent spate of cladding fires have thrown the industry into such a state that there is already evidence of a big shakeup of the industry, with a number of Australian State building authorities seeming to have abandoned waiting for a revision of NCC, as demonstrated by the introduction of minimum requirements for cladding materials, and the minimum requirements for engineering competence (registration of building professionals). In effect, this shift has been already in play for a number of years (with the minimum requirements set by the Home Building Acts in various Australian States, and the registration of engineers in Victoria and Queensland), and today being extended to plug what appear to be new gaps in the NCC.

The very fact that the State authorities are rushing to increase their own building requirements suggests that the NCC is getting to the stage where it is at risk of being considered as 'fundamentally broken' and irrelevant.

What is the current state of play with cladding?

An example of the current state of play (or disarray) is the controversy over combustible cladding.

Concerns regarding 'cladding' requirements in Australia have been around for a long time and have not just arisen. 20 years ago the Australian Building Codes Board was the principal financial contributor to a report prepared for work commissioned by the Fire Code Reform Centre Limited.

The 'Branz Report FCR 1 Fire Performance of Exterior Claddings' was released in April 2000 and the preface for this report was noted as 'This is a report on an investigation of fire performance and test methods for regulating the fire safety performance of exterior claddings in Australia'. The upshot of this report was that 'the existing controls are in some cases not sufficiently specific' and that 'requirements in the Deemed to Satisfy parts of the BCA relating to the use of combustible claddings and their evaluation for contribution to surface spread of flame would benefit from revision'.

Perhaps with foresight as to the property damage suffered as a result of cladding fires in recent times, the Australian Building Codes Board may have been more pro-active in implementing suggested revisions of the NCC regarding cladding. This implementation is now occurring, but the delay means that we now have over 15 years of recent building construction to audit and rectify (often at considerable cost to individual apartment owners).

Any positives?

On the positive side, in my experience, most builders genuinely would prefer to just get it right the first time. Builders really just need the regulatory framework to facilitate that, and if this was put in place then the rate of defects would significantly reduce.

When defects are apparent, how creative can you be in coming up with a reasonable alternative solution to rectifying a defect without ripping everything apart and starting again?

My experience has been that the secret to the successful delivery of a new project rests in the quality of the design and the quality of the procurement strategy. The quality of the construction is obviously also important. However, the checks/verification of the construction quality are set by the design and procurement strategy.

In effect, successful construction projects do not happen by accident, they happen because they are "designed" to be successful.

In a similar manner, the secret to a successful rectification project is also driven by good design and good procurement. Only a design process can identify 'outside the square' and viable 'alternative solutions'.

The difficulty that the industry faces is the ongoing worship of the mantra that successful projects will be delivered by the securing of "warranties" and "Codemark" compliance certificates, and that these documents eliminate the need for a design.

Warranties are very useful things to have - once a dispute is in play! However, a warranty will not avoid a dispute (only good design and procurement will do that).

By example, the most powerful warranties available are those provided in the NSW Home Building Act, and yet residential construction features highly in construction defect disputes and litigation.

Out of interest, what is the worst or most unusual defect you have seen in your time reporting as an expert on building defects?

The worst would be a large multi-story commercial office building recently constructed in Canberra.

The modern curtain wall facade leaked in places, but, following an investigation it was identified that the water ingress was the least of the owner's concerns.

It was found that the entire facade had been constructed and installed without any structural engineering input, whatsoever. The cladding subcontractor had apparently adopted the schematic design shown on the architect's drawings - literally!

Shortly after our assessment (and peer review by another expert cladding consultant, as surely this situation could not be true, not in the Capital City of a first world country like Australia) the building was wrapped in structural netting to prevent the facade from falling off before the facade could be dismantled and structurally strengthened.

Interestingly, the building was fully compliant with the requirements of the NCC, and was duly issued its occupation certificate (in spite of the structural adequacy of the facade, or lack thereof-it appeared that an 'appropriately qualified person' without any engineering qualifications certified that it was all good).

For further information please contact:

Partner, Helen Kowal
Phone: +61 2 9777 8321

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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