Built Environment Economist - Australia and New Zealand - September - November 2021

SEPTEMBER - NOVEMBER 2021

The text pages of this publication have been printed on paper manufactured in Australia and produced from responsibly managed forests.

25 CIRCULAR ECONOMY AND CONSTRUCTION COSTS

31 DATA SCIENCE AND THE QUANTITY SURVEYING PROFESSIONAL

41 NEW ZEALAND WOOD TIMBER DESIGN GUIDES – COSTING TIMBER BUILDINGS

55 SECURITY OF PAYMENT CHANGES: KEEPING UP WITH THE DIFFERENCES

CONTENTS 2 CEO Letter

38 Critical Factors Affecting Cost and Time of Prefabricated

4 The Current State of Play: Australian Construction

41 New Zealand Wood Timber Design Guides – Costing

Industry 7

Construction

Q & A: Minimising Risk and Improving Outcomes

12 Ravenhall Correctional Centre Case Study

Timber Buildings 46 Australian BIM and Digital Engineering Education

18 NZIQS 2021 Conference: Resilience in an Ever-Changing

Position Statement 52 Concurrent Delay and the Prevention Principle

World 22 The Future of Commercial Real Estate Debt Belongs to

55 Security of Payment Changes: Keeping up with the

the Invested

Differences

25 Circular Economy and Construction Costs

58 Expert Determination for Dispute Resolution

31 Data Science and the Quantity Surveying Professional

62 Building Cost Index

34 Four Habits of Highly Effective Estimators About Built Environment Economist is the flagship publication of Australian Institute of Quantity Surveyors (AIQS). Produced quarterly, Built Environment Economist seeks to provide information that is relevant for quantity surveying, cost management and construction professionals.

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ISSN 2652-4023

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 01

CEO LETTER

ADVANCING BUILT ENVIRONMENT COST PROFESSIONALS As we all know, the July through September (and possibly part of October) lockdowns across significant parts of Australia have had a dramatic impact on construction and the broader economy.

That said, I am sure we will all come through this much the wiser.

On a positive note, crises such as this afford us the opportunity to think outside the square and investigate alternative approaches to business, to challenge ourselves with respect to how we could do things differently in whatever will become the new normal. It has also provided a

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big impetus for the use of technology to optimise working from remote locations (outside the office) and conversely made us appreciate the importance of face-toface engagement with other professionals, family, and friends.

CEO LETTER

Over recent months, AIQS has continued to promote the importance of quantity surveying as a profession and has been developing information for members and their clients on a range of topics. Here is a snapshot of some of the activities being undertaken.

• change in contractors’ approach

In July, AIQS lodged a submission to the ‘Commonwealth Parliamentary Inquiry into Procurement Practices for Government-Funded Infrastructure’.

AIQS highlighted that the increase in infrastructure work in Australia over recent years has resulted in a lack of resources, poorly applied lessons learned from previous projects of a similar nature, and a lack of consistent benchmarks to validate the project. The scale, complexity, value of projects, and significant interfaces between contract packages and stakeholders create the need for joint ventures, attracting complications on which systems to use, multiple reviews, how to resource, and the many different management styles among the many variables which add cost and complexity to infrastructure projects.

• industry standards

The common misconception that the traditional approach of transferring the risk costs the client less money is not wellfounded and incorrect. Neither the client nor the contractor during the development of the budget and project bid phase can understand the extent of risk.

AIQS provided 18 recommendations against the following key challenges required to improve procurement of government funded infrastructure projects and achieve greater cost certainty include: • long term plan • complexity • stakeholders

• market capacity • procurement • level of design • planning • risk • budget development/funding • achieving cost certainty.

A copy of the submission is available at: https://www.aph.gov.au/Parliamentary_ Business/Committees/House/ITC/GovfundedInfrastructure In the same month, AIQS lodged submissions with the Tax Practitioners Board (TPB) and the Australian Taxation Office (ATO) with respect to residential tax depreciation, highlighting the following: 1. the lack of prescriptive behavioural standards governing the provision of residential tax depreciation reports, and 2. inadequate registration provisions governing those registered tax agents who have the ‘condition’ of quantity surveying, as determined by the TPB

to contractual risk allocation issues associated with the inclusion of limitation of liability clauses, sub-surface conditions, and utilities. While draft papers have been submitted with recommendations, further work will be required to reach a position which is acceptable to both contractors and the government.

An Information Paper on Life-Cycle Cost Analysis is being finalised, to be published shortly, with a summary of the paper being included in the revised Australian Cost Management Manual which will also be published this year.

An updated Guidance Note on Construction Finance Reports, incorporating material pertaining to Construction Delays, Restricted Site Access, and Progress Claims has recently been published on the AIQS website. In addition, the Replacement Cost Assessment (for Insurance Purposes) Information Paper is being updated to include explanatory material on items affecting the Capital Replacement Value and is due for publication later this year.

3. implications from the James Review.

In addition, AIQS is developing an Information Paper on Residential Tax Depreciation and is awaiting feedback from its submissions as well as Commonwealth Government reforms arising from the James Review of the TPB and its legislative framework.

Over the course of this year, AIQS has participated in the joint Australian Construction Industry Forum (ACIF) and Australasian Procurement & Construction Council (APCC) working groups to develop position papers with respect

GRANT WARNER CEO Australian Institute of Quantity Surveyors

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 03

SUSTAINABILITY

THE CURRENT STATE OF PLAY: AUSTRALIAN CONSTRUCTION INDUSTRY

BY NICK DEEKS AAIQS

The shock of COVID-19 threw the construction industry a curveball, but also opportunities, not only to stop and reflect but also to change, adapt and evolve.

Many businesses took advantage, mostly because they had to but also because the decision makers had time to consider the future, new ways of working, digital innovation, and larger views.

It gave us the opportunity to look at the ways we operated and to be proactive and forward-thinking and to set a clear path forward.

One significant and visible outcome was the climate. We could breathe cleaner air, we could see clearer oceans, climate change became far more visible and became the topic of many conversations while also dominating the press. People were taking notice and becoming more conscious of it, in part perhaps because they had time to reflect as they weren't rushing from one place to another and in short weren't busy in the thick of dayto-day activities. Within our industry, we could think about renewables, sustainable construction, more efficient

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and productive ways of doing things, and about how to reduce carbon emissions.

Could we possibly get governments working together with planning experts to create future sustainable cities?

We saw the Federal Government take early action to tackle the COVID-19 pandemic. Introducing travel bans, lockdowns, border controls, working from home orders and other restrictions, which have forced the community to re-evaluate ways of living and working.

Existing patterns around transport,

SUSTAINABILITY

Cost-effective technologies such as energy efficiency, renewable energy and storage are readily available and can be rapidly deployed to reduce electricity emissions social infrastructure and construction have shifted and should be making us reflect on major infrastructure decisions.

These behavioural changes responding to the pandemic are driving impacts across infrastructure sectors and should continue beyond the pandemic.

Health concerns have impacted behaviours such as riding public transport and willingness to be in crowded spaces. There are more people working from home with some unlikely to return to the office. As a result of these new working practices and the necessity to maintain social distancing, many people have (or are trying to) move away from dense, metro areas to outer suburban areas, creating spikes in property prices in these areas, enlivening the suburban retail, cafe, and restaurant scene, potentially at a detrimental cost to our CBDs. If this trend continues these things need to be carefully considered when planning major infrastructure projects.

Whilst the government is fast-tracking projects left, right and centre, which is positive for the current situation – this is not a solution in itself. We must ensure these projects consider the future needs of our cities, population, travel patterns, transportation preferences and that they

consider technological transformation to bring long-term benefit, rather than being selected for the sake of shiny new big-ticket items that keep the constituents happy.

Will the CBD continue to be the lifeblood of cities? Will we need to transform our cities to adapt to these new ways of working and potential lack of people, do we transform them into more urban and decentralised centres, and if so, how will this affect GDP? Are our transportation systems suitable for how we will move in the coming decades, and is our technology up to scratch?

Will commercial buildings require rethinking? What will our retail centres look like? Will we be travelling during rush hour, or will there be a rush hour at all?

How will we move around? What does public transport look like? Are our current roads appropriate? Will the future include flying cars?

While some may think these questions are far-fetched and not of current concern, these are the questions we need to be asking when approaching planning for future-proofed cities. The lessons learned from COVID-19 must not be wasted, and the key to success is not expecting to revert to ‘normal’. If we have learned anything, it’s that what we thought of as normal before was simply not sustainable.

At this pivotal moment in time, we find ourselves in the midst of one of the single most dramatic global events in human history. Directly or indirectly, every person on earth has been affected. We could not have imagined our streets would have been deserted, and in many locations still remain so; our cars off the roads; nearly all planes grounded; offices and shopping centres empty, factories closed, our children being educated at home and our citizens in lockdown, some with imposed curfews and restrictions on the people

they are allowed to meet up with.

This is a once-in-a-generation opportunity to make our country more resilient, prosperous, and sustainable.

This is a chance to completely transform our approach to planning and dramatically improve our quality of life, with a long-term futuristic view of what life could be like and what we want it to be like, let’s not slip back into “the same old, same old”.

Let’s seize the opportunity and draw a line in the sand between our past and our present and create a future, for long-term benefit and growth rather than shortterm satisfaction or political desire.

Part of this future-proofing strategy is to consider the environmental impacts of the construction industry.

According to the latest IBIS data, construction in Australia has a market size of $410.7 billion in 2021 alone.

For an industry that contributes so much economically, we must be more considerate of the environmental impacts. The construction, operation and maintenance of buildings accounts for almost a quarter of greenhouse gas emissions in Australia.

This is mainly due to the copious amounts of embodied carbon that results from the manufacturing of construction materials but also in the construction, extraction, transporting, and installation on-site, as well as the operational and end-of-life emissions associated with those materials.

Embodied carbon will be responsible for almost half of total new construction emissions between now and 2050.

Due to this significant contribution to the climate change emergency, there is a need to introduce legislation towards mandatory reporting of carbon emissions in the built environment,

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 05

SUSTAINABILITY

along with limiting embodied carbon emissions on projects.

To do this, we need to look at the building process holistically and consider the whole lifecycle of projects, including planning, design, construction, and operation.

We are seeing other countries implement strategies to limit carbon emissions. A team of experts in the UK have proposed that the upfront and embodied carbon of building materials be compulsorily calculated and capped as a requirement of Building Regulations.

Embodied carbon will be responsible for almost half of total new construction emissions between now and 2050 This proposed Building Regulations amendment ‘Part Z’ and Approved Document Z outlines requirements on the assessment of whole life carbon emissions, and limiting of embodied carbon emissions, for all major building projects. Part Z would ensure embodied carbon is assessed on all projects, as part of a comprehensive whole life carbon assessment.

On our own shores, there is a complete lack of commitment at government level to develop effective regulations that will help us reach net zero targets.

“Technology not taxes” is a term used, however, if we don’t commit, other countries will impose taxes, and who’s going to pay for these?

Since last December, Scott Morrison has been reluctant to commit to a net zero 2050 target and now he is coming under serious scrutiny as world allies recognise the weak efforts to implement solid climate change action.

The latest Intergovernmental Panel on Climate Change (IPCC) report has confirmed our fears that climate change is in fact a real crisis that should be taken seriously.

It warns that without immediate and large-scale reductions in greenhouse gas emissions, the goal of restricting temperature rises to 1.5°C or even 2°C will soon be out of reach.

Australia’s emissions are rising and are projected to continue increasing without a credible and comprehensive climate and energy policy.

Cost-effective technologies such as energy efficiency, renewable energy and storage are readily available and can be rapidly deployed to reduce electricity emissions.

The proposal enforces mandatory assessments ahead of setting carbon limits and if adopted, voluntary action would rapidly increase, leading to green investment and jobs across the construction industry.

Recently, the Victorian Government announced funding for two new battery and hydrogen facilities at Deakin University in Melbourne. The university’s regional Victoria campus will transition from gas to hydrogen and the Warrnambool bus fleets will also run off renewable energy.

This push from UK industry leaders to include carbon regulation is a step in the right direction and a major development in the roadmap to net zero.

There are also plans to build the world's biggest hub along the south coast of Western Australia. The Western Green Energy Hub (WGEH) would stretch

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across 15,000 square kilometres and could produce up to 50 gigawatts of energy. If it was created, the hub would produce 3.5 million tons of zero carbon green hydrogen, or 20 million tons of green ammonia each year, for both domestic consumption and export.

These are some significant steps taken by local governments. Funding for initiatives like these will be paramount if we are serious about reaching net-zero emissions by 2050.

We are also seeing major developers in Australia making net zero carbon commitments, prompting the Green Building Council of Australia with the agreement of industry, to tighten standards in regards to net zero and Green Star.

Although these initiatives are a step in the right direction, we need direction and leadership from the top. Without a concrete commitment from our Federal Government, Australia will continue to fall behind in climate change action and more importantly, cause irreversible damage to our atmosphere.

Let’s use this time to evaluate and reinvent the wheel. The way forward is to work holistically as an industry and have a strategic approach to construction projects and stimulus.

We mustn’t be complacent, it’s time we took a proactive stance. We must be forward-thinking, be brave, be a global leader in technology, renewable energy, lead the way in sustainable construction and reduced carbon emissions.

Nick Deeks AAIQS is the Managing Director for WT Partnership Australia.

Q&A

AS A KEY COLLABORATOR IN THE DELIVERY OF BUILT ENVIRONMENT ASSETS, WHAT INDUSTRY-WIDE OR PROFESSION-RELATED PRACTICES DO YOU THINK SHOULD BE MODIFIED OR INTRODUCED TO MINIMISE RISK AND IMPROVE OUTCOMES? BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 07

Q&A

SYIDAH ARNOLD MAIQS, CQS As the lead for my organisation’s BIM and training committees, I am tasked to drive continuous digital improvements and technical training activities to support ongoing staff development. Combined with my early career in architectural design, I am fortunate that my role offers me the opportunity to explore and investigate initiatives to address this exact question and challenge the status quo. In my opinion, two notions come to mind.

intelligence. Cloud based data systems that employs artificial intelligence processes containing high quality depositories for data mining purposes is imperative within a data warehouse. In order for the systematic management of large volumes and often isolated pieces of data, dedicated data analysts (without necessarily having a technical cost planning background) may become the norm within a PQS firm.

Firstly, the utilisation and access to valuable data accumulated over hundreds if not thousands of projects is a significant contributor to achieving cost

Secondly, the increased delivery of projects through a BIM environment reveals a gap between the design consultant’s true understanding of

the cost planner’s requirements and vice versa, the PQS’s understanding of how a model is produced. Although numerous publications are available, closing this knowledge gap further will facilitate the application of a genuine 5D BIM workflow. We may see modelling become an essential part of our skill set and the emergence of ‘cross hybrid’ cost planners within the traditional PQS firm.

The adaptation above will no doubt contribute to our longevity and value in the future of a digital led construction industry.

ALFRED MUCUNABITU FNZIQS, REG QS In terms of industry-wide practices, there are common traditional practices that I think could be altered to minimise risk.

Traditional methods of tendering is a common one, whereby all contractors are more focused on winning the contract which provides very high competition and predominance of lowest cost which is driving this risk demeanour. More early contractors involvement or the like in my view are better procurement paths that involve a lot of collaboration and risk mitigation at each phase. This also enables all stakeholders to scope, assess and price the risks at each stage of the procurement process thus improving the

outcomes and values of the project.

Another ‘stick-out’ practice, that I find these days, is the introduction of so many special conditions and alterations of standard definitions. Special conditions are meant for specifics requirements of the project that are not covered under the general terms and also could include requirements of the client for the project.

It is fair to say that it is pertinent that all parties seek legal advice during contractual negotiations for these sorts of situations, but I think most of these special conditions are driven by legal experts to minimise the exposure of

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risks and in most cases are far beyond reasoning for the project and warrants this as more of a ‘bespoke’ than a standard with suitable special conditions.

I am always an advocate of the standards without amendments and to have all the tools to manage these risks in a ‘fair and reasonable’ way.

Last but not least, I still have questions and doubts about practices of the nomination of engineers in contracts.

I do know that there is a group of professionals who are taking a lead on this issue, and this will hopefully provide daylight to this issue.

Q&A

NIRVANA RAMPERSAD MAIQS, CQS Construction projects carry risks that can affect the successful delivery of the built assets. Identifying and responding to the risks with adequate mitigation strategies at an early stage is important. Can a digital transformation in the construction industry facilitate this process?

Compared to other industries, the construction industry has been slow to embrace technology. Optimising on technology can improve project outcomes and reduce risks in a project.

One way to achieve this, is by adopting a collaborative process such as BIM in projects.

Currently, BIM is being underutilised as a risk management tool. The implementation of 4D and 5D BIM can contribute to efficient coordination, costing, scheduling, and planning by enabling users to identify inefficient workflows, potential delays and bottlenecks through simulation and visualisation.

BIM enables the design team to build the project virtually in the digital environment. In this way, errors, omissions, and clashes can be detected and corrected at an early stage. This approach is more efficient, cost-effective,

and faster than to build the asset onsite and making changes during the construction phase.

The adaptation to BIM is not only a digital transformation but also a new cultural approach for quantity surveying professionals to work with for the whole lifecycle of a project. However, there are some limitations with BIM such as the initial cost of investment and the required level of training for its users.

Nonetheless, I believe that BIM can be utilised as a risk management tool to achieve the desired outcome.

PHILIP ADAMS MAIQS, CQS Cost management forms a key part of the role and added value for a quantity surveying professional. Textbooks will tell us that the final cost of a project is mostly determined during the design and documentation phase, but over the last few decades this has changed.

We have seen a marked shift in risk allocation, initially through quantity risk, then design risk and more recently the transfer of very onerous risks onto the contractor e.g. ground conditions.

There is also the problem of ever larger and more complex contracts including extensive amendments to standard

forms and voluminous documentation which often create tension, inconsistency, and ambiguity.

Consequently, we see more claims and disputes, which means the final cost of a project cannot be determined until in some extreme situations, years after it's completed. The focus of cost management has therefore shifted and needs to adapt accordingly.

In simple terms, disputes arise because of unrealistic and misaligned expectations, and this is where good cost management is key. So how do we align expectations?

When assessing change and claims for the purposes of establishing future commitments and changes to the budget one must risk assess in a realistic manner, as if one were an independent third party, and report true prospects of success. One must also read the contract in its entirety, avoiding preferential interpretation of isolated sections, and take a balanced ‘cold eyes’ view.

If both sides adopt the same cost management principles the chances of a resolution are increased because expectations should be more closely aligned.

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 09

Q&A

AUDRINA STANLEY FNZIQS Having worked for main contractors and a multidisciplinary consultant practice, I do not believe anything new needs to be introduced to minimise risk and improve outcomes.

I have been involved in feasibility exercises for potential projects, to concept design through to construction of vertical and horizontal projects and two things have often stood out - lack of coordination and lack of collaboration between design teams and clients, with design documentation - drawings and specifications and with contractors.

Numerous risks and changes come from documentation that has not been

coordinated, such documentation that makes its way inexcusably into the construction phase. I have often heard that this is the contractors risk and problem - wrong! This is a risk and problem for all of us that we all in some way end up paying for.

If clients and their representatives collaborated better with their design teams and listened to their professional opinions, if design teams worked together to create cohesive designs and were enabled to brainstorm together, if specialist subcontractors were brought into the design process earlier, the list goes on. If this was done, we would be

able to mitigate risks, not just risks to the client, but risks to ourselves.

Why is this not business as usual?

Clients/architects/engineers/specialist subcontractors/main contractors working together to coordinate design documentation and collaborating to understand the clients brief, bouncing ideas off each other, finding risks, working through them during the design process, working through the buildability of designs, knowledge sharing, etc.

We need to use and work on what we already have right in front of us.

ELLIOT BALL NZIQS (AFFIL) After 15 years of quantity surveying for businesses and contractors, I recently took an opportunity to work for local government. What has ensued can only be described as a whirlwind of steep learning curves - navigating seemingly endless policies for procurement, accountability, and finances. Part of my role specifically covers procurement and I now have a new-found respect for anyone who is trying to meet community expectations while simultaneously appeasing contractors.

Possibly the greatest asset this role has to offer are the procurement rules published by the Ministry of Business, Innovation and Employment (MBIE) in New Zealand. These rules come with a huge amount of support including document templates, guides, online training, and some tertiary institutions offer New Zealand Qualifications Authority recognised qualifications. They are only mandatory for central government, but we would be remiss to not take advantage of these opportunities to improve our own processes. MBIE are actively engaged

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in the industry and have presented these rules to encourage procurement to be fair and transparent. They provide the backbone for an objective, unbiased and auditable tender process.

There is renewed focus on quality, social and environmental impacts and contractors will find themselves having to respond appropriately or risk losing out. MBIE are creating a paradigm shift towards quality over price, and you should expect to see less LPC’s and more price quality tenders in the future.

Q&A

STANLEY HOO AAIQS, CQS A building process starts with proper planning in the early stage, refining it through the design stage, and completing it in the construction phase. It is a lengthy process and various difficulties arise during the whole planning and construction process.

Common risks that I believe builders are facing include: • COVID-19 thread - increasing builder’s risks on running costs, insurance premium, overtime, site shut down, etc • some trades and labour market are volatile due to border closed which are driving up wages and with potential risk to delay the project program

• the material shortage is one of the worst in Australia in the current 21st century • the cost of importing materials from overseas has increased sharply • inexperienced design teams who design the building products with less cost efficiency and it always ends up costing more to build • inexperienced construction teams with poor coordination would end up costing more for the project • the building construction industry is one of the least digitised industries these days and the COVID-19 factor is making it worse.

We don’t seem to have the answers for all the current issues, but a robust dialogue

between industry representatives with governments on all levels on COVID-19 issues would improve the risk profile of a lot of the construction businesses. A mandate of COVID-19 vaccination on nationwide (currently it is voluntary) would help to improve the international market to reopen again.

A task force team should be setup to provide a more flexible plan for the businesses who are relying on the imported overseas skilled employees/ professionals. This measure would be able to provide some relief to the industry skilled profession/labour shortage such as quantity surveying professionals, engineers, etc in short term. This would also improve the quality of the industry employment over the long term.

LUKE WINTER MNZIQS There are many instances where risk could be minimised in construction, but two industry-wide practices instantly come to my mind that requires addressing.

Firstly, contractual risk could be minimised by the use of standard industry contracts without addition or amendment.

Standard industry contracts were built by those who are active in the construction industry and witness the legal issues and consequences of risk imbalance. Yet too often, legal teams representing the contractee rewrite and amend large sections of industry

contracts to the point that the risk balance lies firmly in their client’s favour.

In addition to this risk, the contractor then has to expend money to comprehend the legalese, which is unnecessary. They are then also in a position where contesting the contractual terms could be detrimental to their tender submission.

Some smaller contractors may also have significant construction experience to build what the contract is asking, but if they miss the significance of an edited, modified, or additional clause to a standard contract, they could pay the consequence.

Secondly, engineers to contracts should be part of a separate body of professionals appointed independently without the influence of the client so that they can retain their impartiality and integrity.

In many instances, the engineer to the contract or their representative is the client’s project manager, which means their roles are blurred and their impartiality questionable.

Perhaps a system of escrow, the utilisation of smart contracts, and the transparency of blockchain technology could help achieve this.

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CASE STUDY

RAVENHALL CORRECTIONAL CENTRE 12: SEPTEMBER - NOVEMBER 2021: BUILT ENVIRONMENT ECONOMIST

CASE STUDY

• pre and post-release services.

The prison was procured as a full service Public Private Partnership (PPP) with a private sector consortium financing, designing, building, and now operating the prison for a period of 25 years until 2042. Under the PPP the successful consortium was required to provide a full suite of correctional, health and facilities management services.

MBM was engaged as the facilities management (FM) adviser to assist primarily with the following: • provide facilities and asset management advisory services, technical expertise and advice to Department of Justice and Community Safety (DJCS) on FM services with respect to the scope of works associated with the design and construction of the Ravenhall facility and its ongoing operation and maintenance, with a view to optimising whole-of-life costs

Photo courtesy of The GEO Group Australia Pty. Ltd.

Victoria’s fifteenth prison, Ravenhall Correctional Centre, was officially opened in October 2017, and began receiving prisoners in November 2017. The facility provides accommodation and services for male, medium-security prisoners, as well as specialist forensic mental health services for 75 prisoners in dedicated forensic mental health beds.

• new approaches to reducing the risk of reoffending

The prison is designed to flexibly respond to different prisoner profiles that may emerge over time. Its areas of focus include:

• improved responsiveness to the complexities of young adult prisoners

• implementing an integrated and holistic model of care for prisoners with a mental illness • implementing a targeted approach for prisoners with challenging behaviours • indigenous prisoners

• programs and services for prisoners serving shorter sentences

• liaise closely with the other technical advisers to the project, including through relevant working groups (e.g., correctional services, commercial, and legal), to ensure coordinated technical documentation.

A major contribution to ongoing operational term issues in these types of social infrastructure projects is a lack of common understanding by the client and successful respondent on the required scope at the start of the project.

A properly defined and managed scope leads to the delivery of quality services at an agreed cost to the stakeholders.

The challenge for MBM was to ensure that technical requirements included within the request for proposal (RFP) provided sufficient detail to enable a clear understanding of requirements whilst not

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CASE STUDY

being too prescriptive, thereby allowing the respondents to offer up innovative solutions.

Using market tested benchmark requirements adjusted to suit the specific requirements of stakeholders and DJCS, MBM developed a detailed description of the service requirements indicating: • relevant standards and guidelines • outcomes required (describing the key outcomes required by DJCS and relevant stakeholder for the service, which should be considered when delivering each of the FM services • minimum requirements (outlining the state’s minimum requirements in relation to the relevant service).

This enabled respondents to clearly see how the expected outputs generated by the delivery of the service would deliver benefits for users and the main responsibilities for both the respondent and related to the service to be delivered, that were being retained by DJCS or the stakeholders.

The scope of the project also included construction and operation of a Statewide Services Building (SSB) outside of the prison walls. This

presented a challenge in terms of having a very different set of requirements for the FM services and an understandable reluctance to have two different sets of services requirements. MBM and the project team worked closely with relevant stakeholders to align service requirements where possible and to only make specific reference to the SSB where absolutely necessary. This reduced the potential complexity of the services specification and ensured a common level of service across all facilities within the scope of the PPP. MBM developed minimum applicable asset, cleaning, and grounds maintenance condition and performance standards for the prison and Statewide Services Building, against which the performance of the successful respondent would be measured over the term of the PPP. Where possible the services requirements were aligned to technical design requirements in order to ensure that condition and performance standards were aimed at ensuring fit for purpose facilities rather than specifying unrealistic condition and performance standards that would be difficult to achieve over the life of the assets.

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A key criticism levelled at a number of social infrastructure PPPs in Australia is the number of key performance indicators (KPIs) the service providers are required to measure and report on, and the penal nature of performance abatements on the payment mechanism.

In conjunction with the project team and relevant stakeholders, MBM reviewed performance regimes and payment mechanisms on comparable projects across Australia, New Zealand, and the United Kingdom.

It was clear that, under full-service model correctional centre PPPs, the availability charge (related to the number of daily available cells and a comprehensive list of criteria defining how availability was measured) would encompass a number of traditional service related KPIs. MBM proposed KPIs related to the completion of planned maintenance tasks and the completion of reactive maintenance with specified timeframes, thereby ensuring service failures relating to health, safety and wellbeing of users and prisoners would be appropriately abated, however, service failures which had a lesser impact would be dealt under alternative contract mechanisms.

CASE STUDY

Photo courtesy of The GEO Group Australia Pty. Ltd.

The FM services that were included under the scope of the project included:

under the evaluation framework to evaluate:

• general FM service requirements and provisions applicable to all services, including management of delivery, training and induction, and reporting systems

• the respondent’s plans and method statements to provide and manage the FM services

• building management services planned and reactive maintenance, and lifecycle maintenance • utilities and medical gas management services to ensure continuous provision of utilities and medical gases • waste management and disposal services including collection, onsite recycling, and offsite disposal • grounds maintenance services for sports ovals, car park, and external areas • pest control services • cleaning services for prisoner and non-prisoner areas • specific requirements, where relevant, about the service handover to government at the end of the contract.

During the procurement process, MBM worked closely with the project team

• the robustness of the proposed operational readiness and ramp-up plan for the implementation of the services and introduction of prisoners at the facilities • the VFM offering of the lifecycle and FM services taking into account financial costs, risks, and continuous improvement and innovation over the operating phase.

The successful respondent was the GEO consortium, whose major members included GEO Group (facility operator and equity investor), John Holland, (builder), Honeywell (facilities management) and Capella Capital (financial adviser).

The project was the first Victorian PPP to be procured under the new Victorian PPP Guidelines and incorporated a high value/high risk (HVHR) peer review by the Department of Treasury and Finance (DTF). The HVHR framework comprises a series of project assurance checks and

processes to increase the likelihood that they will achieve their stated benefits and be delivered successfully on time and to budget. Acknowledging that available prisoner places was a key project objective, MBM worked closely with the project team and stakeholders to develop a regime that ensures standards are maintained without placing undue risk with the GEO consortium and ensure that this objective was met.

In awarding the Ravenhall Prison Project the Project of the Year Award for Infrastructure Partnerships, Infrastructure Partnerships Australia Chief Executive Adrian Dwyer said it was exciting to see the project excel, as it was the first privately delivered prison project Victoria had seen in about 20 years – delivered on budget and on time.

“The Ravenhall Prison Project fundamentally transforms the way that support is provided to people in the justice system in Victoria,” Mr Dwyer said.

“In a Victorian first, the proponents will oversee all elements of the prison’s operations, including custodial services, with performance targets to directly reduce the rate of recidivism. Australia is a world leader in bringing together the

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 15

CASE STUDY

Photo courtesy of The GEO Group Australia Pty. Ltd.

public and private sectors through Public Private Partnerships (PPPs) to deliver better outcomes for the community.

“The Ravenhall Prison Project is a stellar example of the evolution of the PPP model in Australia and shows what can be achieved when the public and private sectors collaborate to achieve good outcomes.”

MBM CEO David Pearson said the Ravenhall Prison Project was an excellent example of a successful PPP and MBM was very proud and privileged to be part of this successful project.

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“Congratulations to our advisory team, the wider project advisory team, Project Co and Department of Justice for delivering a best-in-class project," Mr Pearson said.

This case study was written by Justin Noakes, Director at MBMpl.

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NZIQS 2021 CONFERENCE

RESILIENCE IN AN EVER-CHANGING WORLD INTRODUCTION 325 delegates, sponsors and exhibitors attended the NZIQS 2021 Conference in Rotorua in late June, the largest attendance ever. Wellington had come out of COVID Alert Level 2 just the day before, allowing our Wellington delegates to travel to the conference.

Speakers covered a range of topics relevant to quantity surveying, the construction industry and personal development. Presentations included an update on the economy, re-shaping the role of the Engineer to the Contract, how to make valid Payment Claims and Payment Schedules to avoid disputes, surviving as a business in a COVID-19

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world, the different roles of a quantity surveyor, and the sustainable opportunity of building with wood.

Rotorua is in a geothermal field in the Bay of Plenty region of New Zealand's North Island. The Whakarewarewa State Forest, known as 'The Redwoods', is situated on its doorstep.

NZIQS 2021 CONFERENCE

Two presentations focused on local construction in a geothermal area and an award-winning timber building.

CHALLENGES AND COSTS OF BUILDING IN GEOTHERMAL ENVIRONMENTS This presentation was delivered

by Lawrence Charles, a Principal Geotechnical Engineer with Tetra Tech Coffey. For more than 25 years, Lawrence has been providing specialist consulting services helping clients address their most complex challenges. Lawrence specialises in excavation and slope stability assessment, landslide risk assessment and remediation, geohazard risk assessment, fault evaluation, terrain analysis, earthworks/construction oversight, and quality assurance.

Table 1: Poten al Ground Hazards • Inunda on • Subsidence • Landslip • Ground se lement due to compressible soils • Slope instability • Erosion - river, lakeshore, wind, etc • Internal erosion, including tomo forma on • Collapsible soils • Geothermal gas • Geothermal erup ons • Corrosive soils • Volcanic erup on • Groundwater flooding • Soil contamina on • Ground rupture • Ground shaking • Liquefac on hazards, including se lement, bearing capacity failure and lateral spreading

The Rotorua Geothermal Field sits in the Taupo Volcanic Zone and is ideal for electricity generation and direct heat sources. The Rotorua Lakes Council has specific requirements for construction in this geothermal area, including: • a systematic approach to the management of ground hazards • 7 potential geothermal-specific hazards are noted in the ground hazards table • Peer Reviews are required due to the levels of complexity • self-declaration of competency of the geo-professional or chartered professional engineer.

Actual and potential hazards within the Rotorua District can be both natural and manmade. A list of key hazards is given in Table 1. The list is not comprehensive

• Post earthquake subsidence • Old Geothermal bores • Subsidence due to depressurisa on of a geothermal aquifer • Tectonic subsidence

and other hazards may be identified on-site. Some hazards can interact to increase cumulative effects (e.g. liquefaction and geothermal). Some parts of Rotorua will likely experience liquefaction on hot areas.

ADDITIONAL GEOTHERMAL CONSTRUCTION Some of the additional costs that building in a geothermal field may require are: Machine Borehole Drilling Geothermally altered soils sometimes make for very hard drilling.

Blow Out Preventers (BOP) If the maximum safe temperature of

85°C is reached at an unacceptably shallow depth, the continuation of the borehole will require the use of a BOP and grouted casing. The drilling subcontractor’s cost can be $4,000 or more plus two to three days for a driller to install.

CPT Drilling Geothermally altered upper soils often make CPTs deeper than 5m to 10m difficult.

Fault Avoidance Zone Trenching is required during investigation or construction. However, this may not determine a fault as the trench is normally shallow.

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 19

NZIQS 2021 CONFERENCE

Corrosive Environment Sulphate and pH testing is recommended, and corrosion-resistant concrete is sometimes called for.

Abandonment of Geothermal Bore This may take one to three days and 150mm annulus to cap.

Gas Membrane Requirement Gas membrane installation

Where H2S gas is on file and/or gas permeation is an issue, the gas membrane is incorporated into the design and may take many days or weeks to install before and after the concrete pour.

Standover Requirement In a geothermal field for any borehole or CPT deeper than 5m.

Other Costs

Scion Innovation Hub, Rotorua

Drilling consent, fully grout exploratory machine boreholes and CPT holes postinvestigation, CPT holes not deep enough sometimes require machine boreholes to drill through hot or hard ground, settlement monitoring, Health and Safety (gas detector requirements, paired workers etc.), and peer reviews.

SCION INNOVATION HUB Te Whare Nui O Tuteata

Diagrid structure

(Named after Tuteata, an ancestor of the three local sub-tribes).

In collaboration with Irving Smith Architects, RTA Studio was commissioned to reimagine the Rotorua headquarters of Scion, a Crown Research Institute that specialises in technology development for the forestry industry.

The Hub is a cutting-edge showcase for engineered timber, not only in terms of the aesthetic but for what it contributes to a carbon zero future.

Interior, Scion Innovation Hub

20: SEPTEMBER - NOVEMBER 2021: BUILT ENVIRONMENT ECONOMIST

The new Scion Innovation Hub building offers an invitation to the community to come walk our forest and see the future of timber.

Building Construction The building is constructed as a system of interrelated parts.

The diagrid structure is made up of over 4,000 individual parts to achieve 88 diamond and triangular frames. The steel joining the diagrids is a seismic fuse, while the dovetail joints provide strength. The timber components were prefabricated, and the ground floor diagrids were stood up in 3.5 days.

The efficient façade enclosure provides natural light through the glass, and the double-skin offers thermal performance.

The prefabricated unitised curtain wall was coordinated with the timber structure.

CLT is used on the stairs, doors, and wall, with CNC milled ply on the reception desk.

The Scion Innovation Hub is designed to welcome the public. The new front door is a trio of "peaks" in gluelam timber, representative of the three hapu (Māori community) in the region.

In addition, a public exhibition area showcases Scion's work.

The construction programme was 18 months, 4 months over schedule due to COVID-19 delays and moisture control through building in the winter months.

Embodied Carbon Neutral Building It took 35 minutes for NZ Forestry to grow the wood in this building.

As assessed using the Etool system, the Scion Innovation Hub achieves embodied carbon zero at the time of completion. Furthermore, to measure all of life and end of life carbon, the

NZIQS 2021 CONFERENCE

new building was assessed to achieve the 2030 target set by the RIBA (Royal Institute of British Architects) of 500kg of carbon/msq.

By using engineered products made from sustainably grown pine and putting more thought into the operational characteristics of a building, the building significantly contributes to New Zealand's carbon zero future to leave a much lighter footprint on the land.

Emerging Professionals Site Tour The NZIQS Emerging Professional (QSEP) members went on a site visit to the Scion Innovation Hub during the conference. Scion presenters explained the research and development work that found more efficient construction methodologies and how the architectural details worked to make the Hub a passive building.

The tour was educational, and QSEP members were impressed with the natural beauty and structural design of the timber elements.

Embodied carbon at the end of construction

Awards - Scion Innovation Hub 2021 A+Awards Jury – Architecture + Wood 2021 A+Awards Popular Choice – Architecture + Wood 2021 Waikato Bay of Plenty Architecture Award- Commercial 2021 Waikato Bay of Plenty Colour Award

This article has been supplied by the New Zealand Institute of Quantity Surveyors (NZIQS).

NZIQS QSEP members at the Scion Innovation Hub site tour

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 21

ADVERTORIAL

THE FUTURE OF COMMERCIAL REAL ESTATE DEBT BELONGS TO THE INVESTED

BY BEN ROBINSON THE MARKET AND ITS MAKERS The players in the estimated $380 billion¹ Commercial Real Estate (CRE) debt sector in Australia are in the business of delivering one product exceedingly well in order to thrive… that product being CRE private debt.

During a large major bank merger over a decade ago, the CEO of traditional Australian bank ‘A’ described the merger approach as being one of ‘multiple dining

rooms served out of the same kitchen’.

Essentially it referred to multiple product lines being administered by the same back office. It made sense. Efficiencies are built on revenue going up whilst cost reduces and the larger the institution, the greater the opportunity to find those cost efficiencies, with the least impact on service optics.

In stark contrast to the traditional bank, the CRE private debt manager deploys one key product (with a few colour

References ¹Money Management May 2021

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options) and resultingly, must retain a sharp line of sight on the two parties that matter the most; the investor and the borrower. There are no alternative product lines to hide the performance of key investments and the investment managers are singularly held to account.

As Payton Capital Ltd.’s Head of Lending, Jamie Westlake states intently, “Our role is to make sure that capital is working as hard as it can. This means clients’ money is moving forward at all times. It’s not

ADVERTORIAL

THE PAYTON CAPITAL APPROACH As mentioned above, CRE private debt is about two distinct parties; the investor and the borrower. The relationship between these two parties is complex but complementary and particularly in the current low yield environment, it makes sense that they learn to play nice.

As well managed as investment funds might be, ultimately it is the investment manager’s choice of borrower and project that will deliver stable underlying investment returns.

That choice is made by people like Westlake, who brings 32 years of traditional banking experience to the table at Payton Capital and whose philosophy is complementary to the client centric approach required by the sector, “While it takes time, skill and asking appropriate questions, to get the development community to open up about their wider business, the benefit is that Payton Capital can provide more targeted guidance on effective ways to deploy equity and potentially enhance project returns through investment partnership.”

stagnant.”. It’s this type of investment approach, which has propelled the CRE private debt industry onto the main stage when it comes to providing a deeper client value proposition than its trading bank counterparts.

Interestingly, this is also what banks used to do, however with scale and diversification comes competing priorities, so whilst CRE debts past belongs to the traditional bank, the future may be more effectively invested by the private market.

The Payton Capital model of holistic thinking exists at the core of every deliverable, from the Board strategy to individual loan structures. Traditionally, property lending has focused on the deal “…what is being built, who’s building it and what is the profit margin on the project”. Westlake believes, “this misses the point and presents an opportunity for us to make a difference. If you just focus on the profit in the discrete project, as opposed to the profit from the development organisation’s wider business, you miss the main opportunities as a funder.” Further, “as a borrowing client we can quote on their one specific deal, but that’s not our main driver. We want to talk about how hard their money is working in general.

We’re capital partners, not just lenders.”

Importantly, for the entire Payton Capital

business, this approach facilitates the multivariate outcome of increasing Payton Capital’s range of investment offerings to its investment clients whilst enhancing value and utility to its tightly held book of borrowing clients. Ultimately, in CRE private debt there is no correct loan structure, there is only a need and a solution.

THE NEED FOR SPEED The Payton Capital approach focuses on projects starting and finishing efficiently.

It is about getting the equity and profit in and out, in a way that enhances the return metrics but manages the risk. This means a developer can start the next job earlier and over the medium term, they will have done one or two more jobs than previously contemplated under a traditional bank structure. “If we like the product, the location is good, we have a relationship with the developer, understand the wider developer’s business and they satisfy our lending criteria then we may give the developer the approval to start quickly. This means they can avoid inertia during the pre-sale phase, save on the cost of pre-sale commissions and produce a faster return on investment.” says Westlake.

The other benefit of acceleration is that the developer can potentially achieve a premium on sales due to the certainty of a finished product as opposed to selling a set of plans. Whilst acceleration can pose risks and care needs to be taken when managing market and investment risk, the benefits can outweigh the risks.

The velocity with which the developer gets its invested funds back can often substantially trump forecast market movements.

QUALITY AND QUANTITY As a complementary approach, Payton Capital also assists clients via an enhanced leverage model. In a traditional

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 23

ADVERTORIAL

bank model, a developer needs 35 cents in equity for every dollar of the project cost. For the right project Payton Capital will look at providing 90% of the total development cost, so a developer only needs 10 cents in that dollar. “What this means for the developer, is that instead of doing one job at a time, they can spread the equity invested into multiples.

Subsequently, their equity return increases on every dollar invested and risk is spread across a portfolio of projects.”

To deliver an appropriate risk adjusted leverage model, the client needs a clearer exit via pre-sales however “The more we know about a developer’s strengths, financial capacity and competitive advantage, the more flexible Payton Capital can be with conditions. We may fund 90% of a project’s total costs with minimal pre-sales because we know the developer has a pipeline of projects settling shortly and therefore that holistic understanding of the developer leads to greater opportunities to assist with that particular project.”

AN INVESTMENT IN TIME It has been said that it takes many years to be an overnight success and given

Payton Capital was born in the 1960s, that notion could certainly be applied to them. It takes time to build a wellfunctioning enterprise and the hurdles are ongoing but an ongoing dedication to the investor and borrower, through the lens of risk management, has proven to be the key to longevity at Payton Capital.

Whatever the future holds for the CRE private debt market, Payton Capital will be a substantial player in an evolving and growing landscape, which continues to successfully hold the traditional banking sector to account.

PAYTON CAPITAL LTD Payton Capital is a rapidly growing boutique private debt lender, funding construction developments in Victoria, New South Wales and Queensland.

Funding projects ranging from $5 million to $50 million, Payton Capital takes a holistic approach to lending, to keep their borrower clients moving forward.

Payton Capital is also a boutique investment manager specialising in investment products delivering risk adjusted returns without compromising capital security. With more than 50 years’ experience in property finance and

24: SEPTEMBER - NOVEMBER 2021: BUILT ENVIRONMENT ECONOMIST

investment management, Payton Capital is driven by a desire to see their clients succeed. Payton Capital is also driven to make a meaningful difference in the lives of those less fortunate, which is why the company is 20% owned by the Payton Foundation, delivering significant dividends to its partner charities.

Ben Robinson is the Relationship Director at Payton Capital.

If you’d like to learn more about borrowing from Payton, please visit us at https://payton.com.au/borrow/ or contact Ben Robinson M: 0416 219 493.

This advertorial has been paid for and supplied by our Corporate Partner, Payton Capital Ltd.

SUSTAINABILITY

CIRCULAR ECONOMY AND CONSTRUCTION COSTS

BY SARA J WILKINSON AND NICK GONIOS Your head may be spinning already.

Circular economy and construction costs: What do you mean? Circular economy (CE) is a term increasingly used in business. One definition of CE is; “an economic system that tackles global challenges like climate change, biodiversity loss, waste, and pollution.

Most linear economy businesses take a natural resource and turn it into a product which is ultimately destined to become waste because of the way it has been designed and made”. ¹

It’s a broad definition with significant implications and opportunities for the built environment. The Ellen MacArthur Foundation define CE as “based on three principles: • design out waste and pollution • keep products and materials in use • regenerate natural systems”. ² Again, lots of potential for built environment professionals, such as quantity surveyor’s to make an impact and a positive contribution. Australia currently produces 74 million tonnes of

waste a year and 90% of all raw materials do not find their way back into the economy. In 2008-09, Australia produced 19 million tonnes of construction and demolition waste. Of this, 45% was disposed to landfill and 55% was recovered or recycled. With a growing, urbanised global population these amounts and associated impacts grow; unless we take effective action.

This article sets the scene regarding the CE, and how it relates to the built environment and construction costs, circular procurement and circular cities.

References ¹Wikipedia, 2021 ²Ellen MacArthur Foundation, 2021

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 25

SUSTAINABILITY

WHAT'S THE PROBLEM? In 2017, the McKinsey Global Institute’s ‘Reinventing Construction’ study showcased the sector as the largest in the world economy, with US$10 trillion spent on construction-related goods and services annually. The industry’s productivity gap is massive, falling behind many sectors, being three times less productive than manufacturing for example.

cities are even more unsustainable as demand for resources and assets grows, in an inefficient manner.

Traditionally, construction of buildings and infrastructure have an industry embedded mindset of ‘fixed and long term’ , meaning they are designed and engineered for fixed, long term existence and use. Business models wrapped around this mindset are central to the problem and a critical part of the challenge to shifting the whole construction sector towards sustainable, agile practices.

The climate crisis is important when it comes to the ‘invisible’ negative externalities of construction costs. For too long, the global economic system has valued short term profits and asset values on balance sheets and has not recognised the environmental and social impacts of actions, especially in construction.

Another McKinsey study on decarbonising construction, noted the sector, directly and indirectly, is responsible for almost 40% of global CO2 emissions from fuel combustion and 25% of greenhouse gas (GHG) emissions (see Table 1).

Across the value chain, the construction ecosystem accounts for approximately 25% of global GHG emissions.

With the intensification of urbanisation globally and increased population (from 7.9 billion in 2021 to 9,735 billion by 2050), GHG emissions in GtCO2e, 2017.

54.2

21.4 CO2 emissions from fuel combustion 19.8

Non Construction

32.8

40.5

5.8

1.6

Cementprocessing emissions

13.6 7.8

20.7

8.1

(24%)

8.0 Construction Value Chain

13.7

All GHG emissions

0.1

12.1

(25%)

Construction transport GtCO2

(37%)

Other GHG emissions

Total

2.8 (9%)

Power

Transport

Building Operations

7.9 6.3

0.6

Industry

Other

Table 1: Across the value chain, the construction ecosystem accounts for approximately 25% of global GHC Source: McKinsey & Co. "Call for action: Seizing the decarbonization opportunity in construction" July 14,2017.

2021 emissions GHG emission article in GtCO2e,

One leading Australian developer executive noted complex, systemic challenges they face and are frustrated by, yet must accept to keep construction projects moving forward. Spending $25 million to remove waste during construction on-site for a large Melbourne project was unacceptable and they recognised this is a big part of the problem.

Applying tangible value to ALL

construction costs is vital and fundamental to shifting towards CE driven cities, precincts, and urban environments. Environmental and social measures must be considered and not just financial to attain a complete picture with construction. One methodology growing in use globally is Sir Ron Cohen’s Impact Weighted Accounts methodology, developed with Harvard Business School. Applying this

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model to track financials, social, and environmental measures, both positive and negative is key.

Recognising most construction is in new buildings (2%), with the remaining 98% of existing buildings having older building products, systems and structural materials which are ageing making this the larger, more challenging problem when it comes to considering the broader scope of construction costs. As

SUSTAINABILITY

such, retrofit and adaptive reuse has an important role in the shift to a CE.

Circular Cities Project – Using Circular Procurement to Fast-Track Zero Waste Cities, found ten challenges to adopting a CE approach, which are;

Far too often, construction and infrastructure projects are used to kick start economies when recessions or ‘shocks’ to the current economic system occur. The current linear model is not sustainable. However, the shift towards a more CE driven world is complex, full of regulatory challenges, and operating systems that require a systemic approach across organisations, governments, technologies, capital and communities.

Tackling this on a ‘piece by piece’ basis will not suffice and a hard reset is required for long term success.

1.

lack of strategic pressure

3. current planning does not support circular building as well as it could 4. procurements are locked down in the planning phase 5. construction phase does not implement the plan 6. solutions made during the planning phase are hardly ever adjusted in the contract phase 7.

A European Institute of Innovation and Technology (EIT) Climate-KIC’s

9. lack of space and time 10. information steering is inefficient.

2. you get what you pay for

CHALLENGES (BOTTLENECKS) AND IMPLICATIONS

8. information on recovered and recycled materials is not available or the materials are not cost-efficient

lack of information and CE expertise is reflected in every stage of procurement

Looking at these bottlenecks, they exist at all stages of a project and are affected by different stakeholders or parties. The bottlenecks collectively mean cost savings that could be realised are not achieved.

Consequently, the social, economic, and environmental potential in construction projects is not fully realised. Figure 1 illustrates the parties involved in public construction projects and their roles.

The parties in private construction projects are often similar in number. Each party is involved in different stages with varying degrees of power and influence.

Decisions made in the early phases of

Planner – determines what will be built, where and on what conditions

Material supplier – Supplies the construction materials in accordance with the project plan and tendered by the contractors. Offers options, serves as a materials expert.

Purchaser – defines the objectives and budget of the project

1 2

8

Procurement Specialist – Procures procurement packages in accordance with the procurement plan. Brings options to the table, but does not make decisions.

3

7

6 Contractor – Carries out the contract based on planning, Subcontract, materials and equipment tendering.

Developer – Contract, tendering and steering. Protects the purchasers interests and facilitates dialogue between the purchaser and the contractor.

4 5

Project planner and Architect – Prepare the project plan based on the goals set by the purchaser. Plan the execution, schedule, budget, funding and cost targets of the project.

Environmental Expert - information steering and cooperation with project planners and procurement specialists

Figure 1: The parties involved in public constructions projects and their roles. (ClimateKic report, 2019).

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 27

SUSTAINABILITY

any project impact on the ability to act in respect of CE at later stages.

One challenge is the goal of building for profit, where developers focus on maximising profit with subsequent owners being responsible for lifecycle and operating costs. Whereas a build to rent model is more focused on repairability, durability and value for money over the building lifecycle. This may render higher upfront costs more palatable.

Furthermore, the current economic model means planned obsolescence is designed into the way products are designed, engineered and produced.

Earlier in the process, the design team do not consider replaceability or repairability. This is compounded by the increasing difficulty in repairing products and components, due to increases in

product design complexity. Increasingly dense structures of products, coupled with manufacturers' policies are part of the problem. Reduction in the length and breadth of construction apprenticeships over time means many in the workforce do not have the skills to repair or replace buildings and their components. The result is the repairs, if possible, are more expensive than replacement and more landfill waste is created.

Australia has a few large tier 1 developer/ construction companies and a very long tail of tier 2 and 3 developers, builders, and contractors, without the economies of scale to modernise and deliver services and capabilities with CE principles at their core.

The result is more waste and more landfill.

There is the issue of voluntary and mandatory approaches. Countries,

such as France, Italy, Spain and UK have mandatory audits of Construction & Demolition Waste (CDW), whereas others, such as Austria and Ireland require mandatory audits for hazardous CDW only, and others, including Germany and Greece have no legislation. The result is a varying degree of uptake. Clearly, there are differences in implementation and effectiveness, for example, if the system is not audited for compliance limited reuse and recycling may occur.

SOLUTIONS TO CIRCULARITY AND CONSTRUCTION COSTS At the core of the CE is the fundamental mission to decouple economic development from materials production and use. It’s a mighty mission, and a huge milestone to be achieved for the

Figure 2: Construction cost lifecycle and circular economy

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SUSTAINABILITY

built world as core structural products are designed to be embedded during the design and construction phases for a long period of time. This fixed, long term horizon mindset in construction is both the challenge and more importantly the opportunity to take a ‘first principles’ mindset to tackle them head-on.

There are initiatives exploring ways to build awareness and alignment across stakeholders to accelerate the shift to circularity. One example, WWF’s Materials & Embodied Carbon Leaders Alliance (‘MECLA’) is focused exclusively on transforming the building and construction sector to reaching net-zero emissions.

With 7-9% of annual greenhouse emissions being produced by steel, cement and aluminium industries alone, MECLA is exploring how to both reduce embodied carbon in these products and construction costs with new design, engineering, and deployment solutions.

Figure 2 shows several solutions working towards ‘making good’ by shifting to a CE and rethinking construction costs.

As demonstrated with the solutions in Figure 2, there are so many areas to solve across the construction sector.

We must not hesitate and expect others to focus on tackling these challenges independently. On this note, we have entered a ‘call to arms’ moment where we must all come together, collaborate and solve hard, complex problems as we shift towards a CE driven world.

WRAP UP

including contractors, government authorities and property investors.

Research in Europe and elsewhere shows a key barrier to CDW recovery is inadequate policies and legal frameworks to manage CDW. It must be a priority for all tiers of governance in Australia.

Quantity surveyor’s play a crucial role in advising clients during various stages of projects and building lifecycles. They have influence and can advise clients on the benefits of long term thinking, design for subsequent use and flexibility vs durability with a view to a more circular approach to construction and reduction in whole lifecycle costs and less CDW.

USEFUL INFORMATION • Scaling the Circular Built Environment: pathways for business and government, 2018. World Business Council for Sustainable Development (WBCSD). https://www.wbcsd. org/Programs/Circular-Economy/ Factor-10/Resources/pathways-forbusiness-and-government - Accessed 28th July 2021 • Impact Weighted Accounts https:// www.hbs.edu/impact-weightedaccounts/Pages/default.aspx Accessed 28th July 2021.

Sara J Wilkinson is a Professor at the University of Technology Sydney School of Built Environment and Nick Gonios is the founder of circulist.

Awareness of sustainability and the need to reduce, reuse and recycle has been advocated in the construction sector for over three decades. All aspects of sustainability (economic, environmental, and social) can be impacted positively through effective and appropriate construction waste management. As one of the largest worldwide waste streams, CDW is important to all stakeholders

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 29

Accurate costing information is priceless. It’s free too.

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Cost-related WoodSolutions Technical Design Guides contain practical examples and in-depth information, written by experts in each field.

Download your free copies from woodsolutions.com.au/publications and add to your priceless professional knowledge.

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DATA SCIENCE

DATA SCIENCE AND THE QUANTITY SURVEYING PROFESSIONAL

BY STUART DOWLING MAIQS, CQS

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 31

DATA SCIENCE

DOES THIS SEEM FAMILIAR? Data science encompasses preparing data for analysis including cleansing, aggregating, and manipulating the data to perform advanced data analysis.

Analytic applications and data scientists can then review the results to uncover patterns and enable business leaders to draw informed insights. Isn’t this what a quantity surveying professional does in their day-to-day work – taking data derived from plans, quotes, measurements, etc and preparing this data in a way that we can interpret and present as useful to our client?

But what of the future and the increasing volume of data available? The buzzword ‘Big Data’ comes to mind. Big Data provides us with a method to collect, analyse, and apply vast amounts of information to help solve business problems and provide critical, informed insights for future activities. It helps companies’ complete projects on time, bid more accurately, and build more efficiently.

While Big Data holds a lot of promise, it is not without its challenges

BUT WHAT IS BIG DATA? Oracle Software corporation defines Big Data as information that contains greater Variety, arriving in increasing Volumes and with more Velocity. This is also known as the three Vs. Put simply, Big Data is larger and more complex data sets, especially from

new data sources. These data sets are so voluminous that traditional data processing software just can’t manage them. But these massive volumes of data can be used to address business problems you wouldn’t have been able to tackle before.

Two more Vs have emerged over the past few years: Value and Veracity. Data has intrinsic value. But it’s of no use until that value is discovered. Equally important: how truthful is the data and how much can you rely on it?

Today, Big Data has become capital.

Think of some of the world’s biggest tech companies. A large part of the value they offer comes from their data, which they’re constantly analysing to produce more efficiency and develop new products.

Recent technological breakthroughs have exponentially reduced the cost of data storage and compute, making it easier and less expensive to store more data than ever before. With an increased volume of Big Data now cheaper and more accessible, you can make more accurate and precise business decisions.

Finding value in Big Data isn’t only about analysing it (which is a whole other benefit). It’s an entire discovery process that requires insightful analysts, business users, and executives who ask the right questions, recognise patterns, make informed assumptions, and predict behaviour.

In his article “Top 8 Data Science Use Cases in Construction” Igor Bobriakov, a data scientist, proposes why the construction industry should be concentrating on harnessing the values of the analysis that Big Data creates daily. The construction industry has always been a victim of poor planning, management, budgeting, miscalculations,

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cost overruns, low return on construction assets, mistakes in proportions, and insufficient means for the building. Data science can be called upon to minimise and reduce the risk of many of these problems. Out of these eight cases, two stand out of particular interest for quantity surveying professionals.

1. Predictive analytics One of the most fundamental data science use cases is prediction.

Predictive analytics has taken under its control the analysis of vast amounts of data providing the capability to forecast. The ability to track real-time data and change it into meaningful insights for prediction has become a game-changing solution for the construction industry. Multiple scenarios based on the insights are then applied to make estimations and avoid failures in the future.

Many construction companies have introduced interactive reporting, realtime data, and dashboards into their operations in order to connect different areas of the project, from scheduling, budgeting, to optimising the project development and ensuring the work is delivered on time. By introducing professional reports and construction dashboards, the whole management team can gain a clear overview of the most critical metrics and milestones, resolving countless administrative hours and increasing productivity levels.

To see these notions in practice, you can take a look at a construction dashboard example (Figure 1), where a visualised overview of the most important KPIs for a project overview, including projects by status, and projects on a watchlist. You can immediately spot the contract value, margin, budget, and a number of critical indicators that will help you in monitoring the current status.

DATA SCIENCE

Figure 1: Construction Dashboard Example Source: https://www.datapine.com/construction-analytics

2. Accurate budgeting and planning The cost optimisation process is something that should be performed during the whole period of the construction project execution. This must be done to make sure that building costs match the limits of the estimated costs.

Accurate planning and budgeting should be the priorities for any construction project. The managers struggle with setting proper expectations considering the unexpected matters that may arise during the construction process.

Smart AI-powered tools and trackers help store the financial information, receipts, requirements, limitations, and

documentation in one place as well as analyse the expenses in real-time.

Keeping track of what is done helps to stick to the plan or make amendments.

Many of these tools have an integrated feature of risk assessment and alerting.

While Big Data holds a lot of promise, it is not without its challenges.

First, Big Data is… big. Although new technologies have been developed for data storage, data volumes are doubling in size about every two years.

Organisations still struggle to keep pace with their data and find ways to effectively store it. But it’s not enough to just store the data. Data must be

used to be valuable and that depends on curation. Clean data, or data that’s relevant to the client and organised in a way that enables meaningful analysis, requires a lot of work. Data scientists spend 50% to 80% of their time curating and preparing data before it can be used.

Does this mean quantity surveying professionals need to become data scientists? Possibly, but at the very least we need to be aware of the value and of the possibilities available to us - Big Data technology is changing at a rapid pace and keeping up with Big Data technology is an ongoing challenge.

Source material https://medium.com/activewizards-machine-learning-company/top-8-data-science-use-cases-in-construction-9ce8035e936f https://www.oracle.com/au/data-science/what-is-data-science/

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ADVERTORIAL

FOUR HABITS OF HIGHLY EFFECTIVE ESTIMATORS Construction is becoming an increasingly competitive landscape with higher demands and greater risks. Technology is key to obtaining and retaining a competitive edge — and it all begins with estimators. Effective estimates are critical, as they act as a project’s first guard against risks, such as rework and budget overruns.

Without stringent accuracy during the estimating process, businesses risk hurting their bottom line — or worse.

According to a survey conducted by QuickBooks and TSheets¹, one out of every four construction companies would go out of business if two to three inaccurate estimates were made. That’s why reducing the risk of scope gaps

References ¹https://quickbooks.intuit.com/time-tracking/resources/construction-job-costing-survey/

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and inaccurate takeoffs is critical to construction success, starting with the estimating process.

Effective estimators have a few vital traits in common: they work efficiently and collaboratively, and they are willing to adopt cutting-edge technology as it becomes available. In this piece, the

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estimator, there is perhaps no trait more necessary to the estimator’s success than the ability to collaborate.

Collaboration is central to the estimator’s job. From the earliest stages to the submission of finalised estimates, estimators work with stakeholders across the entire project. Additionally, in many cases, more than one estimator is working on the same project. Being able to collaborate and work together quickly and accurately is vital. This is particularly true if estimators work in different offices.

With the dynamics of work changing to becoming more virtual and remotefocused, it is more important now than ever before for estimators to focus on practices that will improve collaboration holistically.

Powering Collaboration Through Technology While collaboration is partly a learned skill set, it can also be improved through implementing the right technological solutions. Gone are the days of static spreadsheets, siloed desktop solutions, and stilted communication. Cloudbased solutions help estimators work collaboratively in real-time.

When looking to adopt new technology into the quantification process, look for a product that will improve collaboration in all of the following ways: Image © Ben Rahn/A-Frame Inc.

habits of highly effective estimators will be explored, with real-life examples of how to implement greater discipline in each arena.

• allows estimators and other key stakeholders to access the same documents • ensures updates are displayed instantaneously for everyone accessing the document • offers a communication platform creating a more streamlined method for sharing information and notes

1. WORK COLLABORATIVELY

• gives access at any time from any location.

While each of the following four habits is critical to becoming an effective

It is easy to see how technology can improve the collaboration process. An

estimator can begin the takeoff process, sharing documents in real-time with all affected stakeholders. As any party makes changes, updates are also shown in real-time. When a question arises about quantification, estimators can log into the same platform and collaboratively work towards addressing the issue immediately. The result is more accurate takeoffs, less rework, and fewer scope gaps.

2. STAY ON TOP OF VERSION CONTROL Married to the process of collaboration is proper version control. When version control is not managed well, it results in rework, miscounting, and, ultimately, lost profits. For this reason, it is critical to make sure all estimators are working off the latest project files. This can be a difficult task, particularly when numerous teams are collaborating on one project from different locations. Hunting down documents and trying to keep track of who is working on which one at any given time is a time consuming task riddled with the potential for serious error. To cultivate a better system, the right technology should be implemented, reducing the time spent on tracking down updated documentation.

Improving Version Control with a Cloud-Based Solution Once upon a time, version control was a frustrating process. In many cases, different estimators on a shared project each owned a document version living on their desktop. This led to confusion and the necessity to eventually attempt to merge these documents. For estimators interested in improving this process, a cloud-based solution is ideal. The following should all be included in any new technology adopted: • a common environment that allows all parties to access documents in realtime

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ADVERTORIAL

• the ability to enable notifications when an outdated version is being used • a focus on transparency and visibility with living documents.

By using a cloud-based solution, estimators can spend less time focused on tracking down the latest version of a file and more time focused on creating highly accurate estimates.

3. STREAMLINE THE TAKEOFF PROCESS WHEREVER AND WHENEVER POSSIBLE The takeoff process can be cumbersome.

Numerous parties are involved as estimators seek to create an accurate portrait of expected material needs and associated costs. Additionally, the complexity of accounting for potential changes to the scope of the project makes it extremely difficult for estimators to provide truly accurate takeoffs. Inaccurate takeoffs requiring copious amounts of rework will damage the bottom line. Estimators need to be laser-focused on improving the takeoff process. However, shifting too much time and resources to the takeoff process can lead to inefficiency and work overload. Streamlining the takeoff process wherever and whenever possible is, therefore, a central habit to effective estimators. Achieving this is possible when the right strategy is employed.

A Strategy Focused on Automation and Real Time Updates Estimators serious about streamlining the takeoff process should shift their strategy to focus on digital solutions. The right technology should offer all the following process improvements: • time savings from using a digital takeoff instead of manual paper-andpen takeoff • real-time updates that cut down on time spent doing rework and tracking down the latest file versions

• technology that allows for multiple quantities, complex formulas, and improved collaboration • a solution that offers automation for some manual processes, freeing up estimators’ time from the tedious tasks.

The right cloud-based solution can ensure that estimators are saving more time during the takeoff process while simultaneously improving accuracy. This affects everything downstream positively, with fewer hiccups during the project’s lifecycle.

4. EMPLOY NOVEL TECHNOLOGY THAT COMBINES 2D AND 3D MODELS Finally, an important habit for estimators interested in improving their effectiveness is to always look to employ the latest in technological advances.

While 3D models are often thought to be in the realm of BIM managers, estimators also benefit greatly from being able to visualise design intent and understand scope in 3D to generate a more accurate takeoff. Combining 2D and 3D models on one centralised platform also fosters greater multidisciplinary collaboration by breaking down the silos between BIM/ VDC and estimators. In the past, 2D and 3D takeoffs happened in separate applications. Data had to then be combined through a manual process.

This often resulted in errors, scope gaps, and inaccuracies. Traditional methods for combining 2D and 3D workflows could cost valuable time, leading to potential deadline slippage. By adopting the latest in technology, estimators can take the lead in their industry, offering stakeholders notable benefits Using a Centralised Platform for 2D and 3D models When looking to adopt any new platform, the chosen technology needs to truly add value. As is the case with any process

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change, the learning curve will require training and an investment of time.

However, the right technology is worth the upfront investment due to the long term return. Choosing a platform that centralises 2D and 3D takeoffs has the following benefits, making it easy to see why this is a worthwhile change: • the combination of 2D and 3D takeoffs in one centralised location will improve project collaboration. Being able to review data in one spot will reduce errors or duplication efforts during takeoffs • errors can quickly be identified, freeing up more time to focus on valuable tasks rather than on fixing mistakes • a cloud-based solution will allow estimators to work in parallel with other key stakeholders, such as architects, in real-time. This ensures that everyone has clear visibility into the project budget, with estimators making updates to the takeoff in realtime for every design iteration.

Technology that allows for a singular platform in which 2D documents and 3D models are available helps build better transparency, reduce the workload for estimators, and increase collaboration.

The result is that takeoffs are more accurate and project timelines are accelerated.

CONCLUSION Highly effective estimators implement four key habits, all of which can be achieved to a greater degree by combining them with the right technology. With the use of a centralised platform, estimators can create accurate takeoffs to generate competitive bids faster via increased collaboration and streamlined digital workflows. This results in lower risk, higher win rates, and expedited construction timelines.

Forward-thinking technology that

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includes features like the combination of 2D and 3D takeoff in a cloud-based environment, will provide an even better edge. Estimators interested in leading in the industry should explore technology to lead to even better, more accurate results.

ABOUT AUTODESK Autodesk ® Takeoff, the latest product from Autodesk Construction Cloud, allows estimators to perform more accurate 2D takeoffs and generate automated quantities from 3D models within a single takeoff solution. By leveraging a centralised platform, estimating teams can feel confident working with the current document set to improve their takeoff process, reduce the risk of rework, and ensure project success.

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This advertorial has been paid for and supplied by Autodesk Construction Cloud.

Please visit https://construction.autodesk.com if you would like to learn more.

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 37

PREFABRICATION

CRITICAL FACTORS AFFECTING COST AND TIME OF PREFABRICATED CONSTRUCTION

BY JONATHAN WANG The utilisation of prefabrication does not necessitate an increase in time and cost efficiency. This is the conclusion that I found after completing my university thesis on the exploration of prefabrication in construction. Although the use of prefabrication at a surface level seems rather rudimentary, upon further analysis one may discover that there are many nuances to the current paradigm of prefabricated construction.

Contrary to current opinions, there are many subtle factors that are not considered

when analysing time and cost efficiency.

Therefore, this thesis was written with the intention of highlighting the lesser-known factors that have a significant impact on the process of prefabrication.

To identify the time and cost affecting factors, I analysed confidential data from a project in New South Wales (NSW) that incorporated prefabrication into their construction process. This was done to ensure that the conclusions made were relevant to the current construction industry.

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The analysis of the data was achieved in two methods: an analysis of correlation and frequency. These two methods were the most suitable due to the data that was provided for this project.

Based on the examination of existing studies, I found that there was a lack of publications that explored the niche aspects of prefabrication. Therefore, the conclusions that were drawn from the analysis were achieved solely through the examination of the data provided from this NSW case study.

PREFABRICATION

• station workflow • number of stations.

The consideration of station workflow addresses the interrelationships between each of the workstations that exist in the factory ground. When arranging for the workflow of the stations, the need to consider how the transferal of the prefabricated component from one station to another is integral. These components can be substantial in size and/or mass, which can make the transferal from one station to another become a significant issue. The process of transferring large components between the stations can result in a substantial increase in resources.

Therefore, it is imperative to take into consideration the layout of the factory to maximise potential efficiency.

It is also integral to consider the human resource and staffing required to operate the workstations. The quantity and skill demand of workers is a subtle but important factor to consider, as this determines the appropriate number of staff and stations required to create the prefabricated components. Although it may seem optimal to utilise additional staff, there are several pitfalls that may result in driving up the costs, such as: • proper staffing of each station

The following are the conclusions that were drawn through the analysis of the provided data.

OFF-SITE FACTORS Factory Layout The layout of a factory played a crucial role in maintaining the efficiency of a prefabricated construction process. It is important to consider the following points when arranging the configuration of the factory:

• increase of workstation space in order accommodate additional staff • increase overhead costs.

Inversely, a reduction in the number of staff to reduce overheads can result in their own set of problems. These may include: • congestion of operation in the station, increasing the time of the production cycle • inability to achieve full utilisation of the staff roster due to delays.

Consequently, it can be seen that the staffing is imperative in achieving

It is crucial to consider the additional time and cost that is associated with the integration of the prefabricated component to the onsite components maximum operational efficiency.

Furthermore, it is noted that due to the differences in prefabricated modular items, the construction methodology must also be taken into account. This results in differing needs from both the workstation activity and staff.

BIM Program This aspect deals with the importance of finding adequate software programming that will be able to address all of the requirements associated with designing the prefabricated units. It was noted that the use of a singular software that can encapsulate the entire design and construction of the prefabricated component will result in significant time and cost savings. This removes the need to transfer documents between programs, streamlining the process.

The use of a singular program may also result in lower overhead cost, as the need to obtain licenses for a single program is significantly cheaper than multiple programs. This becomes especially apparent when analysing the production cycle, where for each unit made, the time spent on each was decreasing for each program. The implication from this heavily suggests that the need for familiarity of each of the programs and how to transfer is critical as this can inflate the time of up to 30% more in this case study.

Therefore, it would be reasonable

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PREFABRICATION

to assume that a use of a single or a reduced program will not only reduce the overall time but ensure that the production cycle does not start off with unnecessary delays and time bloats due to the need to familiarise and train the staff to the new programs.

However, it must be acknowledged that the employee must be able to utilise the singular software at an intricate level to completely manage the designing and construction of the prefabricated components.

Furthermore, this is an ideal scenario, and it must be noted that there very likely isn’t a program able to address all the aspects currently. Therefore, the use of multiple programs is to be expected and must be accounted for within the planning of the project and one must ensure that the programs used are the most streamlined and proficient.

ON-SITE FACTORS Combination of Prefab and In-Situ It is crucial to consider the additional time and cost that is associated with the integration of the prefabricated component to the on-site components.

Using the data from the NSW project as an example, one of the identified issues that heavily impacted the time and cost of the procedure was the unexpected difficulty of combining the prefabricated facade to the in-situ wall. This was due to the need for additional machinery to handle the large components.

Furthermore, it was also shown that traditional construction methodologies were not suitable nor applicable during the installation.

A solution may be approached from two angles. The first is customising the prefabricated components to

enable the connection to the existing components. The second is to acquire further specialised workers to be able to install the prefabricated components.

Both aforementioned options result in a significantly higher human resource cost over the traditional method. Therefore, it is imperative to conduct analysis on the method, viability, and resources of the installation to ensure that the additional cost associated with this step is reduced.

Worker Skill Set Despite the supposed reduction of the need for workers on-site because of prefabrication, the degree of skill required to assemble the prefabricated components in the facilities is considerably higher. An analysis of the skillsets of the workers on the project revealed that the skillset of the workers required for the stations is particularly high. Most of the workstations required a worker with both a ’particular’ and ‘skilled’ workset that was exclusive to the specific step of the construction. The only stations that didn’t require these skill sets were the logistics and quality assurance steps. Similarly, on the construction site, there was an increased demand for skilled workers to operate the larger machinery, as well as the experience of integrating the prefabricated component into the building.

Unit Material Composition Finally, one of the crucial factors that affects the time and cost is the unit material composition of the prefabricated component. The ability to select the most optimal materials suitable for the prefabricated component influences many of the aforementioned processes.

By choosing the correct materials and filtering out the irrelevant ones, it is possible to conserve time by avoiding the manufacturing of unnecessary components.

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Furthermore, by selecting the appropriate materials it may be possible to remove the difficulty of the component construction process, resulting in the decreased requirement of skilled labourers.

Therefore, selecting the most appropriate materials can significantly drive down the cost and can be achieved through activities such as value engineering.

CONCLUSION In conclusion, prefabrication can still be considered a worthwhile investment and in the future become the main form of construction. However, as explored in the aforementioned points, there are many more nuanced and intricate pitfalls that can cause an inflation of both cost and time, some of which may not even be mentioned in this article.

Therefore, it is suggested that methodical planning may be able to mitigate many of the previously stated problems that usually present themselves as latent or unforeseeable issues. It is suggested that future projects that want to employ the use of prefabrication should perform their due diligence and the examination of previous projects utilising prefabricated or modular construction. Should future construction endeavours improve upon the identified complications listed above, then prefabricated modular construction and the associated cost and time benefits may fully be realised.

Jonathan Wang is a recently graduated student from the University of New South Wales.

He has completed his honours year of Construction and Property Management whilst further specialising in quantity surveying.

TIMBER

NEW ZEALAND WOOD TIMBER DESIGN GUIDES – COSTING TIMBER BUILDINGS

BY LINDA LODETTI MZNIQS, REG. QS, MRICS AND ANDY VAN HOUTTE

NZIQS would like to acknowledge the Wood Processors and Manufacturers Association (WPMA) in the publication of this article

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TIMBER

With the rate of climate change accelerating and extreme global weather events becoming “common”, the future of our planet for the next generation increasingly becomes this generation’s problem to solve. The only thing that surpasses the rate of change of our weather events is humankind’s ability to make change.

We have caused our current climate to warm faster than the planet can adapt to cope with it. Our planet has seen massive climatic changes over its millennia of evolution, and the planet life has adapted or died with the remaining life becoming stronger. The current flora and fauna on Earth can assist with rebalancing the climate, but only with the correct management. It is up to humans to rebalance the climate as we are the only beings that can affect change faster than the planet can.

The way we make change with our current management systems is by measuring something, because as soon as you measure something, it is human nature to improve it. Thus, we begin by measuring the rate of climate change and its contributing factors.

Following this, we account for emissions that contribute to or diminish climate change. The New Zealand Government has implemented the Climate Change Response Amendment Act 2019, which provides a framework to develop and implement clear and stable climate change policies. There are four key initiatives: 1.

reduction of greenhouse gas emissions

2. establishment of emission budgets 3. requiring the government to develop and implement policies for climate mitigation, and 4. the establishment of an independent climate change commission.

The focus remains on the reduction of carbon dioxide - the most prevalent greenhouse gas - either by reducing emissions or via “carbon sinks” which accumulate and store these gases. Some examples of carbon sinks are oceans, forests and soil.

One emerging and less understood gas in the role of climate change is oxygen.

Oxygen occurs naturally as a byproduct of photosynthesis and its increasing levels has allowed life to thrive on earth. Oxygen affects the climate because it makes up a large fraction of the atmosphere’s mass. Reducing oxygen levels thins the atmosphere, allowing more sunlight to reach the earth’s surface. This extra sunlight causes more moisture to evaporate from the surface, increasing the amount of water vapour in the atmosphere. As water vapour is a greenhouse gas, this makes the earth warmer.

Timber is one of the earth’s photosynthesis machines that absorbs carbon dioxide, and through the process of photosynthesis produces oxygen and stores carbon in the form of cellulose. By producing oxygen and storing carbon, timber is part of the solution whereby the more wood we use for buildings the more we manage our construction and energy emissions.

Timber as a construction material is experiencing a renaissance for two key reasons. Firstly, new technologies allow it to compete competitively against alternative materials. Secondly, it is the only way to truly achieve carbon neutral buildings. Stunning new architecture is being created as designers utilise new wood technologies in a way previously unexplored.

To support the development of timber buildings in New Zealand, WPMA has commissioned a series of timber design guides which are free to download from www.wpma.org.nz. The guides cover a range of topics, including two guides

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on sustainability and one on the costing of timber buildings. The two guides on sustainability are the NZ Wood Design Guide Ch2.1 Timber, Carbon and the Environments and the NZ Wood Design Guide Ch2.2 Social and Health Benefits of Timber Construction. The penalty of sustainability is often considered to be cost, however, with timber construction this is not necessarily the case.

In a first of its kind guide, the WPMA Design Guide team collaborated with Linda Lodetti (principal author) and a working group consisting of Martin Bisset, FNZIQS (NZIQS President), George Traylor and Barry Lynch, MNZIQS. The NZ Wood Design Guide, Costing Timber Buildings, explores the process that the quantity surveyor (QS) will use to cost a timber building, using a case study of a real building to qualify its approach: “For a QS, the challenge lies where the current available “actual cost” data is not readily available in house or on published data sites. The lack of “historical” benchmark data, as a basis for early estimates, means that to evaluate such solutions requires first principle approaches, when often design detail is not yet developed.

In time the “pooled” greater local QS cost knowledge will be more readily available, however for now the best approach is a “collaborative” early input from supplier and design engineer, as the best approach to apply to Engineered Timber Structures for any QS to take. Failing which, QS’s may build in for “perceived” risk of such products at early design stages, which can result in projects not being feasible, or result in the project not even being considered further as an option. The task of the QS is to establish a robust budget for the client to be able to deliver the project. A key tool to ensuring this is achieved, is by assessing the “risks” in the project

TIMBER

and making appropriate “allowances” until such time as details and market testing of the cost plan is possible.”

1.

- NZWood Design Guide, Costing Timber Buildings The Timber guide expands on the appropriate use of Project Contingency and Design Development Contingency and comments on how it is adjusted through the design stages.

Understanding when it is most appropriate to bring a mass engineered design solution to the design table is key, and we highlight a few examples for each situation:

A. WHEN SOIL CONDITIONS ARE POOR Poor soil conditions represent an opportunity for mass timber as an appropriate design solution. Considering that mass timber is 1/5 the weight of concrete and also less dense than steel it provides the ideal conditions for costeffective foundations and lightweight superstructure solutions.

All Stars Inn, Bealey Avenue, Christchurch: an innovative design using timber piling and Cross Laminated Timber (CLT) mass timber floor, wall and roof panels proved a viable structure compared to traditional design. Products such as CLT are considered to be mass timber.

2. Beatrice Tinsley building, University of Canterbury - new four storeys built on the existing basement.

C. QUIET CONSTRUCTION Where required to reduce construction noise levels, such as at hospitals.

2. Park Lane retirement village apartments, Whiteleigh Avenue, Christchurch: using a preloaded gravel solution and concrete ground floor raft slab with CLT wall and floor panels as the structural frame, the project avoided the expense of traditional piling and the risk of unknown ground conditions.

1.

B. BUILDING ON EXISTING STRUCTURES

E. SEISMIC RESILIENCE

Light weight timber construction is ideal for inner city vertical expansion, increasing the building area by adding additional floors:

Design ability to perform during an earthquake (because of low seismic mass and inherent flexibility) with minimal damage or replaceable dissipaters.

1.

1.

Merchants Quarter Apartments, Auckland - three new storeys erected on an existing high rise.

Te Ara o Puanga – Mary Potter Apartments, Wellington.

D. SPEED OF CONSTRUCTION Reduced time on site and reduced Preliminaries (construction startup costs).

1.

Kainga Ora (Housing NZ) social housing programme, Auckland.

Trimble Office Building, Birmingham Drive, Christchurch - earthquake monitoring built into frames.

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TIMBER

2. Hutt Valley Health Hub, Lower Hutt, Wellington - important Level 4 medical centre.

F. EXEMPLAR BUILDINGS Innovation and landmark buildings.

1.

Nelson Airport Terminal - new terminal building with multi angled complex roof design.

2. Te Whare Nui o Tuteata – Scion research and learning centre, Rotorua - a showcase of multiple timber products.

The benefits of using mass engineered timber solutions have the potential to reduce construction costs and add value far beyond direct product comparison. A few aspects that need to be considered when unravelling the cost savings are as follows: • the reduced foundation requirements due to the lighter weight properties of timber • smaller crane capacity is required due to lighter timber loads being lifted into place • with new CNC technology, higher dimensional accuracy is achievable • prefabricated in controlled environments before delivery to site • faster to erect on site • shorter critical path programmes result in reduced preliminaries • less scaffolding costs due to shorter duration and options with edge barrier protection lifted up resulting in the mid floors being immediately accessible.

In comparison, any wet trade needs to cure and dry and be propped up with a longer turnaround time.

• timber is biodegradable • there is less waste on-site • timber can be repaired, such as fixing

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TIMBER

cracks or replacing fire charred layers • timber can store carbon • earlier project delivery than traditional construction - has huge benefits for the owners who can use their asset earlier, earn revenue sooner, reduce any alternative temporary rental costs and unlock funds earlier for their next investment opportunity.

The case study in the Costing Timber Buildings guide of a five-story apartment block showcases where a structural timber frame is cost neutral compared to a steel frame solution. By way of example, it comprises 300x45 Laminated Veneer Lumber (LVL) 13 joists and various sizes of LVL columns and beams, using strong rod tie systems in the shear walls.

This Lightweight Timber Frame (LTF) solution designed in LVL members demonstrates that a cost neutral timber frame design for the five-story apartment construction is achievable in New Zealand.

Traditional Comfloor 60 system floors were initially considered, however, have since been designed in mass timber Parallel Laminated Timber (PLT) floor panels.

In a direct comparison of costs, a timber member may have a higher elemental cost. The challenge is to take all the factors on board and evaluate the complete build costs, incorporating the system benefits of timber construction as highlighted above.

mass timber solutions, what does the innovative product bring to the table?

Understanding the range of available products and investigating the cost drivers without adding unnecessary contingencies for risk - is essentially no different than traditional construction.

In New Zealand, it is encouraging to see significant investment into plants and manufacturing capacity gearing up, which will create more costeffective pricing of mass timber product production in the near future. As more project types become available to analyse, the more historical data we will have to give us confidence for future concept estimating. We are not saying that steel and concrete do not have a place in design solutions, but we want to explore when timber is best to bring to the design table.

Choosing mass timber as the only truly renewable construction product is making a sustainable choice for generations to come - even if it is cliché to say for our grandchildren and the planet that they get to live on. Ultimately, the value-added proposition of timber goes beyond the bottom-line costs.

Experienced QS’s will know that you need to look at the big picture, and the only way is collaboration with design engineers, specialised or nominated suppliers, and early contractor involvement on buildability issues. The QS’s challenge is: when considering

Linda Lodetti MZNIQS, Reg. QS, MRICS is a Central North Island Lead Quantity Surveyor at Prendos New Zealand and Andy Van Houtte is a Director and Structural Engineer at Potius Building Systems.

This article was supplied by the New Zealand Institute of Quantity Surveyors (NZIQS).

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EDUCATION

AUSTRALIAN BIM AND DIGITAL ENGINEERING EDUCATION POSITION STATEMENT 46: SEPTEMBER - NOVEMBER 2021: BUILT ENVIRONMENT ECONOMIST

EDUCATION

AUSTRALASIAN BIM ADVISORY BOARD In May 2017, the Australasian BIM Advisory Board (ABAB) was established by the Australasian Procurement and Construction Council (APCC) and the Australian Construction Industry Forum (ACIF), together with NATSPEC, buildingSMART Australasia and Standards Australia. This partnership of national policy and key standard‐ setting bodies represents a common‐ sense approach that captures the synergies existing in, and between, each organisation’s areas of responsibility in the built environment. It also

supports a more consistent approach to the adoption of Building Information Modelling (BIM) across jurisdictional boundaries.

The establishment of the ABAB is a first for the Australasian building sector with government, industry and academia partnering to provide leadership to improve productivity and project outcomes through BIM adoption.

The ABAB is committed to the optimal delivery of outcomes that eliminate waste, maximise end‐user benefits and increase the productivity of the Australasian economies. The ABAB has

evolved from a previous APCC–ACIF collaboration established in 2015 at a BIM Summit. This summit produced resource documentation to support BIM adoption (refer towww.apcc.gov.au for copies).

Members of the ABAB have identified that, without central principal coordination, the fragmented development of protocols, guidelines and approaches form a significant risk that may lead to wasted effort and inefficiencies, including unnecessary costs and reduced competitiveness, across the built environment industry.

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EDUCATION

EXECUTIVE SUMMARY

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EDUCATION

STATEMENT OF PRINCIPLE Across Australia, there are several vocational and university courses, offered in BIM and Digital Engineering (Digital Delivery), which range from initial awareness through to particular capabilities for specific disciplines.

While these courses are being delivered across formal and informal education streams, there are inconsistencies in the structure and content of what is being taught and the credentials received.

Inconsistencies in delivery across the full range of sectors that utilise BIM and Digital Delivery limit workforce mobility and industry connectivity.

This lack of a workforce baseline in Digital Delivery capability is making it difficult for students, clients, and employers to understand the skills they will be leveraging and the pathways to mastery.

This inconsistency needs to be addressed to assist the Australian built environment workforce to meet its local needs and to achieve global competitiveness.

Further, Australia’s coverage of Digital Delivery within the built environment, as a core qualification for practitioners, is not present, nor is it offered as a necessary requirement of course completion. This, combined with COVID-19 impacting Australia’s access to imported digital delivery capability through skilled migration, has resulted in a greater dependence on the locally educated workforce, at least in the short-term. Together, these issues are placing an increased burden on the built environment workforce by having workers that are neither job ready nor future ready.

This education gap has meant Australia relies heavily on the self-taught market, informal software training or those relying on international qualifications. Such an

approach is creating discrepancies within an already tight profit margin industry, where Digital Delivery is not framed to directly support Australia’s market, nor where experiences are extensive enough to deliver business transformations effectively, even to individual projects.

It is these discrepancies that require Australia to take a strategic approach to Digital Delivery education to prepare our workforce to meet local and global standards, whilst enhancing its ability to be globally competitive. A mature Digital Delivery workforce for the built environment, supported by a robust connection between industry, government, and academia, will allow Australia to create an internationally advanced workforce and our own tailored solutions.

STATEMENT OF CONTEXT The built environment is an integral part of Australian life that supports a large portion of our economy, infrastructure and society. Global best practice acknowledges the adoption of Digital Delivery to data and knowledge, and the importance of education pathways to enable the workforce, across the lifecycle of the built environment to progress and remain contemporary.

In early 2017, the APCC, in collaboration with ACIF, released its BIM Knowledge and Skills Framework (hereafter the Framework), which was built to align BIM education across Australian jurisdictions by assisting industry and educators in their capability development planning.

This in-depth Framework, together with accredited courseware and certified qualification procedures, creates a digital delivery education model that supports job ready BIM practitioners.

In mid-2017, in the absence of national qualifications aligned with the Framework,

BuildingSMART committed to developing further detail and invested in a project to create an exploratory assessment regime (BIMcreds) using the Framework as a basis to better understand the competency levels within Australia.

Since the soft release of this assessment, BuildingSMART International have shown ongoing interest to progress the assessment further.

As this initiative progressed, so did the interest in developing BIM Digital Delivery courses across both vocational training and university education. In 2019, a BIM Education Group was formed to explore these possibilities further. This Group, from across Australia, included representatives from TAFE and other registered training organisations (RTOs), as well as from universities. Their objective was to understand how to bring Digital Delivery education, using multiple credential approaches (such as microcredentials), and incorporate them within qualifications aligned with the Australian Qualification Framework (AQF).

THE AUSTRALASIAN BIM ADVISORY BOARD’S POSITION As noted previously, Australia has invested in the development of a BIM Knowledge and Skills Framework that will assist in establishing the formal Digital Delivery Education Framework.

This Framework is the foundation for helping the built environment workforce advance and progress. When the Digital Delivery Framework is delivered with accredited courseware and nationally recognised qualifications, this will assist in the upskilling of the Australian workforce and reduce dependency on skilled migration. Further, it will create additional opportunities for State and Territory investment in traineeships and upskilling of existing workers.

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2. Encourage inclusive collaboration between government, industry and academia to grow Digital Delivery ability.

1. Drive a consistent education standard across all jurisdictions to ensure a globally competitive industry.

To reach a consistent approach to Digital Delivery education, ABAB supports nationally recognised BIM training to provide a consistent approach to skilling that is embedded into training and education across the built environment value chain in all jurisdictions.

Until a formal industry wide standard to training and education is implemented, ABAB supports coursework or certification, which aligns to and follows the APCC and ACIF BIM Knowledge and Skills Framework.

In the longer-term, coursework, certification schemes, and qualifications, consistent with the Framework, must meet formal AQF requirements required by the Australian Skills Quality Authority (ASQA) and its Skills Service Organisations (SSOs), and the Commonwealth Department of Education, Skills and Employment.

ABAB recognises that the best solution to incorporating a consistent approach to Digital Delivery capability is to engage all training and educational stakeholders. ABAB will work with government agencies, along with industry, professional bodies, vocational training organisations and universities, to ensure greater collaboration, including promotion of Digital Delivery’s importance to the built environment workforce. To support this initiative, a roadmap to Digital Delivery training and education should be placed on the agenda at all levels of government.

Within vocational training, ABAB intends to work with SSOs and their Industry Reference Committees to update nationally recognised vocational training packages to incorporate the Digital Delivery standards.

ABAB will also work with universities, professional bodies, associations, and relevant government agencies, to update the university curriculum.

Setting a national education standard will support and grow Digital Delivery capabilities within the workforce now and into the future.

ABAB advocates for a consistent approach to ensure that the workforce is receiving the same message and that it aligns best practice Digital Delivery outcomes to effectively upskill those working in the built environment.

developed by educators that meets a consistent standard aligning to global expectations. However, this should be done without disadvantaging the way the built environment workforce delivers or operates across Australian jurisdictions, noting that this includes government procurement models.

4. Continuously develop by connecting research and technology strengths with academia.

The advancements in research and technology will be connected to academia through liaisons with BIM education groups. The connections will be formed through an ABAB representative on the BIM education groups to enable sharing of research and technology. This will include a tripartite relationship with the industryled research initiative Building 4.0 Cooperative Research Centre (CRC).

ABAB will ensure all advancements are progressively shared as they are made available or presented to the ABAB committee themselves.

In addition to connecting research and technology, Australia will need to continuously support all emerging capabilities.

3. Integrate and align with the national and international standards.

To ensure Australia’s approach to Digital Delivery education enables the built environment workforce to be globally competitive, ABAB supports curriculum

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In addition to ensuring the standards are followed, academia must be connected to research and technology advancements to integrate into their curricula.

EDUCATION

CONCLUSION Statement of Authorisation

5. Continuously foster emerging capabilities into the curriculum as our people, technology, and processes continue to advance.

ABAB will provide support for emerging capabilities. This support will include courses to be accessible to start-ups and small and medium enterprises (SME).

This, in turn, will assist the industry to capitalise on their agility and innovative approaches to further advance the Digital Delivery curriculum.

The Digital Delivery is a global market opportunity, and as such those who work in the Australian built environment have an opportunity to access international markets.

Furthermore, there is an opportunity for Australian education standards to become the benchmark for regional skills delivery, and to create an export opportunity for BIM training and education providers. An expanded leadership role in the global built environment industry will generate strategic advantages for Australian jurisdictions, but will depend on our capability, technological capacity and engagement. As the industry advances, ABAB will leverage its membership to promote Australia as global leaders in Digital Delivery through activities such as members participating in international forums. This will allow better access to international markets and ensure that the Australian built environment industry is integrated into the global marketplace.

This position statement was subject to expert review by the Australasian BIM Advisory Board and authorised by the Board members at its meeting of July 2021.

BIM Education Publication BIM Knowledge and Skills Framework Media Release, Exploratory Notes, and Framework detail.

Other Relevant Links • ABAB Website • APCC Publications • Artibus Innovation - A Skills Service Organisation • Australian Industry Skills Committee

This report was prepared by Teresa Scott, from Australasian Procurement and Construction Council and Belinda Hodkinson from Magnae.

This report is a resource provided by APCC. Please visit https://www.apcc. gov.au for more information.

Copyright © Australasian BIM Advisory Board 2021. This publication is licensed under a Creative Commons AttributionNon-Commercial 4.0 International Licence. https://creativecommons. org/licenses/by/4.0/ Please feel free to use this content but attribute it to the APCC.

ABAB supports a dynamic and wellsupported built environment industry, which has its education sustained by a strong connection between government, industry and academia.

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CONSTRUCTION DELAY

CONCURRENT DELAY AND THE PREVENTION PRINCIPLE

BY ROBERT GEMMELL

INTRODUCTION

ANALYSIS

This article looks at the interrelationship between the ‘prevention principle’ and concurrent delay.

In Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd,¹ the court said:

The prevention principle comes into operation where the employer’s act or omission prevents the contractor from complying with its obligations to complete the works by the completion date. If the employer’s act of prevention causes critical delay to the works, and there is no mechanism in the contract to extend time for completion as a result of that act or omission, time may become ‘at large’. If time is ‘at large’ the contractor’s obligation will be to complete the works within a reasonable time and the employer is unable to deduct liquidated damages (unless time is again made of the essence).

“From this review of authority, I derive three propositions: (i) Actions by the employer which are perfectly legitimate under a construction contract may still be characterised as prevention, if those actions cause delay beyond the contractual completion date. (ii) Acts of prevention by an employer do not set time at large, if the contract provides for an extension of time in respect of those events. (iii) Insofar as the extension of time clause is ambiguous, it should be construed in favour of the contractor.”

Where there is concurrent delay, arguably, both the employer and the contractor are causing the same delay. If the contractor is not granted an extension of time for that delay, unless the contract expresses a contrary intention, would it therefore be correct that the ‘prevention principle’ operates to render time at large?

Some commentators and courts have opined that the prevention principle may not apply to cases of concurrent delay.² In Adyard Abu Dhabi v SD Marine Services,³ the court held that a party seeking to rely on the prevention principle must establish that actual delay was, on the facts, caused by the particular acts of prevention relied upon.

Adyard did not establish actual delay and was not entitled to rely on the prevention principle and its claim was dismissed.

References ¹ Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd [2007] EWHC 447 (TCC), [2007] BLR 195, 111 Con LR 78, [2007] CILL 2458, para [47]; note 19, para 56 ² See John Marrin QC, ‘Concurrent Delay Revisited’ paper for the Society of Construction law 2013, pages 5, 6 and 7 ³ Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm), [2011] BLR 384, 136 Con LR 190

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CONSTRUCTION DELAY

In Jerram Falkus Construction v Fenice Investments,⁴ the court considered that the prevention principle does not apply in cases of concurrent delay and said: “Accordingly, I conclude that, for the prevention principle to apply, the contractor must be able to demonstrate that the employer’s acts or omissions have prevented the contractor from achieving an earlier completion date and that, if that earlier completion date would not have been achieved anyway, because of concurrent delays caused by the contractor’s own default, the prevention principle will not apply.”

In his paper,⁵ Marrin points out that the Australian Supreme Court of Victoria in SMK Cabinets v Hili Modern Electrics,⁶ considered the application of the prevention principle where the acts of the contractor also contributed to delay. The court said: “The sole remaining matter is the soundness of the ground on which the arbitrator in fact rejected the defence of prevention. He evidently considered that where acts or omissions of a proprietor do in fact substantially delay completion, the proprietor nonetheless cannot be said to have prevented the contractor from completing by the relevant date unless the contractor would have been able to complete by that date had it not been for the supposed prevention. Mr McCurdy asks us to uphold that view. But it has been accepted for more than one hundred years that this is not the law. The cases are all one way.”

Marrin further points out that,⁷ in Jerrum Falkus, the court was referred to a footnote in Keating⁸ and to SMK Cabinets and Adyard. In relation to the footnote in Keating, the court in Jerrum Falkus said: “In fact, on an analysis of that case, and indeed the other cases referred to in the Keating footnote, it becomes apparent that they were not dealing with concurrent delay, but instead with the situation where the contractor was in delay for part of the time but where, for other periods of delay, the contractor could show that they were the result of the acts of prevention on the part of the employer. I am in no doubt that, in those circumstances, the prevention principle applies. But none of those cases deal with concurrent causes of delay, and in my judgment, in that situation, the right analysis is provided by Mr Justice Hamblen in Adyard.”

Marrin says that there are some difficulties with this conclusion.⁹ Marrin points out that Mr Justice Hamblen in Adyard did not go so far as to hold that the prevention principle was inapplicable in cases of concurrent delay. Marrin also points out that no rationale is offered for distinguishing between cases of concurrent delay and the other cases of contractor-caused delay referred to.

Marrin says that the ‘suggestion’ appears to be that the prevention principle applies where the employer’s act is the sole cause of the relevant period of delay but not when the same act is one of two concurrent causes – but is this correct?

Marrin suggests that on analysis this question involves two issues:¹⁰

1. The first concerns whether the prevention principle depends on the employer’s act being the sole cause of delay in the relevant period, as opposed to being a concurrent cause; and 2. The second concerns the relationship between the prevention principle and the terms of the contract agreed between the parties.

In relation to Marrin’s first point, whether the prevention principle depends on the employer’s act being the sole cause of delay in the relevant period, as opposed to being a concurrent cause, Marrin’s preferred view is expressed by the editors of Hudson as follows:¹¹ “Thus, it is well established that an employer is not entitled to liquidated damages if by their acts or omissions they have prevented the contractor from completing their work by the completion date. Whether concurrent with another contractor delay or not, there is no reason why the principle should not be the same. As Salmon LJ observed: “If the failure to complete on time is due to the fault of both the employer and the contractor, in my view the clause (giving the employer liquidated damages) does not bite. I cannot see how, in the ordinary course, the employer can insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled … I consider that unless the contract expresses a contrary intention, the employer, in the circumstances postulated, is left to his ordinary remedy; that is to say, to recover such damages as he can prove flow from the contractor’s breach.”

⁴ Jerram Falkus Construction Ltd v Fenice Investments Inc (No.4) [2011] EWHC 1935 (TCC), [2011] BLR 644, 138 Con LR 21, [2011] CILL 2072, para [52] ⁵ John Marrin QC, ‘Concurrent Delay Revisited’ Society of Construction law 2013, page 5 ⁶ SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391 at 392. ⁷ John Marrin QC, ‘Concurrent Delay Revisited’ Society of Construction law 2013, page 6 ⁸ Keating (8th edn, Sweet & Maxwell, 2006) ⁹ John Marrin QC, ‘Concurrent Delay Revisited’ Society of Construction law 2013, page 6 ¹⁰ John Marrin QC, ‘Concurrent Delay Revisited’ Society of Construction law 2013, page 6 and 7 ¹¹ Nicholas Dennys, Mark Reaside and Robert Clay (general editors), Hudson’s Building and Engineering Contracts, (12th edn, Sweet & Maxwell, 2010), para 6-060

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Where there is employer delay, whether concurrent with contractor delay or not, the contractor should be entitled to an extension of time for the period of employer delay.

In relation to Marrin’s second point, that is the relationship between the prevention principle and the terms of the contract agreed between the parties, the prevention principle applies unless the contract expresses a contrary intention.

In North Midland v Cyden Homes,¹² the parties included an extension of time clause which gave the contractor an entitlement to an extension of time for an act of prevention by the employer except for when there was concurrent delay. If this exception had not been written into the contract, the contractor, North Midland, may have been entitled to an extension of time when there was concurrent delay.¹³ The contractor argued that the ‘prevention principle’ was a rule of law which protected it from being held to a completion date which the employer had prevented it from achieving.

However, the Court of Appeal disagreed.

The prevention principle applies where a contract is silent as to whether an act of prevention by an employer entitles a contractor to an extension of time. Where the contract is silent, the law will imply a ‘non-hindrance’ provision into the contract which the employer will be in breach of if it attempts to take advantage of its own acts of prevention.

SUMMARY It therefore appears that, the stronger argument is that the prevention principle operates where there is concurrent delay unless the contract expresses a contrary intention.

The prevention principle does operate where the employer’s act or omission is the only cause of critical delay and again, where the contract does not express a contrary intention.

¹² North Midland Building Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744 ¹³ Walter Lilly v Mackay [2012] EWHC 1773

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LEGAL

SECURITY OF PAYMENT CHANGES: KEEPING UP WITH THE DIFFERENCES INTRODUCTION Over the past four years, there have been some significant changes to some of the state-based Security of Payment regimes.

This has been occurring at the very time that the Federal Government was seeking harmonisation in this interest of efficiency and standardisation.

Many of the changes have staged implementation, so more than ever it is

important to appreciate which changes will affect the specific construction contract that is being administered.

This is particularly the case for end of project claims on large projects that were commenced several years previously.

The introduction of Project Bank Accounts and Statutory Trusts in certain jurisdictions will also affect the administration of some projects.

All quantity surveying professionals need

a close working knowledge of the Act in their jurisdiction in order to assist any party to the project contracts.

FEDERAL GOVERNMENT REVIEW In 2016 the Federal Government commenced an initiative to identify the potential benefits of harmonising state legislation. The result was a report dated December 2017, prepared by John Murray AM, that surveyed the various

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stakeholders and proposed a ‘best practice’ model, largely based on the New South Wales model. The following state changes would indicate that, with a few notable exceptions, there is some progress towards that best practice model.

QUEENSLAND The Building and Construction Industry Payments Act 2004 was significantly amended in December 2015, removing the ANSs, and was then repealed with the introduction of the Building Industry Fairness (Security of Payment) Act 2017. The new Act applies to payment claims issued after commencement on 17 December 2018, so it is unlikely that any actions remain under the repealed Act. The most significant changes were the removal of a requirement to identify a Payment Claim as being made under the Act, an extended default timeframe to reply to a Payment Claim, and the removal of ‘second chance’ notices to provide a Payment Schedule before proceeding to adjudication. While ‘complex’ claims with extended timeframes remained, the potential to give new reasons was removed. The Act also introduced Project Bank Accounts, to be established by the head contractor and initially implemented on some state funded projects.

Amendments to the Building Industry Fairness (Security of Payment) Act 2017 were passed on 23 July 2020. Some of the amendments apply to existing and new contracts, including non-payment of a Payment Schedule being a fineable offence, and the ability of a subcontractor to make a withholding request up the contracting chain if an adjudicated amount is not paid. Project Bank Accounts became statutory trusts, with a staged rollout.

Government projects for tenders released between 1 March 2018 and 28 February 2021 with a value from $1M to $10M generally require a Project Bank Account,

but this can be transitioned to statutory trusts. Those same types of projects tendered after 1 March 2021 require the head contractor to establish a Project Trust and a general Retention Trust. From 1 July 2021, the requirement for these statutory trusts extends to all government and health projects above $1M. From 1 January 2022, private sector, local government, statutory authority, and government owned entity contracts valued at $10M or more also require the establishment of a Project Trust, with the limit lowered to $3M from 1 July 2022. This requirement encompasses subcontractors that contract for the above values. From 1 January 2023, all contracts valued at $1M or more are required to implement Project Trusts. The Retention Trusts are also progressively rolled out, applying from 1 March 2021 to any head contract that requires a Project Trust and any subcontract one tier below. The range of contracts that require a Project Trust expand on 1 January 2022 and 1 July 2022 as noted above, so both the head contractor and first tier subcontractors on those projects must implement a Retention Trust from those dates. From 1 January 2023, Retention Trusts apply not just to head contracts and first tier subcontracts, but to any contract that requires a Project Trust because it is above $1M in value, and all subcontracts one tier below. Some projects, such as transport and most mining work, are exempt.

NEW SOUTH WALES The Building and Construction Industry Security of Payment Act 1999 was amended in 2018, effective for contracts entered into on or after 21 October 2019. The concept of ‘reference date’, was removed, instead allowing a claim to be made on and from the last day in each month unless the contract provides an earlier or more frequent date, and the requirement for all payment claims to state that they are made under the

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Act was reinstated. The amended Act provided that if the Supreme Court finds that only part of an adjudicator’s determination is subject to jurisdictional error, that part may be severed, and the rest confirmed. It is likely that many contracts will remain to be determined under the unamended Act. From 1 March 2021, the Act also applied to the owner-occupier principal of a residential construction contract entered into on or after that date.

Under the Building and Construction Industry Security of Payment Regulation 2020, from 1 September 2020 the head contractor must create a Retention Trust for retention money if the head contract has a value of at least $20M.

WESTERN AUSTRALIA The Building and Construction Industry (Security of Payment) Act 2021 will replace the Construction Contracts Act 2004 for all contracts entered into after commencement of the new Act. The WA government has indicated a staged implementation, with proposed dates in 2021 and 2022 subject to industry consultation. The new Act only allows claims up the contractual chain and follows the general recommendation in the Murray Report for a best-practice model, generally along the lines of the NSW Act, where the contractual right to make a Payment Claim and contractual obligation to respond (either through the written terms of the contract or terms implied by the Construction Contracts Act) is replaced by statutory rights and obligations. Those statutory documents frame the dispute that is argued in adjudication, similar to a court matter where the positions of the parties must be made clear at commencement.

The responding party gets a second chance to do so before adjudication commences but claims or reasons for nonpayment outside of the documents that

LEGAL

frame the dispute cannot be considered by the adjudicator.

A process is introduced for review determinations by a second adjudicator.

This process is far broader than the review provision under the Victorian Act, which is limited to a consideration of excluded amounts under that Act and, according to statistics released by the Victorian Building Authority, is rarely undertaken.

The new WA Act provides that a party can submit a review application merely because the adjudicated amount differed from what was claimed/scheduled by more than a fixed amount (perhaps $200K), and the review adjudicator can quash the first determination and make a new determination.

From what is likely to be a second implementation stage, a contractor will be required to keep a Retention Trust Account to hold all retention funds if the contract value is above a threshold that is subject to industry consultation, with a possible significant threshold reduction in a third stage of implementation.

The new Act includes a unique provision that enables an adjudicator, arbitrator, expert, or court to declare a notice-based time bar unfair and ineffective in the case of the particular entitlement that is the subject of the proceedings.

There is likely to be a significant transition period of existing contracts that will remain subject to the Construction Contracts Act 2004.

NORTHERN TERRITORY

to review an adjudicator’s determination, including the general power to refer the matter back to the adjudicator if the original determination is set aside. The timeframes were standardised to working days and adjusted accordingly.

TASMANIA, VICTORIA, SOUTH AUSTRALIA, AUSTRALIAN CAPITAL TERRITORY The Security of Payment legislation in the above jurisdictions had remained relatively unchanged over the past four years.

DIFFERENCES IN STATE LEGISLATION The above review documents significant recent changes. It does not document minor changes to timeframes or summarise the differences between the state/territory-based Acts that have been in place for some time.

In all circumstances, reference to the relevant state/territory legislation that is current at a point in time is recommended.

The success of claims and defences under the various Acts requires careful planning and administration of the relevant contracts and early intervention to present a case in the best light possible.

This article has been written by the team at Doyles Construction Lawyers. www.doylesconstructionlawyers.com

The Construction Contracts (Security of Payments) Act 2004 was amended in 2019, permitting parties to a high value contract (over $510M) to agree in the contract to opt out of the adjudication process and instead follow the contractual dispute resolution procedure. Power was granted to NTCAT

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DISPUTE RESOLUTION

EXPERT DETERMINATION

FOR DISPUTE RESOLUTION

BY AJANTHA PREMARATHNA FAIQS, CQS

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DISPUTE RESOLUTION

The construction industry is the sector most affected by disputes across its delivery time. Unlike many other industries, the production duration for the construction sector is a very lengthy and time-consuming process involving planning, designing, construction, operation, and maintenance. At the same time, there are a higher number of stakeholders associated with the process compared to many other industries. These stakeholders vary from the client, authorities, consultants, subconsultants, contractors, subcontractors, suppliers, operators, manufacturers, end-users, and so on.

DISPUTES The lengthy process and number of stakeholders can often lead to miscommunications, misinterpretations, misinformation, ambiguities, and discrepancies. The outcome of all of this is that the contracting parties (clients and consultants, clients and contractors, contractors and subcontractors, subcontractors and suppliers) embark on various claim situations, conflicts, and disputes.

Construction professionals who have knowledge of the subject matter of the disputes have been sidelined with legal professionals taking over the governing of the proceedings at a heavy cost.

The cost of resolving such disputes is, to some extent, a waste of global resources. Had such disputes been avoided or minimised at the inception of the project, the resources mobilised to resolve the dispute could have been utilised towards a more productive and meaningful global purpose.

Dispute resolution in the construction sector has now become a lucrative industry for its stakeholders. The amount of money spent to resolve such disputes is enormous. Due to the current trend of the industry contracting parties, disputes cannot be avoided. Therefore, contracting parties should look for the most effective dispute resolution mechanisms to resolve their disputes efficiently and cost effectively with minimum resources.

DISPUTE RESOLUTION Currently, there are various dispute resolution options that are specified in contracts and are being practiced in the industry. Firstly, either the architect, the contract administrator, or the engineer could step in between parties to resolve disputes. This is the most appropriate and most economical mechanism to resolve the dispute between the parties.

However, the quality of this approach would depend on the experience of the dispute resolver such as the architect, the contract administrator, or the engineer.

The poor quality of dispute resolution by the architect, the contract administrator, or the engineer may result in the dispute not being resolved at this stage and thereby escalating it to the next level.

The next level of dispute resolution mechanisms vary from adjudication, arbitration, litigation, and other amicable solutions. Although almost all the disputes arising in the construction sector are related to technical,

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contractual, or commercial matters, with a few issues centred on legal issues, most of the adjudication and arbitration proceedings are to some extent hijacked by legal professionals from the construction industry. Adjudication and arbitration proceedings have been transformed into a mini-court hearing and have been overly complicated with legal jargon and procedures.

Construction professionals who have knowledge of the subject matter of the disputes have been sidelined with legal professionals taking over the governing of the proceedings at a heavy cost.

This is not usually the expectation of contracting parties when they incorporate adjudication or arbitration clauses into their contract. Their expectation is that technically qualified and experienced construction professionals in the industry would investigate their disputes and would resolve them technically and professionally within a reasonable time at affordable costs. The current cost of adjudication and arbitration is exorbitant and out of proportion to the dispute that parties expect when looking for a resolution.

EXPERTS In addition to the arbitration and adjudication, contracting parties rely on several other alternative dispute resolution mechanisms. These include facilitation, conciliation, mediation, and expert determination. All of these alternative amicable solutions have their own merits and demerits. In facilitation, the facilitator may or may not be a technical person, but an individual who has a good personality and experience to work between two parties and narrow down the dispute. Mediators and conciliators could also be a technical

or non-technical person. In all of these mechanisms, the individual working between the parties to settle the dispute would not go deep into the core of the dispute but would try to negotiate between the parties and narrow the gap of the disputes, or would try to bring the disputed parties to the negotiation table.

Due to a lack of technical substance for a solid settlement in most cases these amicable mechanisms fail, and the dispute would then go to the next level.

Adjudicators and arbitrators are mostly technical professionals who have wider experience and deep knowledge of their respective subject matters. However, adjudication and arbitration are not an ideal means of dispute resolution due to heavy costs, time consumption, and the complicated and strict rules and procedures.

As stated above, disputes arising in the construction industry are mainly involved with technical, commercial and contractual issues which are rarely legal. There are sufficient experts in the construction industry who are excelling technically, commercially, and contractually. Therefore, disputes in the construction industry should be left in the hands of experts in the construction sector to resolve them effectively. Such expert determinations could be administrated with less rules and complicated (legal) procedures, unlike arbitration and adjudication where representatives gamble with various delays and procedural tactics at the cost of the disputing parties.

EXPERT DETERMINATION Where contracting parties use expert determination, the process should be appropriate for the dispute to be

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determined and the relevant clauses need to be enforceable in the contract in a practical and effective manner. The parties would agree in advance whether or not they will be bound by the decision of the expert. The expert provides a speedy and effective way of resolving disputes, particularly disputes which are of a specific technical character or specialised kind. Unlike arbitration or adjudication, expert determination is not governed by legislation. The adoption of expert determination is a consensual process by which the contracting parties agree to take defined steps in resolving disputes.

The expert determination clause in the contract between the parties would specify that disputes shall be determined by an expert. There is nothing wrong with such a provision in a contract.

Also, it is perfectly acceptable that the expert determination clause provides that the expert’s decision shall be ‘final and binding’ or ‘conclusive’ similar to an award from arbitration.

Problems may be faced by the experts when factual issues are referred to them.

The expert does not have the power to compel a witness to give evidence or test a witness through cross examination.

In those circumstances, the expert can be placed in an impossible position when trying to determine the truth out of competing versions of the facts.

However, in a technical dispute the expert himself would be in a position to justify the matter in dispute and may call further expert witnesses if required. The validity of such determination may be challenged where the expert is required to decide a legal question or legality of the matter but, in so doing, it is necessary for the expert to form a view as to the correct contractual interpretation of the

DISPUTE RESOLUTION

relevant legal matter with the help of a legal expert.

The expert determination mechanism requires parties to agree on the identity of the expert, and if the parties failed to agree on the expert within a specified timeframe given in the expert clause in the contract, either party may request a nominated third party such as a professional institution to appoint a suitable expert.

An expert will be appointed because of his or her knowledge and experience on the subject in dispute. It is prudent, unlike arbitration and adjudication, to give the expert some flexibility as to the manner in which the process of dispute determination is to be conducted.

The reason for making an expert determination non-binding may be to give the parties an idea as to how the dispute might be decided if it was pursued through a binding process like arbitration or litigation.

SUMMARY

determination. An expert does not have power to call evidence and the witnesses' expert may have to depend on a series of expert witnesses. As almost all of the disputes that are referred to the experts are technical in nature it rarely would need evidence and factual witnesses.

Considering the user-friendliness of the overall process, unlike strict rules and procedures that govern arbitration proceedings run by legal professionals, expert determination shall be more streamlined for better practice in the construction industry.

Ajantha Premarathna FAIQS, CQS, FRICS, FIQSSL is a Chartered Quantity Surveyor with three fellow memberships from professional quantity surveying institutions of Sri Lanka, Australia, and United Kingdom.

He is the Region 2 President of the International Chapter of the Australian Institute of Quantity Surveyors.

The disputes in the construction industry are a common scenario. The majority of these disputes can be resolved and determined by the professionals in the construction industry, as they are the experts in the industry, more economically and effectively than traditional arbitration and adjudication proceedings. Similar to the arbitration award, expert determination can be treated as a binding decision between the parties. In order to be binding, the expert determination clause in the contract shall state so.

Having a binding expert determination clause in the contract ensures parties can effectively settle their dispute. The problem may arise when evidence or a witness may need to call for such

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