Where to from Opal and Lacrosse? Towards a better assurance system in NSW construction industry - Construction & Planning

Following the recent Opal Tower structural issues, the Lacrosse Tower fire and other cladding and structural-related issues across Australia, there has been a flurry of inquiries commissioned by various State and Territory governments, and responses to these.

Background

The Shergold Weir Building Confidence Report (Report) found that building certifiers are unaware of, or have lack of access to, critical information including changes to approved designs. This is due to the D&C delivery structures used for multi-storey buildings, inaccurate designs, and use of performance-based solutions.

Responses by government

The NSW Government Response to the Report proposes that:

building designers and builders be registered;
building designers be required to declare that buildings have been built according to their plans;
the law be clarified to ensure that there is a statutory duty of care owed to owners and owner corporations by certifiers for residential buildings; and
a Building Commissioner be appointed.

Consultations on the proposed changes will start in spring 2019.

Current regulatory frameworks

At present, owners, owners' corporations and occupiers in NSW are protected by a range of regulatory oversight mechanisms.

In Australia, building work must comply with the National Construction Code (which sets out the minimum level of technical requirements for the design and construction of a building). The requirements can be met using a Deemed-to-Satisfy (DTS) solution or a Performance solution (which is unique for each situation).

The Building and Development Certifiers Act 2018 (NSW) is intended to improve the oversight of building certifiers in NSW. Although this Act has been passed by Parliament, it is yet to commence).

The Work Health and Safety legislation imposes duties on a person conducting a business or undertaking to ensure, amongst other things and so far as reasonably practicable, the health and safety of its workers and a safe working environment.

It also requires people who design plant, substances and structures to ensure, so far as is reasonably practicable, that they are without risks to health and safety. A designer is considered to be a 'person conducting a business or undertaking' if their profession, trade or business involves:

preparing sketches, plans or drawings for a structure, including variations to a plan or changes to a structure; and
making decisions for incorporation into a design that may affect the health or safety of people who construct, use or carry out other activities in relation to the structure.

It is important that corporations be aware of their current legal obligations. This can be supplemented by greater transparency of information to the stakeholders in the design and construction supply chain, and governance of the professionals involved in that supply chain.

For the residential building sector in NSW, there is a range of statutory remedies (including statutory warranties, defects bonds for longer periods, home warranty insurances) available to the occupiers, owners and owners corporations. There is also supply chain-related legislation in the form of the Building Products (Safety) Act 2017 (NSW). (For Queensland, see the Building and Construction Legislation (Non-Conforming Building Products – Chain of Responsibility and Other Matters) Amendment Act 2017 (Qld)).

In the case of work on infrastructure assets – in particular, rail infrastructure – there are well-established regulatory and engineering oversight mechanisms. When constructing over or adjacent to rail infrastructure (such as OSD developments), the parties must comply with the requirements imposed on rail infrastructure, and only Authorised Engineering Organisations (AEOs) may carry out engineering work.

AEOs are required to manage their engineering assurance, which must be supported by systems engineering, configuration and technical data management, and to establish and maintain continuous process and product improvement systems including an ISO 9001-compliant quality management system. Perhaps consideration should be given to prescribing the adoption of this 'systems engineering approach' to safety and assurance in the case of high rise commercial and residential buildings.

Effect on certifiers' legal liability

The proposed extension of statutory duty of care by certifiers to owners and owners’ corporations will add to the available remedies. However, it is also important to consider whether those certifiers are able to meet their legal liabilities.

At a practical commercial level, the professionals generally limit their liabilities under their agreements to a monetary limitation of liability and the limits of their insurance cover. With the proposed introduction of a statutory duty of care on certifiers (and with it, a likely statutory obligation for certifiers to hold a minimum amount of cover), it is likely that the insurance market will reconsider the extent and availability of professional indemnity cover available to those certifiers. An increase in premiums to cover the increased risks exposure is also likely. Any legislative changes should consider the impact of proportionate liability legislation on risk allocation between the parties.

Digital information and BIM

As mentioned earlier, the Report notes that it is difficult for certifiers to keep up to date with changes to building designs, and attributes this to the commonly-used D&C delivery structure. Another issue is the performance-based building compliance code under the National Construction Code. This choice of delivery structure and performance based specifications is quite common, depending on the nature of the project and the appropriate risk management approaches.

To allow better access to, and oversight of, information to enable the appropriate certification, governments could encourage the use of building information modelling (BIM) and other digital technology (such as Blockchain). This would enable the sharing of digital records and information in the overall design and construction supply chain. It would give transparency and increase the parties' accountability by the parties and enable appropriate certification of the work from design through to procurement and construction and defects rectification.

For example, BIM brings together all parties and connects them into a virtual ‘design’ forum to review the simulated structure, share information and raise issues. All the design and construct elements (including civil infrastructure, structural and architectural elements, mechanical and electrical services, data and other communication systems) are integrated into the model along with spatial relationships, quantities survey and operational elements.

In the UK, the government has mandated the use of BIM level 2. There has been good take up of BIM in the private sector and it is becoming the norm. In Australia, there has been much less use of that digital information platform.

The Opal inquiry recommended a digital repository of all certifications available to owners corporations and unit owners over time. If implemented, this would require central administration by Government.

Registration of building professionals?

There has been a push for greater scrutiny and accountability of professionals. The Victorian government proposed the Engineers Registration Bill 2018 (Vic), which lapsed and will need to be reintroduced if it is to progress. The Labour opposition party in NSW has announced that it will introduce an engineering registration scheme to improve project quality. To date, only Queensland has enacted legislation in this area, with the Professional Engineers Act 2002 (Qld).

A key recommendation of the Senate Economics References Committee’s Inquiry into Non-Conforming Building Products, set out in an interim report, is to establish a national licensing scheme, requiring all building practitioners to undertake continuous professional development.

It is important that a structure be put in place to ensure that only qualified and certified professionals be allowed to carry out design-related and certifier duties.

Where to now?

Although the recent inquiries have been limited to the residential building sectors, governments should focus on the overall engineering safety and integrity of infrastructure, including commercial buildings. In NSW there is an increased number of integrated station (or over station) developments, and mixed use developments involving both commercial and residential buildings.

Resolving the concerns around certification will require competence, good governance and assurance – and regular reviews to ensure standards are maintained. This necessitates a combined public and private sector response.

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