Built Environment Economist: March - May 2020 edition

MARCH - MAY 2020

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

3 UPFRONT Q&A

27 HOW SYDNEY WATER IS LEADING THE WAY USING NEC4 CONTRACTS

44 THE RAIL INFRASTRUCTURE BOOM

52 DRIVING VALUE FOR MONEY THROUGH DESIGN INTEGRATED WITH COST ANALYSIS

CONTENTS 2 CEO Letter

44 The Rail Infrastructure Boom

3 Upfront Q&A

48 It’s Not What You Do or Who You Are,

8 The Hidden Cost of High-Rise

But What You Sign

16 The Innovative and Cost-Efficient Way to Build

52 Driving Value for Money Through Design

Structural Walls

Integrated with Cost Analysis

24 Revising the Retentions Regime

56 Birmingham: Build to Rent

27 How Sydney Water is Leading the Way Using

61 Why Buildings Leak: Part One 65 Quantity Surveyors in Mediation

NEC4 Contracts 32 Future Reality Q&A

67 Expert Witnesses and ‘Ships in the Night’

40 The Quantity Surveyor and Regulations

69 Building Construction Index (available in print edition only)

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.

Subscribe Visit www.aiqs.com.au and click on the Shop button. You can purchase a copy of this edition or subscribe for 12 months.

Contribute AIQS encourages readers to submit articles relating to quantity surveying, the built environment and associated industries including; construction economics, cost estimating, cost planning, contract administration, project engineering. Contact AIQS.

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Contact at AIQS Anthony Lieberman Communications and Marketing Manager T: +61 2 8234 4009 E: marketing@aiqs.com.au

Disclaimer AIQS does not take any responsibility for the opinions expressed by any third parties involved in the writing of Built Environment Economist.

ISSN 2652-4023

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 01

CEO LETTER

in the provision of less than professional levels of service including, omissions, errors in reports, and potential negligence.

As a professional body with individual members, AIQS’s principal role is the development and promulgation of educational, behavioural and technical information and standards for the benefit of AIQS members and their clients.

This encompasses (amongst other things) establishing tertiary education standards, continuing professional development programs, development and dissemination of information papers, guidance notes and practice standards, codes of conduct, certification schemes, and complaints handling regimes.

Development of standards results in raising professional benchmarks in relation to client engagement, the delivery of services by members, and increased awareness and benefits to members clients (including other end users of member services).

Clients of AIQS members and end users should also gain an appreciation of the level of service to be expected of quantity surveyors, at the same time understanding that the provision of high standards of quality professional services, comes at a price. That price reflects increased surety, reliance on standards, and level of professionalism in the service provided by the quantity surveyor.

The promulgation and application of standards not only informs members and clients with respect to managing risk, they also raise the profile of AIQS and its members. Furthermore, standards provide a measure against which members may be judged. Across the professional services sector there has, all too frequently, been a ‘race-to-the-bottom’ in terms of fees in order to secure a contract.

Unfortunately, this has invariably resulted

Over the past four years, AIQS has received complaints against members in relation to breaches of the AIQS Code of Conduct. These include complaints concerning deficiencies in the provision of tax depreciation reports, unprofessional conduct in the provision of progress claim reports, not acting in an independent and impartial manner, and major errors in calculating project construction costs.

A negligence case in 2016 noted that quantity surveyors should check that they have adequate measures to manage their liability to financiers and developers.

This should include appropriate quality assurance/quality control systems and processes, terms of engagement (including limitations on liability), and qualifications in respect of their valuations. As well as ensuring that they have appropriate insurances in place, quantity surveyors should keep a careful record of ‘contributory negligence’ or ‘failures to mitigate’ by other parties.

Standards also help companies who employ AIQS members as they: 1. reduce costs - minimise errors, redundancies and increase productivity 2. generate efficiency - improved quality, safety, and lead-time of products and services 3. lower risks - identifying and mitigating risks within their business and supply chain 4. enhanced customer confidence promoting acceptance of services into the marketplace by increasing customer confidence in their quality 5. provide uniformity - units of measurement that enable accuracy and confidence in commercial transactions locally and globally.

02 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

In light of recent deficiencies across the construction sector, governments are encouraging professional associations, such as AIQS, to participate in Professional Standards Schemes as a mechanism for driving higher standards of professional service by members.

These schemes have a three-pronged approach to ensuring high standards: Protect consumers They demand high levels of professional standards and practices from those that participate in Professional Standards Schemes. They expect associations within their regulated communities to make sure members uphold standards through education and guidance, monitoring and enforcement, and other measures.

Improve professional standards They work closely with associations to develop self-regulation initiatives through supporting research, developing policies and guidelines, and promoting debate and change to improve professional standards and conduct.

Help associations By approving and administering Professional Standards Schemes, they work with associations to strengthen and improve professionalism within associations and promote self-regulation while protecting consumers. In return, professionals that take part in an approved Professional Standards Scheme and have their civil liability limited.

The AIQS will be developing 15 new standards going forward, with members being encouraged to participate in the development and implementation of standards for the betterment of the profession.

Grant Warner

CEO Australian Institute of Quantity Surveyors

INSIGHTS

UPFRONT For a project to have the best opportunity to achieve a high degree of success in terms of time, cost and quality, it is important to involve built environment cost professionals in conceptual discussions as well as throughout the entire project.

AIQS asked leading professionals to provide us with their insights as to why their input is so valuable from day one.

JANE NORTHEY MAIQS, CQS Technical Director, ANZ Cost Management Practice Director, AECOM

Every project decision has a cost impact.

Those cost impacts can take effect at any stage of the project life span, from inception and construction, throughout operations and during decommissioning.

The earlier a decision is considered and planned the better the outcome for project time, cost and quality. Cost professionals benefit from experience in all project phases across all project disciplines to bring lessons learned and add value day one. They provide advice to ensure decisions can be made in a timely manner to have the biggest impact and ensure project success.

Cost professionals are one of the few consultants to consider the complete project including design, procurement, construction, operations and maintenance, land remediation and/ or acquisition, financial and funding

implications, stakeholder involvement, and more. With a complete project scope in mind and a drive to enable project success a cost professional can track and mitigate risks by providing experiencebased advice to enable their clients to make decisions that have the greatest positive outcome.

A cost professional's approach to cost management and risk assessment requires constant communication with all project stakeholders to ensure a complete understanding of the scope, operational impacts and end user requirements. As projects increasingly respond to human centred design and the standards and expectations improve, a cost professional can assist in planning to allow these requirements to be met without additional cost, time or impact on quality.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 03

INSIGHTS

Dispute avoidance and risk management are relatively modern terms, but quantity surveyors (QS) have been doing this for decades.

PHIL ADAMS MAIQS, CQS Director, Shared Vision Solutions

An experienced QS appointed from day one can provide expert guidance in addressing the very important question - does the contract accurately reflect the deal between the parties? I’m not referring to the general terms and conditions, that is the domain of the lawyers. I’m referring to the scope of works, drawings, specifications, processes, procedures and standards. This is a process that QS’s continue throughout the precontract period.

Let’s consider design. Most ‘construct only’ contracts rarely utilise such definitive wording, and more typical state ‘design to the extent described in the documents’.

So, what if tucked away in the pages of a mechanical or electrical specification, is a specialist subcontractor’s proprietary

TRISH ENRIGHT MNZIQS Senior Quantity Surveyor, Rawlinsons New Zealand

system? Are there ‘clouds’ on the drawings awaiting clarification via the shop drawing process? Remember shop drawings are supposed to be for the purposes of explaining the fabrication and/or installation process, prepared by a subcontractor on behalf of a contractor who has no design responsibility.

Also, let’s not forget BIM and most importantly the Level of Development (LOD). I once encountered a ‘construct only’ contract which included a model at LOD 200 i.e. prior to clash detection. In my opinion clash detection is a design coordination function and does not work in coordination.

Other examples include coordination/ interface management (especially associated with third parties) and latent conditions. All these occur with frustrating regularity and can lead to additional costs, delays, and formal disputes. So, call a QS!

On this basis, I believe there are two major benefits to the early appointment of a QS to a project.

this process may solve the cost issue it will probably result in a delay to the completion.

The first and most obvious benefit is that a realistic budget can be set to inform a business case submission or secure funding before a significant amount of money is spent on professional design fees. Contrast this to being appointed at the preliminary design stage and the first estimate shows that the design exceeds the client’s budget. The client then has three suboptimal choices - to cancel the project, to proceed with a project that costs more than they had planned, but can still be completed on time, or to enter the universally depressing, time consuming and costly process of value engineering and redesign. Whilst

Secondly, the question of quality. I think the definition in terms of this discussion should be the pursuit of the ‘best bang for your buck’, and depending on the project this could be measured by aesthetics, area, lettability, energy efficiency, or any combination of these, or other desirable outcomes.

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The early appointment of a QS will provide the ability to test various options with a rough order of cost estimates to enable the team to work through several schemes. This will provide the client with the best possible project concept for the available budget.

INSIGHTS

RICHARD SAMUELS MAIQS, CQS Director, Muller Partnership

The quantity surveyor is an expert in quantifying and estimating the value of construction costs. They are also well versed with contracts, programs and cost control/monitoring and can apply this expertise across the delivery phase of a construction project. The benefit here is the quantity surveyor can bring this skill set to the forefront during project initiation.

initiating budget talks, feasibility studies, cost planning, and procurement advice whilst identifying tangible and the not so tangible risks that can impact on a project’s outcome or success. We can sometimes predict or see things others cannot ensuring there are contingencies in place to capture these. This is an art the quantity surveyor develops and hones over time.

The genesis of a project usually involves an idea or concept. Attached to this idea in some form or another will be a budget, a finite value that will determine the viability of a project. The quantity surveyor can be crucial to this process, working in collaboration with the head consultant and client to realise a concept and budget before kickstarting a project. A quantity surveyor can provide valuable input from the start,

Our role is to ensure budgets are robust as clients tend to make important decisions based on our advice. We are integral to the decision-making process and whole-of-life approach to accomplishing a successful and sustainable outcome. I’d like to think cost management and control is a fundamental skill provided by the quantity surveying profession. Not just merely an estimating service.

Investing in cost advice early in the building phase, particularly in the form of a schedule of quantities (SOQ), will yield several returns which are not always apparent.

During construction, a SOQ explicitly defines the scope of works. Nobody wins when drawn out discussions take place regarding what is or is not included a lump sum price. A SOQ very quickly settles these issues.

A cost consultant can influence the design in the early stages. Often, the design is too far progressed to achieve the most economical solution for the building.

STUART WATSON MNZIQS Senior Quantity Surveyor, Holmes Wellington

The measurement of a set of documents is a quality check on the documentation that goes to the tender market. If a QS can’t measure the drawings, then a builder will not be able to build it.

Solving coordination issues up front reduces contractor variations during the construction phase.

A measurement must be conducted to price a trade. To my mind, it is inefficient to have five different subtrades measuring the same set of documents.

To complete the cycle, a priced SOQ will help the cost planning of future buildings. Too often clients use a contractors m2 rate from a previous project to cost plan the next building.

In many cases, this approach produces incorrect feasibilities and in turn sets incorrect client expectations.

Cost advice is essential to the feasibility and delivery of a construction project.

It is essential to have the correct information up front, not only for the specific construction project, but in the accurate planning of future works.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 05

INSIGHTS

Built environment cost professionals or rather quantity surveyors, play a crucial role in the built environment.

During the kick start of the project, we provide clients with the rough cost estimate of the project based on the design intent. This first estimate will be the basis on which the design will be further developed.

STANLEY CHANG MAIQS, CQS Project Associate at Rider Levett Bucknall LLP

At each stage of the design process, we keep track and provide timely reporting to the client on cost changes.

Furthermore, we offer valuable input on potential cost optimisation solutions to reduce the cost of the project should the client be faced with cost constraints.

Subsequently, during the construction stages of the project, we ensure all cost extras and changes are captured and

06 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

recorded. This is done through being aware of changes, meetings, visits to the site and constant communication with the project team. This regular reporting of cost related changes enables the project team to be effective in decision-making and relevant corrective action can be quickly implemented.

Finally, we ensure no surprises are found at the project close out phase, we will adopt the philosophy of agreement of all cost changes progressively with all parties and to discuss and resolve all cost and claim issues.

In conclusion, managing cost at every stage of the project - in a regular and timely manner - is the key to achieve a high degree of success for the project.

THE HIDDEN COST OF HIGH-RISE 08 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

With space in Australian cities at a premium, investors and developers will often look to height to maximise yield through the construction of tall buildings. However, a multitude of notso-obvious hidden costs need to be considered as part of any feasibility study to make sure the uplift in scale is equal to a profitable return for investors and developers.

THE RACE FOR THE SKIES With ever-diminishing availability of CBD sites increasing land costs and more onerous building setbacks required thought planning, increasing height can seem incredibly attractive. Many developers will assume that adding floors will increase a site’s return and earn ‘tallest building’ accolades. However, it’s not as simple as multiplying the cost of one floor by the number of floors.

While Australia was quick to jump into building high-rise buildings as the technology became available in the 1990s, currently there are still only 36 built towers (‘sky-scrapers’) that are 200m tall or higher. The Eureka Tower in Melbourne at 91 floors and height of 297m is still the tallest building to roof in Australia.

As well as the obvious additional costs such as well-engineered structure and additional lifts to service upper floors, there are also a multitude of not-soobvious hidden costs that need to be factored into any feasibility study, including the impact on saleable area that is compromised by the increase in lift and other essential service requirements.

WHAT KIND OF SUPERSTRUCTURE IS REQUIRED TO HOLD UP SUPER TALL BUILDINGS? One hundred+ storey buildings are still a rarity. The famous Burj Khalifa in Dubai at 163 floors above ground and at a height of 830m is still the tallest building in the world. Locally and in particular in our major Australian cities, we are generally more concerned with 200–300m buildings with an average of 70–80 floors.

The Burj Khalifa. Image by Donaldytong

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 09

PILES AND MEGA-COLUMNS Underneath, piles transfer the building’s load to a suitable bearing strata, so if a building is being founded on hard rock, it doesn’t necessarily require any piles.

If it does, then their size and number are going to increase proportionately to the load above. A large majority of highrise buildings will use ‘mega-columns’ to transfer loads to the perimeter of the building, which can be sizeable and costly.

A typical tower layout using megacolumns may utilise a central core with a series of shear walls and intermediate outrigger walls to transfer the load to the edge of the building which, along with the columns, gradually increase in size and concrete strength as they go down in order to support the load above. For example, concrete columns at the top of the building can increase in diameter by 300% and 100% in concrete strength in the basement. Similarly, concrete core walls can increase by over 200% in thickness from top to bottom.

Not only does this increase the average cost of the structure, but the required layout of columns and walls can noticeably impact the efficiency of a floorplate’s structural grid and the need for transfer floors. Assuming a floorplate of, for example, 1,000m², this can increase the elemental cost of the structure from low to high-rise buildings in the region of 40%. As floorplates get smaller, the core-to-floor ratio also goes up and this premium increases.

In addition, this type of configuration with its increased thicknesses and sizes of physical structure reduce net

saleable area /net lettable area, and the corresponding wall layouts can reduce the space’s functional efficiency; both of which will affect revenue.

BUILDING MOVEMENT Despite the increase in size of the structural elements, it is still impractical to try and prevent the building from moving with the wind. At the same time, if it is allowed to move too much, this pushes past the tolerances of standard building products such as facades and internal walls and will require specialised / purpose made components. This would be uneconomic due to the large volumes required. As tall buildings get higher and push up beyond neighbouring buildings, they become more exposed and wind speeds increase.

As a rule of thumb metric to counter this, design tolerances generally needs to be engineered to keep the sway at roof level to within the building’s height divided by 500.

For example, the 300m high Aurora tower in Melbourne, would move approximately 600mm in both directions, 1.2m in total.

In comparison, the 830m Burj Khalifa in Dubai would move approximately 1,660mm in both directions—3.3m in total.

While this may seem a lot, the stresses created are spread over the whole height of the building and should remain within the required component tolerances. The more critical factor then becomes user comfort in respect to the speed with which it moves. If it is a slow gentle sway with low acceleration, this will be barely noticeable and acceptable to occupants.

10 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

However, if wind modelling indicates that acceleration is too fast, this will need to be mitigated.

The Burj Khalifa in Dubai has done this largely by changing its shape at different heights and interrupting the wind flows, but most buildings don’t have the height and shape to be able to do this. They have to employ the use of ‘tuned mass dampers’ to reduce this acceleration.

These are housed towards the top of the building. Generally, they come in two forms: the liquid type which comprise one or more water tanks with baffles inside to create a dead weight to push against the wind, or a giant pendulum that swings to counteract the building’s movement.

The most suitable type of damper will differ from building to building dependent on the extent and frequency of movement. The cost of the damper can vary from several hundred thousand dollars for a small liquid damper through to the Taipei 101 tower’s US$4m pendulum. Coupled with this comes the additional cost through loss of floor area to house them, and the cost of supporting the increased structural load they create.

BUILDING SERVICES Building services form a large proportion of any building’s cost and the higher the building is, the more the constraints, options and costs need to be taken into consideration.

Mechanical system technology is continually developing but is still restricted by the efficient length of duct and pipe runs. For VAV/ VRF systems,

this generally means large ducts and that their plant can only economically service approximately 15 floors up and 15 floors down from the plantroom. This results in large service risers and the introduction of on-floor plantrooms (often double height) at approximately 30 floor intervals up the building. This reduces potential NSA / NLA and adds further costs for greater acoustic and fire separation than if the plant was located on the roof or in the basement.

The main alternative to this is to utilise a chilled water system with a central basement and roof plant with pipework circulation meaning smaller risers, but still requiring on-floor air handling plant and access to outside air at a maximum of every 20 floors. While chilled water/ beam systems may reduce the NSA/ NLA lost to risers and plant rooms, it generally comes at a higher initial cost.

So depending on building use, the cost benefit of different systems needs to be carefully analysed on a project by project basis in respect to capital cost versus opportunity cost of NSA/NLA. Running cost comparisons must also be considered if the building is to be held rather than sold on.

Electrical distribution costs are also greatly affected by cable lengths and subsequent sizes. Running individual low voltage (LV) cables up the height of the building is a lot more expensive than cheaper high voltage (HV) cabling carrying the same load. Hence providing the supply authority is agreeable, it is more cost effective to have the main distribution board/ substation halfway up the building to reduce the length of LV distribution cabling.

Aurora, 228 La Trobe Street, Melbourne

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 11

Taipei 101’s Pendulum. Image courtesy of Armand du Plessis.

Similarly, if a second transformer is required, the first should ideally be located on the lower levels, around level 10, and the second halfway above as before. But again, in both cases, this leads to loss of NSA / NLA and adds cost for greater acoustic and electromagnetic field (EMF) shielding. Continuity of supply is also essential in high-rise buildings, with backup generators and associated diesel tanks taking up more space and costing hundreds of thousands of dollars.

Hydraulic systems follow similar trends of increased pipe and riser sizes. As well,

they require intermediate booster pumps for both fire and potable water, while drainage pipes generally require pressure attenuation at regular intervals.

Telecommunications will also need additional distribution cabling and potential signal boosting with distributed antenna systems (DAS), which can run into the hundreds of thousands of dollars.

Vertical Transport becomes more complex the taller a building gets, with waiting times requiring higher lift speeds and dedicated lifts for higher floors— more goods lifts going higher up the building to plant floors and substations

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and potential shuttle lifts from carparks to lobbies etc. With each of the upper level lifts costing in the millions of dollars, extensive modelling is required to match the needs of each type and grade of building to keep numbers to a minimum.

It is not just the increase in the number of lifts that counts—there is also the knockon effect to the building’s core(s).

As noted earlier, the lower levels have the largest structural footprint which is further compounded by significant losses of useable area/efficiency from having to accommodate lift shafts that don’t service their floors.

cradle over 100 floors is not necessarily realistic. Alternately, if the vertical profile of the building is not regular then more expensive solutions and bespoke systems like tracked crawler cradles may have to be developed. All of these options can cost in the millions of dollars.

PRODUCTIVITY AND PROGRAM As height increases, productivity decreases. Simple things like clocking on and getting to the work face take longer, as travel times and wait times for the hoists increase. Similarly, materials handling and tower crane hook-time become crucial, as longer lift times directly impact the program.

It then becomes a balance of when and how many—additional hoists and cranes to add to the cost of the job to maintain productivity.

Meanwhile on the upper floors, as the lower level lifts fall away, there is the additional cost of making changes to the concrete jump-form each time there is a change in core layout.

Building Maintenance Units (BMUs) for façade cleaning and access also offer challenges. Many tall buildings physically step in as they get higher which may require use of a telescopic BMU to extend out over the lower levels or incorporate additional units at each step until either a davit or rope access system can be utilised.

But even if the building is straight-sided, the practicality of suspending a swinging

This is an equation that becomes even more complex when a building rises above neighbouring structures and the work face becomes more exposed to the wind. This causes increased crane time lost to inclement weather, resulting in even longer programs.

To help mitigate the increased time for labour movements, it also becomes more economic to introduce multiple sets of site amenities at regular intervals up the building rather than having to travel down to ground or basement levels. While this helps productivity, it still carries the additional costs of the rooms themselves and complexities of getting early temporary services, (especially hydraulics), to the higher levels of the building.

Another factor when considering the construction of tall buildings is that they take several years to build, and that the level of rear end debt before revenue starts to flow is considerable. Hence bonuses are often offered for early completion and where possible, separable portions programmed to allow early handover of lower levels of the building.

But these generally come at a cost as they may require the acceleration / out of sequencing of works such as lobbies and central plant; temporary entries, hoardings and services; mid-shaft lift motor rooms and disruption to the contractor’s access and materials handling.

PAN-OPS If planning regulations truly allow the sky to be the limit, there may still be an additional height limiting and cost factor. As many of our major cities are crossed by aircraft flight paths, they are subject to PANS-OPS (Procedures for Air Navigation Services—Aircraft OPerationS) regulations, essentially maintaining an obstacle free zone. These set a base height that buildings may not penetrate, i.e., a maximum height for the ‘finished’ building. However, in order to maximise building height potential and physically build to this level, tower cranes for example, need to temporarily penetrate this air space. This is generally permissible upon application to the relevant airport authority but is subject to a time related charge that needs to be added to the Contractor’s Preliminaries.

The differences these hidden costs can create between low, medium and high-rise apartments are illustrated on the next page.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 13

ELEMENTAL COST - MODEL - PERCENTAGE OF OVERALL COST LOW-RISE Element

MEDIUM-RISE

HIGH-RISE

%

%

%

3%

2%

1%

Structure

16%

17%

18%

Façade

12%

12%

13%

Internal fitout

35%

32%

25%

Sub-total - Superstructure

63%

61%

56%

17%

18%

20%

1%

3%

5%

Sub-total - Services

18%

21%

25%

Preliminaries, OH&P, contractor's risk, contingency

16%

16%

18%

100%

100%

100%

Substructure

Substructure

Superstructure

Structure

Services M&E and builders' services Lift installations / BMU

Total

Façade Internal fitout Services Preliminaries

IN SUMMARY None of these challenges and cost premiums are insurmountable given the right yields and rates of return. However, all of them should be workshopped, modelled and analysed before considering adding those few ‘extra floors’. They may just mean an additional plant level, lift, tuned damper or month(s) of rear end debt.

As an example, based on our cost modelling, an optimum height for 600–750m² floorplate CBD apartments is between 55–60 floors. After this, the extraneous costs of dampers, additional mid-level plantrooms, substations, cranes etc. may start to kick in.

This will then require another 15–20 floors of revenue to offset such costs.

All of these factors when properly balanced lead to successful developments. It is therefore imperative that accurate costing and continuing cost management through the design and construction phases of these projects is sought from industry professionals with extensive experience in the high-rise field.

This article has been provided by Slattery and was showcased in their Kaizen series publication.

14 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

0%

5%

10%

15%

20%

25%

30%

35%

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THE INNOVATIVE AND COST-EFFICIENT WAY TO BUILD STRUCTURAL WALLS Dincel Structural Walling, an Australian owned and manufactured permanent formwork system is different from traditional concrete formwork. It consists of lightweight PVC panels with a unique patented snap-lock joint for fast and easy installation, delivering a structurally sound wall when filled with concrete, that is also waterproof, fire resistant and acoustically rated.

Efficient structural design is paramount in maximising the benefits associated with the use of Dincel Structural Walling.

Columns can be inefficient elements as building loads are concentrated onto the column locations, resulting in increased requirements for slab thickness and steel reinforcement.

Instead, multi-storey buildings should be designed with load bearing walls such as Dincel in mind. For example, typical intertenancy party walls, which consist of columns and lightweight ‘infill’ materials, could be replaced with Dincel load bearing walls in order to achieve the following benefits:

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 17

ADVERTORIAL

• Reduction in slab thicknesses: Slabs that were 200-250mm thick could be reduced to as thin as 150mm thick (or 175mm thick with a 25mm set down for wet areas). Transfer slab thicknesses can also be reduced by utilising Dincel walls on the level above as deep beams.

• Reduction in slab steel reinforcement: Post tensioning (PT) or standard rebar can be substituted with mesh reinforcement which is economical and incredibly quick to lay.

• Reduction in construction timeframes: Conventional multi-storey construction dictates that the floor cycle starts with vertical elements. The Dincel system allows floor formwork placement to take place on day one, which removes the vertical elements from the critical path and reduces the floor cycle time.

To achieve the above, it is important that architects ensure that in a multi-level apartment design, wet areas and party walls are placed on top of each other.

This fundamental design requirement will result in the construction of the project being carried out in a more cost and time efficient manner.

By using Dincel as your choice for load bearing walls, the following benefits can also be attained within the walls themselves: • Reduction or even elimination of wall reinforcing steel: This is possible through Dincel’s unique crack inducing technology as certified by the University of New South Wales (UNSW), which removes the need for crack control steel.

• Reduction of Portland Cement content in concrete mix and water proofing membranes on Dincel walls: Dincel’s protective polymer skin allows for: • Enhanced wall durability and therefore enables the replacement of Portland Cement with materials such as fly ash, making for more environmentally friendly concrete mixes.

• Ongoing hydration achieving denser concrete, which in turn can result in up to 50% less cement use.

• Reduction or elimination of waterproofing membranes on Dincel walls as Dincel’s PVC is water impermeable and its internationally patented snap lock technology has been tested and certified by CSIRO as waterproof up to 6m head of pressure at the joints.

DINCEL CASE STUDY ON COST AND TIME SAVINGS Providing outstanding results for its customers is a key focus for Ceerose, one of Sydney’s leading property development and construction companies.

achieving an extensive time saving on the projected build schedule.

The project consisted of 133 units across three towers, each seven stories above the podium level with one level of basement car parking.

The build used 200mm Dincel in the basement, lift, stair and service shafts and well as deep beams, blade columns and façade walls. In other areas, 110mm Dincel walls were used for party walls in between apartments supporting 170mm thick slabs.

The utilisation of Dincel as a loadbearing wall system in lieu of conventional methods achieved a cost-efficient floor system, together with a six-month time saving from the original construction program allowance of 12 months for structural work.

Dincel’s use of PVC Polymer also yielded other important benefits for the project beyond time and cost savings.

Other advantages provided by Dincel’s system was its suitability as basement, water tank walls and planter boxes without needing a waterproof membrane in areas other than the wall junction, as well as garbage and service rooms where mould and mildew is a common problem.

Not only must all projects be completed to a high calibre, the builds also need to be delivered in a cost and time efficient manner, and the finish should be virtually maintenance-free.

DINCEL’S COMPLIANCE TO NCC REGULATIONS MEANS PEACE OF MIND FOR YOU

In developing its cutting edge Ceerose apartments at Pyrmont Bridge Road, Camperdown, Ceerose partnered with Dincel to meet these objectives, while

Product performance claims and proof of compliance with the current National Construction Code of Australia go hand in hand.

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ADVERTORIAL

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 19

ADVERTORIAL

Incidents such as the 2014 Lacrosse fire in Melbourne, the 2017 Grenfell Tower fire in London, and the 2019 Neo building fire also in Melbourne should serve as reminders of what complacency when it comes to compliance, can lead to.

The priority for Australian State Governments has been to identify and now remove non-compliant products.

However, as an Industry our priority from this point on is to ensure that the problem does not become worse. This means that every effort must be made to prevent the installation of more non-compliant products on new or renovated buildings.

Changes to our National Construction Code now offer a clear path of compliance for composite wall systems including permanent formwork systems such as Dincel. Many internal walls and external faรงade walls comprising of composite systems with linings must meet test requirements to AS 5736.1/ISO 9705 and/ or AS 5113/BS 8414, which are full-scale tests to demonstrate fire compliance.

Dincel is one product that has been tested and certified to be compliant with the new NCC regulations for use in both internal walls (Deemed to Satisfy) and external walls (Deemed complaint as a performance solution). Tests have been independently performed

by Warringtonfire to ISO 9705 and AS 5113/BS 8414 as required by the NCC and reports then assessed by Omnii Consulting Fire Engineers.

Another three sets of full system tests were also carried out on the Dincel system via CSIRO and Warringtonfire to determine fire resistance levels (FRL) including: Dincel AS 5113/BS 8414 External Faรงade Test

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ADVERTORIAL

• AS 1530.4 – Result: FRL between 90/90/90 and 240/240/240 depending on profile thickness

DINCEL’S UNIQUE POLYMER FORMULATION AND DESIGN

• AS 1534.4 Penetration tests – Result: no need to cut away Dincel at penetrations joint

Dincel’s high performance hinges on its proprietary formula and patented panel design. Unlike other permanent formwork systems currently in the market, Dincel is made from a unique PVC formulation specifically created to address sustainability and health issues associated with the use of PVC raw materials. All Dincel PVC panels and accessories are BEP (Best Environmental Practice) certified, contain no phthalates and use stabilisers that are free from heavy metals.

• AS 1530.4 joints test (for when Dincel abuts to a different wall system) – Result: no need to cut away Dincel at wall joints.

Proof of compliance for waterproof applications is also important, particularly given the significant rise in building defects as a result of water ingress due to waterproofing failures as indicated by Dr Nicole Johnson and Associate Professor Sascha Reid in their June 2019 Report “An Examination of Building Defects in Residential Multi-owned Properties”.

Dincel’s waterproofing capabilities have been tested and certified by CSIRO as meeting waterproofing requirements as per AS 3740 as well as ASTM E 51408, AS/NZS 4347.1:1995 and ASTM E 96/M 96M-05, without the need for waterproofing membranes.

It is important to note that test standards prescribed by the NCC put the responsibility on designers, specifiers, engineers, builders and certifiers to ensure that a compliant product is used.

Likewise, this responsibility also extends to building product manufacturers and suppliers to ensure they carry the full suite of the latest tests as required by Australia’s Building Code regulations.

Only then, will the building industry avoid the issues of non-compliant products getting worse.

Dincel AS ISO 9705 Full Room Test

The product was also formulated with fire performance in mind, specifically, its special formula intumesces (swells and locks itself in place) in the event of a fire as opposed to melting.

Tests indicate that the amount of smoke generated during a full systems AS ISO 9705 test is 7 times below the maximum allowable in our National Construction Code (SMOGRA 14), and when tested to AS 5113/BS 8414 the amount of debris generated that was PVC based ash amounted to less than 500 grams at the completion of the test with the remaining being concrete (typically the same amount you would get from a normal concrete wall).

Important to note is also Dincel’s waterproofing performance. Dincel permanent formwork panels rely on both its formulation and panel design.

When Dincel is filled with ready mix concrete with a minimum concrete slump of 200mm, the heat generated during

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 21

ADVERTORIAL

the concrete curing, the aggregate size within the concrete mix and the concrete strength generated within the formwork skin forces the joint between the panels to snap lock together in such a way that it creates a waterproof joint up to 6m head of pressure as certified by CSIRO. Dincel performance when it comes to compliance and the unique value proposition it derives from its proprietary formula and patented design needs to be kept top of mind by specifiers, builders and certifiers when it comes to substitution. Equivalence to Dincel just like any other building product in the market, can only be proven if certificates or reports can be produced to attest to it.

Swimming pool built with Dincel in Bungan Head by Waterview Constructions

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This is a paid advertorial. All words and photos have been supplied by Dincel Structural Walling.

NZIQS2020

CONFERENCE

• 24 – 27 June 2020 • Grand Millennium • Auckland

Rethinking Construction; Creating a fairer and sustainable future A sneak peek at our speaker line up

Sir Graham Henry former All Blacks Coach One of the most successful rugby coaches of all time Sir Graham is famous for his changes he made in the All Black culture with their new mantras that included: Sweep the Sheds, Play with Purpose and the No Dickheads.

Proudly sponsored by NZ Strong

Nigel Latta renowed psychologist and TV personality One of Nigel’s favourite sayings is “Just because the issues are complex doesn’t mean the solutions have to be”. With his fresh, no nonsense approach Nigel will take a pragmatic, thought provoking and humorous look at some modern day issues.

Proudly sponsored by CMP Construction

Lisa King founder of Eat My Lunch Lisa believes having a social purpose is no longer an emerging trend, it is becoming a requirement for every business. That social enterprise will soon become part of the norm and mainstream economy. Lisa’s mission to see no child goes to school hungry has seen her company give away over 1.4 million lunches to kiwi kids.

Proudly sponsored by Winstone Wallboards

The programme also includes • QS Funder Panel • Creating Value through Procurement • BDO 2020 Construction Survey Report • Supply Chain Panel • Plus lots of networking and social activities including a Partners Programme, Mountain Biking, Optional Dinners and more!

NZIQS Invites AIQS members to attend our annual conference at NZIQS member rates, starting from just NZ$575!

AIQS members can earn up to 12 CPD points by attending.

For more information on how to register for the NZIQS Conference email alana@nziqs.co.nz

RETENTIONS IN NEW ZEALAND

REVISING THE RETENTIONS REGIME

By Nick Gillies (Partner) and Emily Woods (Solicitor), Hesketh Henry

Ebert Construction Ltd’s collapse in 2018 was the first test of the new retentions trust regime (Regime). The Regime, introduced as an amendment to the Construction Contracts Act 2002 (CCA) in 2017, was intended to protect retentions, primarily in an insolvency. Unfortunately, it has largely failed to live up to that aim following the decision in Bennet v Ebert Construction Limited (In Rec & Liq) [2018] NZHC 2934 (Ebert).

This article considers the problems exposed by Ebert and the future of the Regime in light of this.

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RETENTIONS IN NEW ZEALAND

THE REGIME

EBERT

Prior to the Regime, retentions were unregulated. As a result, retained money under a construction contract would typically be used as (interest free) working capital, and remained unprotected with little prospect of recovery in an insolvency (Mainzeal being the highest profile example of this). What’s more, it was (and arguably still is) not unusual to see ‘claims’ arise shortly before the final retentions were due to be released, with the contractor/subcontractor invariably then ‘cutting a deal’ and moving on rather than fighting for the full amount. This has a negative impact on cashflow in circumstances where the contractor’s/ subcontractor’s margin may be effectively tied up in the retentions.

In July 2018, Ebert Construction Ltd was put into receivership. Ebert operated a separate retentions account (fund), but there was a shortfall in the amount held. As the CCA lacks machinery for administering retention money held on trust, Ebert’s receivers had to apply to the Court for directions as to how fund should be distributed.

Seeking to redress these inequities and inefficiencies, the Regime came into law on 31 March 2017 with the philosophy of protecting retentions by requiring them to be held on trust. The trust status would, so the thinking went, protect retention money for the benefit of the recipient, and hopefully also impose some industry discipline (e.g. by requiring proper accounting records to be kept and made available on request, etc).

To some extent, this has happened.

Anecdotal and survey information suggest a tolerable level of compliance, most likely among the more sophisticated and/ or responsible operators. At the same time, there is perceptible non-compliance, either because some operators do not understand or are ignoring their obligations. Compounding this is a lack of sanctions to address breaches and, as we shall see in Ebert, a lack of protection when there are simple administrative failures.

The Court identified five categories of retentions: (a) Reconciled and transferred (b) Released but unpaid (c) Wrongly classified contracts (d) Calculated but not transferred (e) Uncalculated and not transferred.

To the surprise of some, the Court interpreted the CCA as imposing an obligation to hold retention monies in trust, rather than simply deeming them to be held in trust. In practical terms, this meant Ebert had to have reconciled (essentially calculated in its accounting system) the amount to be withheld and then transferred funds of that amount into its retention account. Only once those proactive steps were completed were those funds held in trust (ie a trust was created). According to the Court in Ebert, the CCA does not automatically apply a trust status to retentions regardless of what has been done (or not done) with them.

The consequence of this is that only those subcontractors whose retentions were ‘reconciled and transferred’ and ‘released but unpaid’ were entitled to a claim on the fund. Those whose

retentions were in the other three categories were not protected by the Regime (as no trust had been created) and fell into the pool of unsecured creditors – entirely as a result of an administrative failure by Ebert.

This outcome is problematic. It seems arbitrary and inequitable to distinguish between classes of retentions according to whether relevant administrative steps have been carried out to create a trust.

In doing so, the Regime fails to provide the level of protection that Parliament seemingly aimed to achieve with the Regime. Moreover, that protection is probably needed most against those who are not diligent or organised (or who even deliberately flout the Regime) and who are therefore less likely to take the necessary steps to create a trust according to Ebert.

IMPLICATIONS OF EBERT As matters stand under Ebert, it is important that parties holding retentions set up and maintain a trust account to hold retention money. While the CCA says retention money can technically be co-mingled with other funds, in reality, best practice (and arguably the only workable approach) is to have a separate account. Without this there is an appreciable risk of a trust not being ‘created’.

Those who are owed retentions should make sure the party holding them has taken the required steps to create and maintain a trust and that they continue to do so. This can be done by exercising the right to see the relevant accounting records under the CCA.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 25

RETENTIONS IN NEW ZEALAND

Other legislative gaps with the Regime, some of which were also highlighted

by Ebert, include no definition of ‘liquid assets’, no ‘de minimus’ contract threshold, no prescribed audit records, no default interest for outstanding retention money, no administration machinery (requiring a receiver/liquidator to apply to the Court for administration directions), and no sanction on the holder or its officers for non-compliance.

WAS EBERT CORRECTLY DECIDED? There are reasons to question whether Ebert was correctly decided in relation to the establishment of a trust. While a detailed legal examination of that issue is outside the scope of this article, two points stand out.

First, and most importantly, there was limited consideration of the legislative purpose. When the CCA amendments were making their way through Parliament, the relevant minister at the time, Nick Smith, commented that the intended effect of the Regime was that retention moneys were to be treated ‘as deemed trust funds’ ((12 March 2015) 703 NZPD 2243). Similar comments were made on both sides of the isle. In summary, a deemed trust model appears to be what Parliament intended even if the legislative wording implementing this was imperfect. That intention makes sense in terms of protecting retentions and is consistent with the overall purpose of the CCA, which is essentially to help cash flow in the industry.

Second, Ebert was not an opposed application. This perhaps explains the lack of consideration of the legislative

purpose. Only two subcontractors made submissions as interested parties, and they did not oppose the application, but they expressed concerns about receivers’ cost and the overall efficiency of the application. As a result, there was an absence of arguments from those who were owed retentions or from industry bodies. Had the Court heard from the subcontractors who were prejudiced

by Ebert’s own administrative failures or the decision had been appealed, the outcome may have been different.

It is possible that the interpretation adopted in Ebert will be reconsidered in another case where more weight is given to the legislative purpose. Nevertheless, as the law currently stands, where a party fails to set aside retentions on trust, those retentions will not be subject to the Regime and the recipient’s interests will not be protected.

THE FUTURE OF RETENTIONS By the end of 2019, the amount owed to Ebert’s creditors had increased to more than $123m. Ebert’s liquidators have formed a preliminary view that there might have been breaches of directors’ duties. Pursuing directors of insolvent companies in their personal capacities may be an avenue for the recovery of unrealised retentions given that the CCA provides no remedies. However, this is untested and, at first blush, there would be legal hurdles to such a claim, including whether any monies recovered from directors must go into the general creditor pool.

What is clear is that the CCA ought to be amended by Parliament in order

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to best address the existing problems and limitations with the Regime and, in particular, to redress the lack of (intended) protection to contractors/ subcontractors in an insolvency.

Although MBIE commissioned KPMG to undertake a review in the second half of last year, there is as yet no indication of what legislative changes are in contemplation. A centralised deposit scheme model (similar to residential tenancy deposits) has found favour overseas (e.g. Queensland and England), as have statutory penalties for noncompliance. Such features are likely to be considered (and should be) as part of that review. At the very least, when and how a trust is established over retentions ought to be clarified so that the industry can move beyond Ebert.

Nick Gillies is a Partner and Emily Woods is a Solicitor at Hesketh Henry, a commercial law firm based in Auckland, New Zealand.

NEC4 CONTRACTS

HOW SYDNEY WATER IS LEADING THE WAY USING NEC4 CONTRACTS

By Mark Simister

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 27

NEC4 CONTRACTS

AN AUSTRALIAN FIRST FOR NEC4 CONTRACTING Australia’s largest water utility Sydney Water recently entered a new era in its business partnership story and became the first in Australia to use NEC4 contracting.

From January 7, Sydney Water began a first-time partnership with three Regional Delivery Consortia – or RDCs – who are tasked to deliver design, construction and

maintenance services across its water, wastewater and recycled water systems.

The Regional Delivery Consortia will work across Greater Sydney, each managing one of the city’s regions.

Announced on 19 December 2019, the three successful consortia across the North, South and West RDC are:

NORTH RDC BDJK (Confluence Water)

SOUTH RDC Delivering for Customers (D4C)

WEST RDC Better Together (B2G)

Broadspectrum (Australia)

Comdain Infrastructure

Stantec (Australia)

Downer Utilities Australia

John Holland

Atlas Personnel Services

Jacobs Group (Australia)

Lendlease Services

Abergeldie Contractors

-

WSP (Australia)

Fulton Hogan Industries

-

-

Programmed Facility Management

Sydney Water’s new partnership framework, Partnering for Success (P4S), has adopted the full suite of New Engineering Contract 4 (NEC4) contracts to source all services and materials for the next 10 years. NEC4 was selected because it brings plain english and a collaborative way of working right up front in the relationship with the supply chain.

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WHAT MAKES NEC4 CONTRACTING SPECIAL At its core, NEC4 incentivises efficiency, consistency and innovation in working together, as opposed to more traditional adversarial contracting. Bringing a whole new way of working and doing business to Sydney Water and the Australian infrastructure delivery space. The intent

NEC4 CONTRACTS

is to establish an environment where issues are made visible early enough to resolve them collaboratively; reducing, and potentially eliminating the need to take expensive, protracted and litigious dispute resolution processes.

The NEC4 suite was also selected as it is just that, a suite of contracts. From professional services, engineering construction, supply and term services contracts. The beauty is that, not only do they use plain english so mere mortals can understand them, but all the contracts have shared terms, conditions and clauses. Each one can be used in tandem with another, and everyone involved can understand how they work: together. Flexibility is also built into the contract suite, such that the standard forms can cover major frameworks, small-scale professional services and be applied to alliances, hard dollar design and construct and facilities management.

They also provide a much more balanced allocation of risk.

HOW WE ARE PARTNERING FOR SUCCESS (P4S) Through P4S, and establishing long term partnerships, Sydney Water is also looking to not just change the way it procures services, but to transform the way it does business. The NEC4 contract is not the only reason why the P4S framework so innovative. The vision of the future is to have a simplified supply chain, business processes, contracts and contract management. Integrated

regional teams will focus on outcomes that customers value, promote innovative new ways of working and developing a flexible model that provides long term stability.

planning. With this secure pipeline and engagement, the RDC’s are building pathways for graduates and apprentices to support the future needs of the water infrastructure sector.

A unique aspect of these integrated teams which enables a high level of cross business interaction is the scope covered.

RDC’s will deliver design, construction, maintenance and facilities maintenance for each region. This encourages closer interaction of the Sydney Water operations and asset planning teams with the RDC’s, enabling improved communications, smoother flows of information and simplified / quicker decision making.

At the same time, we are bringing our project management function back inhouse, recognising we need to remain an agile, intelligent client to help realise the financial and other benefits of the new arrangements. Talent pipelines and clear opportunities for career progression, challenge and interesting diverse work add to the dynamic culture the P4S model enables.

The new partnerships are engineered to benefit both Sydney Water and our RDC partners - and ultimately our millions of customers - by incentivising high performance, increasing productivity and offering certainty of supply.

Sydney Water’s customers can expect to benefit greatly, as these arrangements deliver our multi-billion-dollar capital program and some maintenance services.

These 10-year partnerships will reap many benefits for the five million Sydney Water customers by delivering value through efficiency, innovation, collaboration and shared knowledge.

Our RDC will work hand in glove with our talented in-house workforce, including our existing maintenance and operations team. The longevity of the frameworks also encourages investment in innovation, diversity and a long-term view of resourcing and succession

STEPPING INTO THE PARTNERING FOR SUCCESS (P4S) JOURNEY Sydney Water’s Partnering for Success (P4S) program is designed to offer integration, consistency and value for our 5 million+ customers.

Sydney Water has worked collaboratively with its supply chain to define, develop and implement this new model during a robust market sounding and engagement process that kicked off in 2017. In developing the P4S model, Sydney Water also undertook extensive global research into alternative, better / best / good practice in infrastructure intensive industries. Testing ideas and options to challenge standard thinking, looking for opportunities to generate greater customer value, improve lean program delivery and enhance collaborative ways of working.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 29

NEC4 CONTRACTS

In early 2018, Sydney Water reached out to, and engaged with, the Institution of Civil Engineers Infrastructure Client Group who sponsored the Project 13 initiative (http://www.p13.org.uk/). We became a member of the Project 13 Early Adopter group later that year.

Project 13 is an industry-led response to infrastructure delivery models that fail not just clients and their suppliers, but also the operators and users of infrastructure systems and networks. It is also about creating a new business model – based on an enterprise, not on traditional transactional arrangements – to boost certainty and productivity in delivery, improve whole of life outcomes in operation and support a more sustainable, innovative, highly skilled industry.

Sydney Water saw genuine alignment of goals between Project 13 and its own future delivery framework, P4S. Benefits of adopting and engaging were very clear too. The Project 13 community is alive and well, sharing openly what works, doesn’t work, challenges and successes in open forum. With parties from a wide variety of industries, it’s not a onedimensional community. Membership is drawn from water, power, nuclear, roads, rail and airports; all pulling together to continue developing a blueprint for the future of the industry.

In line with Project 13, P4S is an enterprise level framework and new procurement model. Designed to simplify the supply chain, helping Sydney Water to integrate with industry partners and deliver consistent customer

outcomes. The new model is based on industry best practice for capital works projects, covering design, construction, maintenance (excluding existing insourced civil maintenance) and facilities management.

A pool of specialist suppliers will also be selected in shared purchasing, from which Sydney Water and each of the three RDC can procure asset-related goods and services in a quick, consistent and more transparent way.

The rollout of P4S in December 2018 meant entering an exciting new phase of Shared Purchasing, and a request for tenders (RFTs) to market.

Based on our priority category plan, which was developed in consultation with key internal stakeholders, the first two RFTs were pipes and fittings and valves and actuators. The months that followed saw RFTs issued for: • pump supply and servicing • plant equipment and hire • waste management services • electrical goods and services • network support • industrial cleaning.

Shared purchasing simplifies how we and our partners will procure certain defined goods and services that can’t be selfperformed. By pooling our purchasing in this manner, we’ll achieve economies of scale, increase our buying power and develop deeper relationships with preferred suppliers throughout the entire asset lifecycle.

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Under our new P4S model, Sydney Water and our partners have used the latest NEC4 Shared Purchasing contracts to procure these and other goods and services that can’t be self-performed.

We are now implementing a new contractual arrangement through NEC which facilitates improved collaboration between suppliers and Sydney Water.

WHAT BENEFITS WILL P4S DELIVER For Sydney Water and its partners, the P4S program wins include: • having the three regional delivery consortiums (RDCs) on long term, 10-year contracts. In selecting the best consortia, we account for safety, environmental compliance, quality, risk, ability and commitment to engage community members and price • being committed to finding the highest quality services available that can work with us effectively to meet needs of customers in a city with an increasing need to be resilient, nurturing and innovative • ensuring we have an annual integrated work plan (AIWP), comprising business planning inputs from capital and maintenance • suppliers, including RDCs, will become responsible for project management lifecycle from design to plan, build and maintain - this facilitates more collaboration from end-to-end

NEC4 CONTRACTS

• P4S will enable Sydney Water to create a pool of additional specialist suppliers to make procurement quicker, easier and better for customers.

This means we will have a vetted pool of additional specialist suppliers in shared purchasing to make procurement much quicker and easier – saving money and improving efficiency.

We value consistent processes within the regional consortia to ensure quality customer outcomes every time. The three regional consortia are accountable for project management lifecycle from design to plan, build and maintain.

While we have more hard work to do ahead of 1 July 2021, announcing these new partnerships is the next step in the Partnering for Success program, which started when Aurecon and Arup signed

on as Sydney Water’s Planning Partner in December 2018.

Ultimately, Sydney Water want to foster long-term partnerships with industry best people and suppliers, ensuring security for both Sydney Water and its industry partners to focus on delivering our 30-year infrastructure plan to meet the needs of a growing city and population.

IMAGE OF P4S MODEL DEPLAN PSLIG AN

DESIGN DECSO IGNNSTRUCT

CONSTRUCT M AN INSTTA NCT C O RIU

MAINTAIN O P RTAATIE M AE IN N

OOPERATE PERATE

SE - EXECUTIVE STEERING COMMITTEE P4S ENTERPRISE - EXECUTIVE STEERING COMMITTEE

SSURANCE INVESTMENT ASSURANCE

NNING TNER

SP4S TRATPROGRAM EG IC & CONTRACTP4S MANAGEMENT PROGRAM & CONTRACT MANAGEMENT P L ANNING

TECHNICAL ASSURANCE

PROJECT ENGINEERING

(IN HOUSE) INTEGRATED INTO MODEL (IN DELIVERY HOUSE) INTEGRATED INTO DELIVERY MODEL

TECHNICAL ASSURANCE

PROJECT ENGINEERING

SPECIAL PURPOSE VEHICLES (HPHR PROJECTS) SPECIAL PURPOSE VEHICLES (HPHR PROJECTS)

(IN HOUSE)

EARLY DESIGN

EARLY DESIGN

H TH DELIVERY MANAGERS - NOR ASSET DELIVERY MANAGERASSET - NO RTDELIVERY MANAGER - NCUSTOMER ORTH CUSTOMER DELIVERY MANAGERS - NO RTH (IN HOUSE) CIVIL MAINTENANCE FUNCTION

REG IO NAL DEL IVERY C O NSROER IUNMAL DEL IV ERY C O NSO RTIUM CIVIL GTIO

MAINTENANCE FUNCTION

ASSET DELIVERY MANAGERASSET - SO UTDELIVERY H CUSTOMER DELIVERY MANAGERS - SO UDELIVERY TH MANAGER - SO UTH CUSTOMER MANAGERS - SO UTH (IN HOUSE) CIVIL

(IN HOUSE) CIVIL MAINTENANCE FUNCTION

REG IONAL DEL IVERY C O NSROER IUNMAL DEL IV ERY C O NSO RTIUMMAINTENANCE GTIO FUNCTION

ASSET DELIVERY MANAGERASSET - WEST DELIVERY MANAGERS - WES T DELIVERY MANAGER - WCUSTOMER EST CUSTOMER DELIVERY MANAGERS - W EST (IN HOUSE)

(IN HOUSE) CIVIL MAINTENANCE FUNCTION

REG IONAL DEL IVERY C O NSROER IUNMAL DEL IV ERY C O NSO RTIUM CIVIL GTIO

MAINTENANCE FUNCTION

P L ANNING P ARTNER

OPERATIONAL TECH SPECIFICATIONS

SPECIFICATIONS SHARED PURCHASING

OPERATIONAL TECH STANDARDS

STANDARDS

SHARED PURCHASING

Mark Simister is the Head of Delivery Management at Sydney Water.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 31

VISION

FUTURE REALITY

AIQS asked a selected number of its members to respond to the question: What is your vision for built environment cost professionals?

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VISION

SIOBHAN MADDEN Graduate Quantity Surveyor, WT Partnership (ACT) As building cost professionals, it is our responsibility to be constantly looking at new ways to add value to any project we work on. We must be looking at ways to improve labour productivity, through implementing environmental design and materials to lower our carbon footprint, harnessing BIM, IoT and ourselves! We must be willing to adapt and learn constantly, without this mindset our industry will not be at the forefront of an everconnected world.

Construction prices are a lot higher than they were a decade ago, and with it brings more opportunity to lower these costs through the 5th industrial revolution. AI (Artificial intelligence), AR (augmented reality) among

other things are not new concepts, with the first AI paper being published by Alan Turing in 1950. It will be our ability as cost professionals to harness these on a commercial level that will bring the ultimate value to our clients.

It will be important that multilateral agreements also begin to take shape within our industry.

There is much we can exchange and learn from other countries, their projects, methods and, their perspectives.

My vision for building cost professionals is shared; shared with our design team, engineers, builders, consultants and our clients.

We must keep an open mind and challenge ourselves to do better - if not, why not?

JESSICA LING MAIQS Quantity Surveyor, Wilde and Woollard (WA) I do not ever regret choosing quantity surveying (QS) as my career pathway. I find the QS profession, fascinating, exciting, and yes, challenging but each day so much to look forward to. There is so much to learn due to the rise of new and emerging technologies in construction. The QS has not escaped disruptive changes - the methodology to measure has changed greatly to a point where our measurement platforms and our projects can be global. There is greater flexibility in our workplace. Physical location should no longer be an issue as we are able to communicate, collaborate and work together as a team regardless of distance.

While benefitting from the technological revolution, there have always been mutterings and criticisms about the need for QS services.

It should be understood that quantity surveyors are multi-skilled / all-round professionals who understand how buildings fit together and are able to collaborate with all project teams such as the engineers and other services consultants as well as the architect. In the most desirable situation, quantity surveyors need to know about everything from construction, planning, building codes, management, financial costing, contract administration to construction law.

In short, there is always the excitement of taking on a new challenge within QS profession.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 33

VISION

TOM CHATTERTON MNZIQS Associate, Rider Levett Bucknall (NZ) In a world where there is more demand for construction, but skilled resources are rising to the same degree therefore increased efficiencies will be necessary to deliver projects on time and budget. Where there’s a need for efficiency, technology can be the perfect facilitator. I personally see cost professionals adapting their traditional value-added services to the digital arena. We are already seeing this with BIM. However, this may be applicable to other new emerging technologies too, such as administrating smart contracts, creating and setting up blockchains for open book ledgers from manufacturer to the financier of a project, or even providing quality assurance to deliverables from artificial intelligence software taking on the repetitive and time consuming tasks that we have undertaken in the past.

I don’t think the cost professional will ultimately become redundant to machines, but our integration with new technology will become much more prevalent in our day to day business. The challenges I see for the cost professional is adequately training for emerging technologies, whether this is in academic institutions, professional bodies, or within the workplace. The rate in which technology is coming to the industry will be quicker than individuals can train.

There will be plenty of opportunities if companies and individuals are willing to embrace change and learn new skills whilst coupling traditional value-added skills of our profession. This, I believe, will be our ticket to servicing increased global construction to an even higher standard than we do today.

MATT DUNCAN AIQS (AFFIL.) Senior Cost Planner, Wilde and Woollard (ACT) My vision for the future of cost professionals in the built environment is that we continue to develop and adapt to a changing environment.

the built environment does not follow current unsustainable behaviours, thus increasing strain on already strained systems.

We can get stuck in the rut of looking at the past and following the same principals, which at times has its merits, however we are in a position in which we can help to drive change in our industry. We have the ability to push for a more sustainable and environmentally aware industry where the inevitable increase to

I would like to see a future that learns from past mistakes and works together to create a healthier more resilient environment. Cost professionals cannot do this on their own, however, by taking a stand, we can promote other professionals within the built environment to follow suite.

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VISION

ZIQI CHEN MAIQS Senior Quantity Surveyor, Rider Levett Bucknall (ACT) I see the quantity surveying profession become increasingly demanding with various emerging building technologies, highly connected world economy and market conditions.

To be able to provide accurate cost advice, quantity surveyors would need to stay up-todate with the latest products, construction methods, be familiar with the new technology such as point cloud, 3D printing, AR, BIM etc., and pay close attention to both local and global

events that may impact the market conditions for projects.

To compete with the fast-emerging technology such as BIM and even artificial intelligence, as cost consultants we would need to be able to provide value-add services to clients about projects. In my view, I would see us shifting our focus on more market research, cost analysis and cost management.

PATRICK LOUEY AIQS (AFFIL.) Quantity Surveyor Emerging technologies are quickly being implemented in the construction industry, such as 5D BIM and automated take-offs, making the future role of a built environment cost professional / quantity surveyor look bleak.

analysed and made sense of. I believe this will be incorporated into the role of a cost professional / quantity surveyor, in-turn allowing the provision of better-informed advice and decisions.

However, if cost professionals can embrace and adopt these technologies to further develop their skillset, built environment cost professionals will stay relevant. While tools like automated take-offs may prove more efficient; there are intricacies in the tender processes, contractual issues, payments, site visits and construction processes which require the experience and input of a cost professional.

More advanced data and documentation can lead to an increased integration and collaboration between different disciplines within the construction sector. Technologies like BIM and drone surveys can be shared between multiple disciplines and enable them to interact, solve issues, make changes and value manage a live document.

Current emerging technologies like BIM, augmented reality and surveying drones have a synergy to collectively provide new forms of data, but this data will need to be prepared,

The pressure of learning and incorporating new technologies may seem intimidating, but I envision that the adoption of these new technologies will make cost professional even more relevant.

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VISION

KELSEY TELFORD Quantity Surveyor, Naylor Love In an industry that is booming, we are seeing a significant number of construction companies – including industry leaders – struggling or falling into liquidation. It appears there is a systemic problem in the procurement process. The so called ‘race to the bottom’ doesn’t add longevity to industry participants, even though it’s a longstanding fact that cheapest does not equal the best quality.

Steps are being made to address this issue with the government's new construction

procurement guidelines coming into effect in the later stages of 2019. It’s encouraging to see the government take a lead on this as they have been some of the worst offenders of onerous contracts, lowest price and risk avoidance.

I can see, providing greater attention to scrutinising/pushing back on unfair or onerous contract conditions and encouraging risk be allocated to the party best placed to bear it as being an important part of the built environment cost professionals role.

SAM STEVEN Quantity Surveyor, NZ Strong Construction Having only been working as a quantity surveyor for the past four years, my impression of the New Zealand construction industry is that, for many, it can be devastating, much like an inferno - destroying businesses and people’s livelihoods. Fletcher’s, Ebert, and Arrow Construction are just some examples that have been caught in the path of our industry inferno, with rippling effects throughout the industry’s supply chain.

Subsequently, my vision for the built environment is specific to the New Zealand industry crisis. In particular, this includes an industry with transparent procurement and contracting approaches, retracting the current system which forces as much risk as possible onto the contractor. The NZIQS has already

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taken a lead on this, with some of their latest strategic focus’ set out to combat this.

I recognise my opinion may be slightly bias here due to the enjoyment of measuring, but I believe there is value in returning to the traditional method of procurement and contracting with guaranteed bills of quantities (BOQ), with re-measurable items, rather than a stiff fixed price model based on often flawed documentation.

However, with the exponential developments in BIM in recent times, my dream vision and one that I hope isn’t a pipe dream is to see BOQ’s and BIM work in harmony with one another with BOQ’s being derived from BIM models and used as the procurement and contracting approach.

VISION

STELLA LEE AIQS (AFFIL.) Assistant Project Manager, DCWC A wholesome culture.

Oxford defines wholesome as ‘conducive to or characterised by good health, physical and moral well-being’.

The construction industry ranks high as one of the most fraudulent industries all over the world. When a party gets caught in a compromising situation, there is a temptation to lean towards unethical practice. Even as professionals, at times we tend to believe that our responsibilities to the client far outweighs the public.

Where I am coming from is that my vision, of

a cost professional, stems from something more than merely doing our ‘jobs’ well. There is more to saving your client a large sum of money if it means a subcontractor goes under in the process. There is more to flawlessly dishing out estimate after estimate if it comes at the expense of precious time spent with your family/friend/spouse or even yourself.

The better choice generally comes easily when it’s black and white, but the world we live in is layered in many different shades of grey. It is a call to dig deeper towards a wholesome mindset because this flows into our judgement and our choices, and in turn shaping our goals.

MATT CAPONE Building Cadet, Shape I think that, in the future, cost professionals of the built environment will have to embrace further advancements in technology. At the moment, there are a lot of people who work in the industry that are struggling to keep up with the advancements that are being made, as they feel more comfortable doing things the way they were taught when they first started in the profession.

In order to make the move more seamless in the future, a willingness from the professionals themselves as well as additional training from industry bodies is required to keep up with the times.

It would also be beneficial if the same or similar programs were used, and each industry professional used the same software and presented their data/reports in a similar manner. This makes it easier from the client’s point of view to interpret the information, eliminating the likelihood of misunderstandings and errors – which in turn cost companies’ money. It also makes it easier for professionals to move between companies without needing to be retrained using new software that they haven’t worked with previously.

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VISION

BERNIE PITT Assistant Project Manager, McKee Fehl Constructors With the quantity surveyor profession in hot demand in the Australasian construction sector, and an unprecedented number of students, are academic institutes delivering quality with quantity and are they supported to do so? It’s widely recognised that the training delivered builds career foundations for the emerging professional. The skills and knowledge for the modern QS needs to be concurrently delivered with the nuts and bolts a traditional QS has built their career on. Delivering this technical skillset in a rapidly developing and demanding industry is nothing short of a tall order with a tight programme.

I hope our academic institutes recognise the areas they are not reacting to within the diverse demands of today’s and tomorrow’s construction industry. Increasingly, they struggle to deliver with the resources available, and the industry is stepping in to fill the gap post-qualification. By maintaining connections with recent graduates, academia could identify its shortfalls.

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The industry could be more proactive by increasing consultation and involvement on the programmes, or the re-introduction of ‘trade-based’ QS apprenticeships. It is blaringly obvious that to deliver quality, there needs to be commitment, involvement and support from government and industry. We have already recognised this, with the recent NZIQS Strategic Strategies identifying the development of students and emerging professionals are a national priority.

The influx in student numbers has notably strained industry support (such as mentor programmes, offering real insight and relevant advice), which has traditionally been provided by emerged professionals. This has created a demand for networks, such as Quantity Surveying Emerging Professionals, to build the bridges between the emerging and the emerged and facilitate opportunities, relationships and pathways which wouldn’t otherwise be available in this environment.

VISION

KIRAN VEMPATI AIQS (AFFIL.) Construction Estimator, ASKIN Performance Panels One of the greatest challenges for built environment cost professionals is to understand the cost elements and construction methodology, as a whole, to achieve an accurate costing across the project life cycle.

To encourage and raise the awareness of costing in the built and construction fraternity, the following could be considered: • Uniform platforms to allow for easier sharing of information.

• A collaborative approach rather than a competitive approach between cost professionals, head contractors and subcontractors.

• Serious education on elemental costing with trade specific perspective in tertiary education programmes. I am often surprised

at the apparent lack on inclusion of first estimating principles at the university level.

This will help emerging cost professionals to equip with knowledge on elemental costing across the construction project.

To encourage and development of awareness of costing in regard to construction methodology, the following could be considered: • There is usually too much emphasis on costing and life-cycle cost and construction methodology takes second place. This situation can be improved by collaborating cost professionals with sub-contractors at the project delivery level.

• In my opinion, we as emerging QSs, should be more realistic and absorbent to latest construction technology.

CINDY ZHANG Graduate Quantity Surveyor, WT Partnership I believe that we, as professionals within the construction industry, should all be aware of the fact technology improves efficiency. At the same time, the construction industry is one of the most inefficient and outdated, with fewer efficiency increases due to technology over the past 100 years.

My vision for built environment cost professionals is for us to lead through adopting new and innovative construction technologies and methodologies including, but not limited to, 5D BIM, autonomous equipment, and machine learning.

For instance, we can send drones to inspect construction sites, especially for remote sites or unsafe areas, and receive real-time site information – eyes on the ground. We do not need to physically be on the site and can still assess the builder’s claim, saving travel time and costs. If we take full advantage of what technology can do, we could add value to projects a lot better and provide a better cost planning and management service to help clients achieve an ideal outcome. As a built environment cost professional, I do feel we have the obligation to embrace the possibilities and work together to create a better and more efficient construction industry.

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OPINION

THE QUANTITY SURVEYOR AND REGULATIONS

By Geoff Hanmer

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OPINION

FACTOR ONE The introduction of national building regulations, the Building Code of Australia, now the National Construction Code in the 1980’s was driven by an agenda to increase self-regulation in the building industry and to encourage ‘innovation’ with the aim of reducing the delivered cost of construction. This was backed by the Federal Government and all the States and Territories. By 2004, the Productivity Commission had given building deregulation a big tick. In its 2004 report on regulation in the building industry, the Commission theorised that billions of dollars would be saved by moving to a more flexible regulatory environment. They did not consider the cost of rectifying buildings that developed faults as a result.

FACTOR TWO From 1983 to 1996, the Hawke-Keating government opened up the Australian economy to the world and the Howard government kept that momentum going. Our relatively small and isolated local construction industry became a consumer at the end of a long global supply chain. Building regulators, both State and Federal, did very little to manage this complex new situation, which delivered us amongst other things, building panels containing asbestos, brass plumbing fittings with lead in them and electrical cables that caught fire.

FACTOR THREE After 2000, State governments in rapidly growing parts of Australia, principally Sydney, Melbourne and Brisbane, enthusiastically embraced higher density living as the key to provide housing for a rapidly growing population. Planning codes were changed to encourage more high-rise development. State Premiers of both stripes in New South Wales and Victoria, plus the Federal government, publicly endorsed the advent of tall apartment living, actively supported by the development lobby and design professionals and economists, including many publications including ‘The Economist’. Developers started to contribute big dollars to both the Labor and Liberal parties. According to an article published in the Financial Review on 20 July 2019, the property industry donated $3 million to the federal government between 2014 and 2018. In 1996, just 18% of all Australia's occupied apartments were four storeys or taller. By 2016, this had more than doubled to 38% of all apartments occupied, or 463,557 apartments in total.

FACTOR FOUR Tall apartments are significantly more complex than low-rise buildings to construct, with more demanding structural elements, complex services, and fire safety provisions. The building industry’s level of skill was arguably not equal to the increased level of demand

for this type of building. The capacity of the vocational education and training sector to provide adequate training was undermined by a shift of resources to higher education by all levels of government, particularly after 2007.

FACTOR FIVE From the early 1980’s, traditional methods of delivering tall residential buildings, which typically involved a builder working on a lump sum contract administered by an architect with a quantity surveyor providing cost advice were replaced by ‘design and construct’ contracts. In these contracts, builders gave developers a fixed price to both design and construct the building, employing and directing the architect, engineers and the quantity surveyor functions often side-lined by estimators.

The builder directed the architect and engineers to do whatever was cheapest, and they mostly went along with these arrangements, often abrogating their statutory and common law duties in the process. By 2004, traditional lump sum contracts were virtually dead in the multi-unit residential sector, and we see the results around us.

The New South Wales Building Commissioner’s current plans, as far as they can be established, are centered around making consultants and builders liable for building faults and providing a token force of inspectors to look after ‘high risk’ builders. These will be identified by an as yet untried

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OPINION

rating system the details of which are not yet available, run by private-sector rating agencies more used to assessing financial risk. What can go wrong?

Somewhere around 1986, our leaders lost sight of the wisdom behind the structure of traditional building delivery systems, which recognised that while delivering a building correctly is hard, repairing a defective building is even harder. This is particularly the case when we consider the implications of building failures, including potential threats to human welfare and life safety.

Before the rise of the ‘lump sum’ contract in the late nineteenth century, a quantity surveyor measured work done and issued certificates for payment to the trades who completed the work. With the increasing popularity of lump sum contracts, the key role of the quantity surveyor changed from the remeasurement of built work to the measurement of drawings. In this position, the quantity surveyor had the privilege of asking architects and engineers all sorts of curly questions about what on earth they were on about in their documents.

Most of the questions quantity surveyors asked the design team focused on errors or ambiguities in the documents or errors in coordination. As a result, the quantity surveyor played a vital role assisting architects and engineers to produce documentation that was more accurate and also understandable by builders.

I

Sometimes, though, this process could go too far. After staying up all night producing an initial sketch design for a college in the 1980’s, I blearily remember being asked early next day by our quantity surveyor if the balcony windows I had drawn used espagnolette bolts or shot bolts and rebated stile. Despite this, I still believe that a espagnolette bolt does add real value to the documentation process, well beyond their role in providing estimates.

Since World War II, the use of lump sum contracts experienced a decline which in the last 30 years or so has become an unseemly scramble towards design and build delivery methods. The focus on design and build is largely the result of a belief amongst many in government, aided and abetted by the Productivity Commission, that the initial cost of a building is more important than its whole of life cost. This view is enthusiastically shared by developers, for obvious reasons, but I suggest that the assumption is wrong. Most people who are consumers of buildings, particularly residential apartments, would prefer a focus on whole-of-life cost.

The available data suggests the quality of much of the multi-unit residential market is very poor, with between 70% and over 90% of units having serious defects at completion, depending on whether UNSW or Deakin research is used. A number of senior people in the strata management industry believe that almost

100% of recent projects have serious defects.

In the post-tender component of design and construct projects, which is often just after DA, the quantity surveyor, architects and engineers have a muchreduced role compared to lump sum contracts, as documented in the recent VCAT judgement relating to the Lacrosse Apartment fireI. This is regrettable. Not only have the number of eyes on site decreased, but the number of eyes on documents has also decreased.

In a desire to reduce cost at delivery, governments have wished away a lot of roles that are central to getting buildings right for the long term. We have all seen documents that are incomplete, inaccurate, contradictory and incapable of being built without much alteration, but trying to develop solutions during construction is an approach doomed to failure. The cost of the design effort is still much lower than the cost of demolishing incorrect work.

Without wishing to make any comments about the specifics of the failure at the Opal Tower in New South Wales, it is hard to imagine how an experienced documentation team, including architects, engineers and a quantity surveyor would have allowed the adequacy of the beam that failed at Level 10 to go unquestioned during a lump sum documentation process. What we

https://www.vcat.vic.gov.au/sites/default/files/resources/Owners%20Corporation%20No.1%20of%20PS613436T%2C%20Owners%20 Corporation%20No.%202%20of%20PS613436T%2C%20Owners%20Corporation%20No.%204%20PS613436T%20%26%20Ors%20v%20 Lu%20Simon%20Builders%2C%20Stasi%20Galanaos%2C%20Gardner%20Group%20%26%20Ors%20%5B2019%5D%20VCAT.pdf

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OPINION

do know is that, by the time the beam design was finalised, only the engineer and builder were left with meaningful roles in the Opal Tower design team.

As we can see from the photographs of the beam pre and post failure in the report prepared for the New South Wales Minister for Planning and Housing by Unisearch, there are a number of glaring issues, including the size of the beam itself but also the lack of coordination of services incorporated in the beam, including hydraulic pipes and electrical conduits. We should keep in mind that the beam at Level 10 was supporting six storeys of 200 thick pre-cast panels plus attached floor loadsII. Oddly, the Unisearch report concluded that the solution was the registration of engineers and the provision of a check engineer. I beg to differ. Until Opal Tower, and later Mascot Towers, there had never been a structural failure causing an evacuation of a multi-unit residential building in New South Wales, except for the failure caused by the gas explosion at the Spring Street Apartments in Bondi Junction. To me, this suggests that the lack of registration for engineers has not really been an issue, but that the problems may lie in changes to delivery processes, including the increased popularity of design and construct.

engineer, and quantity surveyor and to restrict the use of design and construct contracts to builders who can demonstrate suitable expertise and quality control in-house, which would of course need to be monitored by third party inspectors.

Design and construct may be a terrific model for developers because it tends to maximise their profit, but the evidence shows it is a very poor one for consumers, particularly for tall multi-unit residential. Its use should be heavily circumscribed by regulation.

It is time architects, engineers and quantity surveyors told truth to power.

Design and construct is a very poor delivery model for speculatively built apartments in tall buildings. No amount of window dressing by the New South Wales Building Commissioner can change that.

Geoff Hanmer is the Managing Director of ARINA, an architectural consultancy specialising in tertiary education. He is also an Adjunct Senior Lecturer in Structures and Construction, Faculty of Built Environment, UNSW.

Rather than check engineers, surely the solution is to re-establish a complete design team, including architect,

II

https://www.planning.nsw.gov.au/-/media/Files/DPE/Reports/opal-tower-investigation-final-report-2018-02-22.pdf

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INFRASTRUCTURE

THE RAIL INFRASTRUCTURE BOOM

By Alistair Aitken, MAIQS, CQS

If puns were appropriate, the rail sector in Australia and New Zealand is ‘full steam ahead’, but what does this mean for those operating within this buoyant sector?

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INFRASTRUCTURE

BACKGROUND As populations of our cities rise, as roads become more congested and as employment and residential patterns change and rail services improve, Australians and New Zealanders are making a choice to use rail more.

With strong political support underpinning significant investment in the rail sector, there are other factors influencing the overall growth, including: • federal funding commitment • improved efficiency and passenger experience in the use of technology • link between improved rail services and housing affordability • reduced network congestion by the separation of freight and passenger rail.

DEMAND The rail industry is facing a skills shortage, driven by unprecedented demand caused by competing major projects, and never has one sector, in recent generations, faced such concurrent demand of this magnitude and scale.

At the time of writing, there are more than 10 major rail projects either proposed or currently under construction valued in excess of $1 billion. The largest of these, Sydney Metro, is anticipated to be a $20 billion plus investment resulting in more than 66 kilometres of new rail line, with major metropolitan rail projects underway

elsewhere including Adelaide, Auckland, Brisbane, Canberra, Melbourne and Perth. This is in addition to unmatched investment in regional networks, including the Inland Rail project ($10 billion) and Victoria’s regional rail upgrade, to name but a few.

Significant investment is also being observed in the enhancement of existing infrastructure and rail networks.

New railcar programmes are well underway in order to replace existing ageing rolling stock fleets, coupled with the need to support the expanded networks and the pressure that such network expansion imposes on existing rail fleets.

Rail systems technology has also seen significant uptake with a number of automatic train control projects underway, which aim to make better operational use of existing rail networks by allowing more trains to run more often.

Separately, and given the rate of technological advancement, increasing demand to build digital radio systems are occurring to replace existing analogue systems, which provides the ability to transmit data whilst also, providing increased reliability and flexibility together with providing more efficient rail networks and supporting plans for future network expansion.

WORKFORCE In previous booms, the differing regional performance and diversity of Australia and New Zealand assisted

in the steady flow of a transient and skilled workforce across boundaries and oceans, however, for some, this was a temporary move until such time as market conditions improved in their traditional ‘home’.

As such, the rail boom is posing a significant challenge to many businesses in the recruitment and retention of staff throughout Australia and New Zealand, a challenge faced by clients, consultants and contractors alike.

SKILLS SHORTAGE The Australasian Railways Association report that the industry in Australia and New Zealand is already experiencing skills shortages and warns more than 20% of the sectors existing workforce is expected to retire within the next decade, highlighting that there is a chronic shortage beyond construction activities in being able to operate and maintain existing infrastructure, let alone expanded freight and metropolitan rail networks.

The consequence of such skills shortage is that construction projects are likely to incur significant cost and/or delivery blowouts, which is already being witnessed on a number of projects in the delivery phase, including the much publicised Sydney Light Rail project.

As such, there will be significant pressure to clients and businesses in the increased cost of wages, together with the availability of specialist plant and equipment, and these are likely to have a

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INFRASTRUCTURE

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INFRASTRUCTURE

greater impact on construction costs with rises anticipated to impact the following key cost components: • labour, plant and material costs • contractor risk allocations (where applicable) • contractor overhead and profit recovery.

Where in the past consultants and contractors have pursued every opportunity, there are signs that they are being selective in current market conditions, often as a result of an improving flow of secured work driven by the boom. Another factor that may limit the appetite to bid for work is the high cost of tendering, which on projects of this scale and complexity are often substantial, with no guarantee of success.

EMERGENCE As a result of the continued and significant investment in rail infrastructure projects, coupled with the financial stability afforded by Australia and New Zealand (when compared with other international markets), there has been an emergence of international players, predominantly in the contracting field.

The emergence of new players in itself creates opportunity by providing further competition to what is otherwise often a narrow field, and with it, this brings a flourish of skilled construction professionals that may otherwise never have made it to our shores,

however, there remains concerns as to the short-termism approach adopted by some businesses as they pursue other international projects and the subsequent inability to capitalise on the up skilling and retention of knowledge and resources.

PROCUREMENT

Undoubtedly, those involved in the planning and delivery of these rail projects will have exposure to projects of a scale never seen before, however the challenge for all involved will be to ensure that there are sufficient programmes and incentives in place to support the development, training and retention of a skilled workforce. Failure to embrace this will be a lost opportunity for generations to come.

In consideration of some of those factors highlighted, improved procurement of services and/or works is essential to mitigate some of the risks identified.

On the part of consultants and contractors, there has been an uptake in the number of partnering and joint venture arrangements. Whilst this creates a shared ownership of risk amongst two entities, it also provides opportunity to pursue larger projects that previously may have been beyond their reach as individuals, whilst also amalgamating resources in order to demonstrate greater resource capability.

Alistair Aitken, MAIQS, CQS is a Director at Rider Levett Bucknall (WA) and is the Australia Chairperson of RLB ANZ Infrastructure Committee. Photos credit: RLB projects.

For clients, recent trends have seen a shift change away from the traditional forms of procurement, with greater emphasis on alliance contracting, early contractor involvement or partnering arrangements, together with initiatives such as contribution towards tender costs.

The allocation and ultimate ownership of risk on these projects will be one of the biggest challenges in the delivery of these projects which ultimately will require a level of maturity and pragmatism developed in a collaborative manner.

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INSURANCE

IT’S NOT WHAT YOU DO OR WHO YOU ARE, BUT WHAT YOU SIGN

By Matt Kuc

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INSURANCE

Increasingly we see construction disputes become more and more multiparty, with professional consultants across architecture, engineering and surveying disciplines finding themselves attached anywhere from the second respondent to the tenth respondent and above in very broadly spread litigation.

Consumerist law seeks to find a commercial resolution (someone has to pay) and getting a reduction to the liability of any one party has shifted strategically from trying to counter on the claimant’s quantum to instead seeking to join and spread liability to other parties.

Rather than waiting for a dispute to arise, this can also be managed by the contract at the engagement stage to create a predetermined liability context should a dispute eventuate in the course of the project.

This is where contracts become topical. Increasingly, the implications of unfavourable contract terms become a significant factor in apportioning liability.

No example has been more publicly clearer than in the Lacrosse dispute (Owners Corporation No.1 of PS613436T, Owners Corporation No. 2 of PS613436T, Owners Corporation No. 4 PS613436T & Ors v LU Simon Builders P/L, Stasi Galanaos, Gardner Group & Ors [2019] VCAT 286) where it was specifically noted that the builder LU Simon, while primarily liable, was able to successfully pass nearly 100% of their liability on to professional consultants in no small part due to the strength of the contracts in place.

For quantity surveyors having the benefit of operating outside the primary design and construction space affords some protection, but, contractual liabilities can draw the surveyor back in.

Across surveying professions, in

particular quantity and building surveying, numerous contractual issues have exacerbated liability or even allowed the establishment of liability that would not have otherwise existed. Negotiating on fair contract terms upfront at the point of engagement is pivotal to ensuring adequate, relevant and reasonable liability is taken on.

There have been four key areas of contractual liability arising for surveying professionals that seek to stretch the liability to unreasonable grounds beyond the actual professional services rendered.

These are: 1. ‘Design’ contracts, with scope outside of service rendered 2. Liability for others, with scope for indirect liability 3. Contracting out of proportionate liability in various jurisdictions such as the Civil Liability Act (New South Wales) and the Wrongs Act (Victoria), or other relevant legislation reducing or removing apportionment rights or defences 4. Broad indemnity clauses, with far greater liability than common law.

A focus on the contract terms at the engagement stage is key to a Surveyor’s ability to firstly: 1. reduce overall risk, and consequently 2. align with available insurance, reducing the gap of commercial (uninsured) risks.

DESIGN CONTRACTS We commonly see professional consultants provided with ‘design’ contracts modified from one of AS2124, AS4000 or AS11000 as the standard

forms of a construction contract.

At times a highly consequential misnomer, these ‘consultant’ contracts are provided to all consultants on a project irrespective of role, however, they are written with liability attaching to the provision of ‘design’ rather than ‘services’ through a defined scope only.

Where a surveyor provides no actual design input, these clauses can serve to claw you back into a claim via contractual liability.

The role of the quantity surveyor should include certifying a progress payment based on a stage being completed, essentially in compliance solely with whether or not that stage was reached in accordance with the corresponding certification of the building surveyor/ inspector/certifier counterpart; and should not be to make a qualitative assessment of whether the design being costed or constructed was a good one.

In the case of a building surveyor, we see some states explicitly reference their inability to provide any design input (section 79 of the Building Act (Victoria) 1993).

Litigation and claims scenarios have arisen drawing in surveying professionals under a design contract where a ‘compliant’ project had damage or loss arising from questionable design. Design was not the role of a surveyor, but unfortunately a contractual responsibility had been taken on.

This has been a timely reminder to ensure that a correct contract form and scope of services is achieved in the first instance by the surveyor, in order to avoid potential contractual liability for services you not only do not provide but could not and had no intention to provide.

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INSURANCE

LIABILITY FOR OTHERS While liability for your actions is reasonable, conversely liability for other parties is, on face value, clearly undesirable. It is common if you utilise subcontractors to be bound to ‘backto-back’ terms from your client to your subcontractor.

Where we have seen challenging contractual environments for quantity surveyors is in some government contracts that effectively create tripartite agreements between a quantity surveyor and building certifier. Despite performing completely different roles, the quantity surveyor was responsible for, not only certifying progress payments (acceptable), but also responsible for certifying the relevant stages of building completion (not acceptable). This was despite the fact that the certifier was not a subcontractor and was contracted separately and directly to the government body.

CONTRACTING OUT OF PROPORTIONATE LIABILITY Proportionate liability legislation exists for a reason – to ensure you are only responsible for losses from your own acts and not be responsible for the work of other parties.

Contracting out of these rights, from the perspective of the principal seeking to impose them, is a way of trying to guarantee a commercial outcome on a dispute if any one contributing party goes broke, has no insurance, or otherwise is unable to pay. Waiving rights or explicitly contracting out of certain legislation

can push liability more into a ‘joint and several’ environment where it can be argued that each party is able to be individually held liable for the entire loss.

While it can be seen why this might be a desirable position for the principal, it is equally a clearly undesirable position for any surveyor to find themselves in.

The advice to businesses with these clauses being proposed is to have them struck out entirely.

INDEMNITY CLAUSES Indemnity clauses vary greatly from contract to contract but key outcomes that benefit a surveyor include: 1. liability reduced to the extent that a loss was contributed to by any other third party 2. liability attaching to the services provided, not to the contract 3. liability that does not agree to pay ‘all’ loss, damage or costs 4. liability that does not agree to pay loss ‘indirectly’ caused by you.

The wording of an indemnity clause can have similar implications to the more obvious clauses contracting out of proportionate liability, albeit tacitly.

The less explicit implications of an indemnity clause are often difficult for a consulting business to identify or understand and forms the starting point of any contract review or insurance advice whether provided by a lawyer or insurance broker in their relevant professional capacities.

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ISSUES AT DISPUTE STAGE Unfavourable contract terms highlighted above can cause the exacerbation of liability against the surveyor, or even seek to establish liability against the surveyor that might not have otherwise existed.

Summarising the unfavourable terms, this could include: • a claim for design flaws, despite arguably only performing a costing or certification role • being claimed against for 100% of the loss, despite only being partly responsible • being held responsible for something you were not directly involved in, and carrying indemnity for indirect losses • being held responsible for the negligence of others, without recourse against them.

This is where advice and consideration is key up front, to not just understand but mitigate potential contractual liabilities in turn reducing the overall risk to the surveying firm in a project.

ISSUES WITH INSURANCE Switching focus to professional indemnity insurance, the intention of the policy is to cover a business for a claim made against them for financial loss arising out of their professional services.

Relevant to the topic at hand, what professional indemnity insurance doesn’t say is to cover a business for a claim made against them for financial loss arising out of whatever contract terms

INSURANCE

were signed. On the contrary, contractual liability above and beyond your common law liability is a common exclusion in professional indemnity insurance.

The clearest example of this is where rights to proportionate liability are waived. This not only increases your liability but also opens up a gap for your insurer to establish the percentage to which you were negligent or contributed to damage or loss being the Insured component, as opposed to a contractual outcome that results in a higher portion of loss being required to be paid; and ultimately uninsured loss.

Flowing on from the dispute to what in consequence is almost always an insurance claim, the alignment of fair, proportionate, and negligence-based contract terms will not only reduce overall risk but also align as closely as possible to indemnifiable risk via professional indemnity insurance.

Insurance and legal advice should be sought from independent advisors in order to best understand and protect your position.

Matt Kuc is the Professional Risks Manager at Member Advantage Insurance Broking, the preferred partner for Insurance and Financial Services of AIQS.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 51

COST ANALYSIS

DRIVING VALUE FOR MONEY THROUGH DESIGN INTEGRATED WITH COST ANALYSIS 52 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

COST ANALYSIS

INTRODUCTION Achieving value for money and a sustainable design are two project goals commonly assessed in the built environment today, but are we adequately supporting project decisions with evidence? How are consultants demonstrating that proposed material selection or specification is worth the budget allocation and will it achieve the requirements of the present without compromising the ability of future generations to meet their needs? Is there calculated evidence demonstrating the project has genuinely established value for money?

Design norms and trends can often find their way into the built environment with inadequate attention to their broader influence on a project. AECOM’s integrated consulting capability combining cost management and engineering, allows us to challenge design norms. With façade and services costs representing a significant portion of a building project budget, AECOM is investing in cost benefit analysis so our clients can ensure smart spending while also considering sustainable design.

PROBLEM With design and cost often shared across multiple firms a holistic approach to design/cost review is difficult to achieve.

A fire rated zone will affect the design of the doors, partitions, services and potentially façade and/or structure. A cantilevered floor will add structural

transfers, require changes to façade design and often amendments to ceiling details. Often it is the cost manager who tracks this ripple effect during design progression. Time, consultant fees pressures and capital budget pressures can prevent sufficient reviews of both base designs and design changes. This can result in the adoption of a less efficient design and hence overall project outcome. All too often designs are not reviewed holistically to demonstrate value for money, particularly when designs are prepared by independent consultant firms working with competing philosophies.

against a ‘baseline’ façade to determine the operational benefits of increased facade performance.

The façade options investigated in this analysis include: • baseline façade: a standard curtain walling system, compliant with building standards, not thermally broken • façade option one: equivalent thermally broken facade • façade option two: the highest performing façade, thermally broken and incorporating an insulated spandrel panel.

For each of the façade options AECOM undertook the following investigation:

THE SOLUTION Gathering a team of engineers (including façade, mechanical, electrical and sustainability) and cost managers, AECOM undertook a study to review the benefits of designing a high-performance façade for a multi-storey project to realise savings in operational expenditure through mechanical efficiencies and whole of life energy reductions. The results supported a value for money outcome over the life of the building and proved further unexpected positive benefits.

AECOM carried out this study on a theoretical Sydney central business district commercial office tower. The building represented a class B, Green Star rated, commercial building with 31 floors. To conduct this analysis, two façade specifications with improved performance ratings were analysed

Thermal Modelling Establish accurate energy consumption data for the sets of defined input criteria and assumptions, including: • u-value: the measure of heat transmission through a building component (such as a wall or window) or a given thickness of material (such as insulation) with lower numbers indicating better insulating properties • shade coefficient: the measure of thermal performance of a glass unit (panel or window) in a building. This is the ratio of solar gain (due to direct sunlight) passing through glass relative to the solar energy which passes through 3mm clear float glass • spandrel height: non-transparent insulated panels separating floor levels.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 53

COST ANALYSIS

Calculate Mechanical Load Taking into account local weather conditions, mechanical loads (W/m2) for each individual elevation were determined.

This concluded reduced supply air was possible from mechanical systems as a result of better performing facades, plus indicated reduced peak loads and lower energy consumption (over a 35 year period)

Resize Equipment and Risers Resizing the plant, ducts and risers to reflect the changes in mechanical loads resulting from each façade specification scenario.

Project Inputs

The building benefitted from an improved facade specification in several ways.

Capital cost savings were anticipated from a reduction in mechanical plant size and riser dimensions. The decreased riser size, multiplied over 31 stories of the building, could lower cost and spatial requirements.

Green Star rating An environmentally sustainable design that reduces energy consumption and CO2 emissions creates an increase in Green Star points. In order to calculate the theoretical value of a Green Star point, several recent similar projects were benchmarked to determine the ‘extra-over’ cost of achieving a higher rating before dividing the cost by the variance of the points.

Option 1

Option 2

3

2.3

2.3

0.35

0.26

0.26

0

0

1000

78

69

60

Sprandel Height North Load (W/m2)

Reduction in mechanical capital costs

Baseline

U Value Shade COEFF

RESULT

2

West Load (W/m )

76

67

59

East Load (W/m2)

70

62

55

South Load (W/m2)

49

46

43

Findings

Option 1

Option 2

Equipment Reduction peak cooling reductions impact mechanical plant size

Peak cooling reduction = 109kW* Riser reduction per floor = 0.43m2 OR 7.41%

Peak cooling reduction = 212kW* Riser reduction per floor = 0.69m2 OR 12.02%

Cost Benefits A reduction in plant size allows for increase NLA & improved energy performance from a better façade leads to energy savings

37.6m2 extra NLA = $2.687m $1.194m Energy Savings @ 2020 additional façade cost is $1.22m payback is by 5 years**

59.5m2 extra NLA = $4.251m $2.579m Energy Savings @ 2020 additional façade cost is $2.43m payback is by 7 years**

ESD Benefits Due to improved façade performance energy and CO2 emissions will reduce.

The reduction in CO2 contributes to buildings targeting Green Star ratings

118MWh energy savings 6.6% energy per year & -7.7% CO2 per year*** 0.9 points = $280 by 2020

251MWh energy savings 13.9% per year & -16.3% CO2 per year*** 2.5 points = $780k by 2020

54 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

Net Lettable Area (NLA) The surprise outcome was that the NLA increased from the reduction in mechanical sizes. This opportunity presents a major commercial benefit.

Overall the NLA gains from the reduced mechanical requirements appeared modest at +40m2 and +60m2 for façade option 1 and façade option 2 respectively. However, given the strength of the rental market in Sydney and the high annual letting rate, the NLA factor was determined to be the most beneficial operational cost saving.

The income generated from the NLA increase was higher than the saving realised through energy efficiency and peak load cooling reductions combined.

While the building performance demonstrated a clear benefit from an improved façade specification, AECOM’s goal was to demonstrate the benefit that existed through the investment in capital costs and to determine a likely return on investment period from operational savings. The following graphs on the next page demonstrate the return of investment period for each façade option.

COST ANALYSIS

Return on investment option one

CASH FLOW ($AUD)

4,600,000

5 YEAR ROI

3,600,000 2,600,000 1,600,000 600,000 -400,000 -1,400,000

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

26

27

28

29

30

Annual Opex Efficiency: NLA and Energy

TIME (YEARS)

Capital investment

25

Return on investment option two 6,500,000

CASH FLOW ($AUD)

5,500,000

7 YEAR ROI

4,500,000 3,500,000 2,500,000 1,500,000 500,000 -500,000

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

-1,500,000 -2,500,000

Capital investment

CONCLUSION Despite the buoyant construction industry in many parts of Australia, there is increasing scrutiny on capital costs which has resulted from an uncertain economy and project budget pressures throughout the private and public sectors. We believe value for money is the number one driver for projects.

A holistic combined approach to both design and cost of our built environment,

TIME (YEARS)

while also considering whole of life, generates a thorough review of design norms and results in greater value for money.

This study provides an insight into the requirement for a higher focus on operational cost benefits associated with analysing capital spend and ensuring it demonstrates value for money. With a relatively short return on investment period, a multi storey city centre building can realise long term benefits through

20

21

22

23

24

25

26

27

28

29

30

Annual Opex Efficiency: NLA and Energy

a high performing faรงade, a sustained annual reduction in energy usage and a reduced impact on the environment through reduced CO2 omissions, while importantly maximising revenue.

This article has been written by Stephen Clarke, Principal Cost Manager, AECOM.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 55

CASE STUDY

BIRMINGHAM: BUILD TO RENT 56 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

CASE STUDY With a swelling pipeline of new schemes, Birmingham’s build to rent sector is belatedly taking off. Build to rent specialists at AECOM, Peter Lakin, Mark Bevan and Sean Cook investigate the sector and provide a cost model to help developers, funders and operators make the most of their investment.

Build to Rent (BTR) may be booming across the UK, but Birmingham has taken a while to get the message. Now, at last, that is changing, thanks to a growing population and a bustling, vibrant economy — not to mention a host of high-profile schemes completed, in progress or in planning.

Projects such as Nikal’s major city centre development Exchange Square 2 and Blackswan’s Gilder’s Yard are part of an expected pipeline of around 5,000 units around the city. They join existing landmarks such as Exchange Square 1, the Lansdowne in Edgbaston and the Forum in the Chinese Quarter in bringing critical mass to Birmingham’s BTR sector.

If there isn’t quite a BTR scheme in every district, it’s not far off. The regeneration of Broad Street will have a new centerpiece in 2022, when Moda’s The Mercian (previously 2one2) with its 481 apartments completes. Head south past the Mailbox and see the site of the Invesco-backed Holloway Head, which promises 484 BTR apartments.

Circle back north to the Jewellery Quarter to check progress on the Legal & General funded Newhall Square development,

by Spitfire Urbane/IM Properties, which will provide 220 BTR apartments with ground-floor commercial space, and the 14-storey Aberdeen Standard Investments’ Lionel House (due for completion in 2021).

Nevertheless, the fact remains that Birmingham has been slow to succumb to BTR’s charms. London paved the way,

with the post-Olympics transformation of the athletes’ village kick-starting half a decade of feverish activity, fueled by weak supply and strong demand for affordable, high-quality housing. Last year Savills estimated that 34,840 new homes would be completed in the UK during the third quarter of 2019, with another 74,466 in planning.

Manchester followed closely behind London, with economics and demographics combining to provide fertile ground for BTR to take root. British Property Foundation estimates showed 75,747 BTR units in planning, under construction or completed across the city at the end of 2019.

The good news is that similar factors are finally enabling BTR to flourish in Birmingham, with significant inward investment over the last decade driving the shift. Organisations such as HSBC and HMRC have brought jobs. The rebuilt New Street station, better tram services and upgrades to the M6, M5 and M42 have renewed the transport infrastructure, with HS2 to add more benefits, if and when it completes. A new library and science museum have upped the city’s cultural credentials — and hosting the 2022 Commonwealth Games will burnish its credibility even more.

Birmingham’s population growth has been steady, prompted by new jobs and the city’s five universities, which produce 67,000 graduates a year, 50% of whom stay on after graduation.

Add to this the West Midlands Combined

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CASE STUDY

Authority’s target to build 215,000 new homes over the next two decades, and the result is a big opportunity for BTR funders and developers. Indeed, in this market, the city’s relatively late entry may work in its favour, with developers able to capitalise on lessons learned from other, earlier projects across the country.

TAKING A LONG-TERM VIEW Institutionally backed BTR projects are all about the long haul, and so cost models need to balance capital and operational expenditure to get an accurate picture of a scheme’s returns. This is the difference between BTR and open‑market schemes — even those destined for the private rental sector. With BTR, the organisations and institutions that forward‑fund its construction will usually be around for the next 30 years of operation. And while returns on a BTR project are generally lower than for those in the open market, the long‑term gains can be substantial.

To make the most of this, developers entering Birmingham’s BTR market need to build up their knowledge and understand the running costs of a building during the design stages.

While apartment specifications may not be so different from a comparable layout for a good‑quality open‑market offer, the specification of amenities and the associated maintenance and management regimes will require extra attention. A gym and a pool may look good in the sales brochures, but their long‑term cost can eat into that all‑important net operating income.

Placemaking is a key consideration — and an area in which BTR developers

could learn from their equivalents in the open‑market residential sector. Public realm, communal areas, cafes and even storage for online shopping deliveries and equipment such as bicycles may be less glamorous but provide more efficient use of space and help to create a feeling of community. And if a scheme fits neatly into an existing masterplan, that’s even better.

UNDERSTANDING THE END USERS: YOUNGSTERS AND BOOMERS A clear understanding of a BTR building’s end users will also be essential to funders and developers who require a successful return on investment. The standard profile of a BTR tenant as a young, single occupier still rings true here. After all, Birmingham is a youthful city, with 75% of city centre inhabitants being under 35 years old.

Those students who remain in the city after graduating will want to match the quality and service they’ve experienced in their student accommodation. Busy, earlycareer professionals may not have the time or inclination to handle maintenance themselves, preferring the support that BTR accommodation provides.

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That said, the tenant landscape is diversifying. One of the first tenants into the Lansdowne — an early BTR scheme in Birmingham, completed by Long Harbour and Seven Capital in the first half of 2019 — was 51 years old.

Knight Frank’s UK-wide 2019 tenant survey noted that more than one-third of renters were aged 25-49, living either as couples or sharing with friends. Other survey categories included families, older renters (either single or in couples) still in employment, and retired baby boomers.

It’s reasonable to assume Birmingham will reflect these nationwide trends.

These varying tenant types will all have different criteria when searching for a rental property, and BTR designs must decide how best to accommodate them. Common to all will be a need for appropriate amenities (including those available in the surrounding area), decent transport and a good level of management and maintenance support.

Features such as furniture packs, with a range of options for different tenant groups, or extended warranties for key equipment and components, will bring tenants in and offer a superior user experience.

CASE STUDY

SPECIFYING FOR SUCCESS Developers need to remember that the standard one-bedroom configuration may not always be the best fit for the diverse BTR demographic, despite the efficiency of the net-to-gross ratio for such schemes. Offering homes with more bedrooms and a variety of building typologies, depending on the particular area of a city or its suburbs, may be a better fit for local housing needs and may be more sympathetically received by the council’s planning teams.

Nevertheless, the overriding ambition must be to deliver an efficient building with acceptable whole-life maintenance overheads. In an emerging market, the rush for differentiation may result in showy, expensive buildings that take longer to recoup their build cost.

Tall towers, for example, are attractive as statement buildings, can offer tenants benefits such as stunning views and may enable developers to pack more revenue-generating apartments into a limited footprint. But, as any contractor will tell you, going higher makes the construction methodology more complex and, ultimately, costlier.

Developers should also challenge design teams to make ease of maintenance and management a critical path from concept design onwards. Consolidating concierge and reception areas, if done cleverly, can mean fewer staff are required cover them once the building is operational.

needs such as home office use, gaming and streaming.

Developers and operators should also reflect on those elements of residential schemes that occupiers highlight as being important to them. Factors such as acoustic performance (noise is often a complaint) or fire safety will reward special focus.

Standardisation of products and components will help bring down the overall cost of a scheme, especially if a developer is looking to build out several schemes in the city.

Sustainability should be an integral part of the design and construction phase. Green technology and renewable energy should complement efficient thermal performance, backed up by responsible sourcing during procurement and construction.

Smart components for mechanical and electrical equipment can provide remote monitoring, smart metering and service alerts. Installing superior IT connectivity will enable users to report faults quickly and get regular service updates via apps, improving their experience.

In any case, fast connections will be expected by tenants to support their IT

STANDARDISING FOR EFFICIENCY: GO MODULAR

Approaches such as modular and offsite construction can bring a factory‑style methodology to a project. Tools such as 4D or 5D BIM enable teams to standardise building components down to the last detail and integrate the cost plan and maintenance into the digital model. Parametric cost modelling can make the systematic examination of the performance of alternative products and designs more efficient, providing granular detail around different floorplate configurations.

In the operational phase, the consistency of components and products will make it easier to achieve economies of scale in maintenance and management contracts across multiple developments.

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 59

CASE STUDY

PROCUREMENT: ROUTES TO THE LOOT Effective procurement and a firstclass supply chain are key to getting any project delivery right. Simple, straightforward procurement routes are important, along with clear and easily understood risk transfers.

When it comes to procuring BTR schemes, many developers and funders tend to favour competitive, single-stage design and build routes, although this may depend on the contractor and supply chain appetite.

Contractors will tend to prefer two-stage design and build, which gives them some flexibility to influence the design and cost, through the integration of their key subcontractors earlier in the tender process.

Whichever route they choose, developers and their funders will need to ensure they work with contractors who share their mind-set of high-quality, efficient delivery with an awareness of long-term maintenance and service, and who have a track record to demonstrate this.

Achieving that may be easier said than done. The embryonic nature of the BTR sector in Birmingham means that local principal contractors with the relevant skills and experience can be hard to find.

It may be down to the regional offices of the tier one contractors to pick up the

work, at least in the short term.

63 square metre (sqm).

Contractor-led supply chains will have a different composition from that of standard residential and commercial projects. As well as the usual trades for the construction phase, developers and operators will need to procure cleaners, building managers and maintenance teams to support the long-term running of the asset.

The scheme includes ground floor amenity space with a concierge facility, gym and cafe/lounge area. Gross internal area is circa 16,800 sqm (180,834 square feet (sqf)) with a net internal area of 12,600 sqm (135,625 sqf), reflecting a net to gross ratio of 75%.

There is, however, the opportunity to bring innovation into the supply chain.

Some 99% of businesses across the Midlands region are classed as small or medium-sized enterprises — and 80% of these have fewer than 20 employees.

Among these, there will undoubtedly be start-ups, specialists and craftspeople who can do things better, faster and more sustainably than their larger rivals.

The potential to bring knowledge and support to newer businesses in this way and thereby build social value through the construction of BTR schemes should not be underestimated.

ABOUT THE COST MODEL This cost model represents a medium quality BTR scheme in central Birmingham. It comprises a 20 storey residential tower, providing circa 200 units with an average apartment size of

The authors would like to acknowledge the contribution of AECOM colleagues to the development of this article and cost model. An edited version of this article first appeared in Building magazine in January 2020.

60 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

The estimate is based on prices current at Q1 2020 and uses rates taken from similar projects competitively tendered within the local market via a single stage design and build procurement route.

The cost model assumes traditional bathroom construction and excludes demolition, unfixed furniture, fittings and equipment, operations and services equipment, professional fees, local authority fees and charges, section 106/278 agreements and VAT.

WATERPROOFING

WHY BUILDINGS LEAK PART ONE Most new, large scale apartment dwellings are beset with waterproofing problems within the first three years of the building’s life. We find it is common for one-year-old high-rise apartment buildings to have leaking podiums, leaking windows, ponding water in bathroom floors or balconies. That’s just the first year. It’s not just residential buildings either. One large scale, high profile, commercial building finished in the last few years in Sydney had $100 million of water leak related defects manifesting before the building opened.

How is it that, in a sophisticated building industry with advanced reliable technologies in so many respects, we have such problems in keeping the water out?

This article puts forward three propositions for addressing this question.

Firstly, a discussion on the essential process flaw in our industry that allows these defects to occur. Secondly, how we can look at the design of a building more holistically to prevent water penetration defects. Thirdly, the quantity surveyor’s role in a more holistic approach to preventing leaks.

1. THE ESSENTIAL PROCESS FLAW Analysis of the defects in thousands of home units and many large-scale commercial structures informs my perspective on the main cause of water leaks and cracking in buildings. In my experience, 90% of leaks and cracks are due to design and design coordination issues. More precisely, I find the leaks and cracks occur at the gaps between professional inputs.

Forensic analysis of actual leaks and also an examination of the original

BUILT ENVIRONMENT ECONOMIST - MARCH 2020 - 61

WATERPROOFING

drawings usually reveals the leaks or cracks to be on the drawings two years before the works are carried out. It is that predictable. For example, in most new buildings we inspect there is at least an 85% non-compliance of the bathrooms with the relevant tiling or waterproofing. Consequently, it’s rare to find a bathroom or shower in a recently completed building with correct falls or adequate termination of the membrane.

Our industry usually places the blame on the tiler and therefore the builder for not getting it right. However, when we check the drawings of these buildings, we see the seeds of the non-compliance were sown two years before in the selection of the floor to ceiling height for the project. How does the builder and therefore the tradesperson get the right falls if there isn’t sufficient floor to ceiling height to accommodate all the conflicting requirements of a modern hobless, frameless, doorless, stepless bathroom?

How do we expect a podium not to leak when the structural engineer’s design has the movement joint placed between two large post-tensioned slabs placed in the middle of a planter box? When critical information on the long- term structural deflection of a podium slab is not shared, we end up with the rainwater outlets at the slab surface’s high points in five years? How do we expect a 1mm liquid membrane to bridge a construction joint which the structural engineer always knew had a long-term potential movement of 10mm, but didn’t think to let us know?

In the conventional waterproofing model, only the architects, the waterproofing

62 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

WATERPROOFING

membrane supplier and perhaps the waterproofing contractor have inputs to the process of keeping the water out.

The structural engineer’s drawing will say ‘waterproofing’ as per the hydraulic engineer’s drawing. The hydraulic engineer’s drawing will say ‘waterproofing’ as per architect’s drawing. The architect’s drawing will show a thin black line ending mysteriously behind an adjacent element.

Flashings are hidden or deleted. A layer of textured coating covering everything to make it all look solid.

When we peer deeper into the building process, we see an absence of effective design co-ordination and complete reliance on a layer of goo. Project managers and developers are reluctant to spend the time and money on getting the necessary people in one room for longer than an hour to collaborate on design, address buildability issues, and assess the risk of leaks. This is particularly prevalent in design and construct contracts. Super specialisation of designers combined with design coordination by email means there is little opportunity to refine how the building, as a total system, fits together.

As a result, the industry has developed a reliance on waterproofing membranes and sealants to do all the work. We design to meet all the usual planning and commercial imperatives then bring somebody in at the end to put a layer of urethane over the exposed bits. As an industry, we think we manage the risk of water penetration by getting a 20-year waterproofing warranty on a $100 million project from a subcontractor. It is a lazy and ineffective approach and lies at the

heart of the water leak defect issue. We as an industry have succumbed to the siren call of the plastics age. We then try to fix these gaps in the design with sealant, on the run, during the works. ‘No more gaps’ by name and nature.

How has this come about? We have collectively forgotten the simple pleasures of a well-placed downpipe and the elegant simplicity of a well detailed flashing. The timeless reliability of open drain joints, clear cavities and integral falls in concrete slabs. We ignore the fundamental principles of how water flows in and around buildings. We try to store it and block it then wonder why we fail.

2. A MORE HOLISTIC APPROACH There is another way, to counter this plainly ineffective strategy, we need to move from a total reliance on waterproofing to a remembrance of watershedding. This is a new term for an old concept. It’s simple, it’s elegant and it has a 2000-year guarantee. Vitruvius, in the 10 Books of Architecture written in 10 BC for Emperor Augustus, included descriptions of specific methodologies for keeping basements dry and defecting water from the tops of brick walls to prevent premature failure. There are more specifics on leak and crack prevention in his writings than in the current Building Code of Australia.

We employ the principle of watershedding when we design and build a cavity brick wall or a terra cotta roof. It’s there when we insist on having a window with a sub sill and weep holes. When we ensure

there are good falls in the shower floor, it’s here when we include more rainwater outlets than we have to, rather than less than we need. It’s here when we consider and then allow for the 10-year dimensional change in the concrete slab rather than just looking at the day one dimension on the drawing.

In our consultancy, we have coined the term ‘watershedding before waterproofing’ to describe this shift in the approach to design. It incorporates the concepts inherent within rain control theory which have been used in high rise facades for many years. But it is time to use these principles wherever the building is exposed to water – not just the facade. Most importantly consideration of these principles needs to commence right at the start of the design process, not just once the concrete starts to flow.

Everyone in the professional team has a role to play in incorporating the principles including quantity surveyors.

Here are some of the key steps in this approach.

1. Engage the architect, structural engineer, hydraulic engineer and quantity surveyor in the watershedding design process.

2. Predict where water will access the building exterior and its pattern of flow. Find the top three risks then focus on these.

3. Plan to gather the water then deflect, redirect and drain it. Do not store it.

Always maintain flow, do not allow the water to become idle. The exception is when it is deliberately being stored for reuse, flood mitigation or for swimming.

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WATERPROOFING

4. Never underestimate the long-term value of a well-placed flashing. It should always gather, deflect, redirect and drain.

5. With walls and windows, look for the opportunity to create a cavity or similar void, thus neutralising air or hydrostatic pressure then collect it and redirect safely. Always use open drain systems for facades in preference to face sealed systems.

6. For protection from ground water, always use drained cavities in preference before membranes and agricultural lines.

7. For roofs, podiums and balconies, never design a flat slab for external use.

Always have integral falls and hobs.

Never rely on mortar topping for falls.

8. When designing a concrete slab, which will have finishes exposed to water, always design to take into account the 10-year shrinkage and deflection of the concrete elements. Similarly, the 10-year expansion of the masonry elements. Put that number on the architectural drawings for all to see.

9. In balcony and roof design, place your downpipes at the points in the slab which are likely to become low points in 10 years.

10. Predict where cracking will occur and take steps to mitigate. The structural engineer and concrete supplier are the most important waterproofers. The membrane is just the back-up plan.

11. Cure concrete with water. Thirsty concrete and windy days, during cure, make for lots of cracks and leaks.

12. In bathroom design, look at the floor to ceiling heights right at the start of the design process. Is there enough room to fit the tile and tile bed with a 1:80 fall in the shower and 1:100 in the bathroom? It may not be as easy as you think. Tilers, like most of us, can’t make something out of nothing.

13. Never include planter boxes or box gutters in the design. If they are necessary, then treat them as the highest risk item on the project.

In describing these watershedding principles you will notice there is no mention of the waterproofing membrane or sealant selection. If you get the watershedding principles right, then you only need the membrane to provide the protection for which the membrane was designed for.

THE QUANTITY SURVEYORS ROLE IN WATERSHEDDING If watershedding is essentially a design related issue, where does the quantity surveyor fit in?

A quantity surveyor can reveal the bits that everyone else overlooked. Otherwise essential quantities and dollars can be missed. Few in the building process have a knowledge across all the technical facets such as the quantity surveyor, therefore the quantity surveyor role is vital to changing this defective building process. There is an opportunity for the quantity surveyor profession to become more aware of the importance of these watershedding principles and

64 - MARCH 2020 - BUILT ENVIRONMENT ECONOMIST

ask why the essential elements are not on the drawings when the project is being priced. To ask the questions when walking the site doing progress claim evaluation. Did the basement and external concrete slabs have the curing required on the structural engineer’s general notes page? If not, what is the assessed diminution of value of the slab due to all the unplanned cracking? Do all the shower floors have the required falls? If not, what is the assessed value of a finished bathroom floor that might have to be ripped up in two years?

Ross Taylor is a specialist waterproofing consultant with over 40 years’ experience in the design of waterproofing detailing, diagnosis and rectification of water penetration issues in new and existing buildings.

LEGAL

QUANTITY SURVEYORS IN MEDIATION Quantity surveyors are, and should be, at the forefront in promoting alternative dispute resolution (ADR) in the construction industry. The primary role of a quantity surveyor is to guide projects to the most economical solutions and the best financial management to the benefit of all stakeholders in general and mediation in particular. Mediation provides a cost and time effective method of dispute resolution and should be the first point of call for the industry.

A mediation session normally lasts for approximately one to two days, whereas arbitration or litigation can take several weeks or months and often ends up costing the parties as much, if not more than the amount in dispute. Mediation can

be scheduled efficiently with the parties generally agreeing on a mediator and his brief. As the mediator is chosen by the parties, the process can be expedited rather than waiting for the Court’s next available hearing date. This can be particularly advantageous when a dispute occurs during a project as it allows works to continue notwithstanding the mediation.

The role of a quantity surveyor in mediation is similar to that of an expert witness in litigation. Quantity surveyors provide valuable information for the mediator and the parties, allowing them to better understand the matter in dispute as well as facilitating the discussion so that the issues that have arisen can be properly discussed, quantified and dealt

with. The quantity surveyor can provide an accurate valuation of the issues and the monies so parties can resolve real costs rather than ambit claims. This can add an additional layer of credibility to the claim or counterclaim and assist in fact finding by the mediator.

Increasingly, ADR clauses are being included in construction contracts to facilitate swift resolution of the issues in dispute with mediation required prior to arbitration or litigation. Of course, mediation is a non-binding process and most parties choose to execute a Deed of Settlement and Release in order to bar any further claims arising from the same issues on the conclusion of a successful mediation.

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Quantity surveyors can actively benefit their clients by suggesting mediation.

Its time and cost-effective nature extend itself as an incredibly efficient solution for disputes when it works.

THE RISE OF MEDIATION Within the global construction industry, mediation is fast becoming an increasingly common and effective method of ADR. With a steady rise with matter settled by mediation to 13% in 2019 in the US of commercial and residential disputesI. The United States Department of Justice notes that the resolution rate for voluntary ADR proceedings was higher at 75% than court order proceedings at 55% in 2017II. Commercial and civil mediation rates have remained remarkably high in the UK 87% from 2014 until 2016III. The success of mediation is further evidenced by the Courts’ position in Australia with court ordered mediation becoming a more commonplace one or more times before the final determination of the proceedings.

THE MEDIATION PROCESS Prior to mediation, it’s important to familiarise yourself, your client and the

approach your client’s lawyer wishes to take with the process. The mediation process differs greatly from conventional dispute resolution strategies, such as litigation and arbitration proceedings.

It is important to understand the mediator’s role in the process, which is only facilitative rather than directive. The mediator must remain a neutral party throughout the process and allow both parties to discuss their grievances and ideally come to a mutual agreementIV. In the UK alone 67% of cases were settled the day of the mediationV. Ensure you’re aware of any legal implications and restrictions during and prior to the mediation prevents any issues of legality with possible solutions that are generated. During mediations, you may speak for your client or advise them as they speak.

Mediation is a particularly flexible process; mediators will facilitate conversations to ensure both parties get equal time to speak and be heard.

If private counsel is required during the mediation process, there’s always an opportunity to ask the mediator for a break and allow you to discuss your client’s options privately, as well there is usually a mandated one-onone session with the mediator which will occur at a later point during the mediation process.

ETHICS IN MEDIATION Those involved in mediation have a responsibility to uphold certain ethical standards, this is second nature to quantity surveyors. It is always your duty in all respect to give honest and true monetary values. These standards are also enforced and prescribed by AIQS. This standard states that members should carry out their professional duties ‘ethically, with honesty, competence, and in good faith, without personal bias’ VI as well as stating that in areas of documentation, accuracy, timelines and fees that is vital that quantity surveyors provide their clients with ‘the information and professional guidance necessary for the client to make an accurate and informed decision about what performance standards, outcomes and risks can be expected in relation to the services they are engaging.’ VII.

CONCLUSION Mediation is increasingly vital to the construction industry and the assistance which can be provided by a quantity surveyor for each of the parties is substantial.

This article has been written for Built Environment Economist by Doyles Construction Lawyers. www.doylesconstructionlawyers.com https://www.finra.org/arbitration-mediation/dispute-resolution-statistics https://www.justice.gov/olp/alternative-dispute-resolution-department-justice III https://mediatelegal.co.uk/civil-commercial-mediation-uk-2016-analysing-cedr-seventh-mediation-audit/ IV https://quantitysurveyor.blog/2019/08/28/what-is-the-mediation-process/ V https://mediatelegal.co.uk/civil-commercial-mediation-uk-2016-analysing-cedr-seventh-mediation-audit/ VI http://www.aiqs.com.au/IMIS/documents/Code%20of%20Professional%20Conduct.pdf VII http://www.aiqs.com.au/IMIS/documents/Code%20of%20Professional%20Conduct.pdf I

II

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By David Roberts MAIQS, CQS, MNZIQS

EXPERT WITNESSES AND ‘SHIPS IN THE NIGHT’ Its known that the common law system is adversarial, what is not commonly known is that the adversarial system creates a dialectic that requires to be synthesised.

The synthesis of two opposing opinions is the essence of the appointment of two opposing experts. Creating a scenario that does not provide a dialectically synthesised outcome of the matters in dispute could be seen as a less effective form of managing the experts within an adversarial system of dispute management which could prolong the dispute and increase costs.

When appointing an expert witness, the appointing lawyer may have no knowledge of the instructions that the opposing lawyer will provide to their own selected (future) expert. When the future becomes the present, the opposing lawyer, will have knowledge of the earlier instructions that were issued to the opposing expert.

It’s at this time that the lawyer could consider that the later brief could be somehow coordinated or aligned with the earlier opposing brief to create a dialectical problem and a potential synthesis of opinions by the appointed experts.

For example: Lawyer #1 brief to expert #1: “What is your opinion of the amount of entitlement to damages of delay event 1?”

Lawyer #2 brief to expert #2: “What is your opinion of the amount of entitlement to damages of delay event 1?”

These two instructions have been issued to different experts at different dates, the brief for expert #2 is issued later than the brief for expert #1 and it's assumed that lawyer #2 had knowledge of the brief issued to expert #1. It is evident that lawyer #2 was concerned with creating a dialectical scenario that could create a like-for-like analysis of the same portion of claimed damages with the view that

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the experts will be able to ascertain their differences in a like-for-like analysis within their confidential conclave.

Alternatively, lawyer #2 may choose to ignore the instructed brief from lawyer #1 and pose a separate and unconnected question to the appointed expert.

For example: Lawyer #1 brief to expert #1: “Provide an overview of the amount of entitlement to damages of delay event 1?”

Lawyer #2 brief to expert #2: “Analyse the actual costs incurred for delay event 3 and provide brief comments on the actual costs for delay event #1. Give your opinion on whether the claimant is entitlement to damages.”

As seen from the opposing instructed briefs, there is almost no synethisable opposing question between the instructing lawyers, this makes an expert conclave somewhat pointless and a potential waste of costs.

Further, note the use of a question in the brief issued by lawyer #2, as follows: “Give your opinion on whether the claimant is entitlement to damages.”

Firstly, the earlier brief from lawyer #1 poses no such question to his instructed expert, and secondly any appointed

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expert on matters of costs and damages should not provide an opinion on contractual or legal matters that are within the sphere of expertise of the lawyer.

Also, note the use of effective verbs within the instructing briefs, for example lawyer #1 requests “[O]verview…” and Lawyer #2 requests “[B]rief comments…”.

This use of different verbs within two potentially opposing and identical briefs can also create scenarios where the opposing opinions cannot be compared on a like-for-like basis and may not create a synthesis of opinion.

It is too often the case that the expert will receive instructions that are disconnected from the opposing experts brief, this may serve to answer a specific question posed by the instructing lawyer which the instructing lawyer believes is relevant to their case, but has no or little connection to the brief issued to the opposing expert. This scenario fails to create the required dialectical argument and no synthesis of opinions can be obtained where the instructed briefs of both experts are not aligned.

In cases where the instructed briefs are aligned, the experts can enter their confidential conclave and potentially agree or disagree on the matters that are exposed by the like-for-like opinions that have been provided by the experts to their instructing lawyers. This is of great benefit to the arbitrators or court where it will become clear and evident as to the matters that the experts agree upon and the potential differences in the value between the two experts’ opinions and the potential costs to proceed with a court judgment or arbitrators decision.

BCI

BUILDING COST INDEX THE BUILDING COST INDEX IS PUBLISHED IN THE PRINT VERSION OF THE BUILDING ECONOMIST. IT CONTAINS DATA THAT CAN BE USED AS A PREDICTOR FOR THE ESTIMATED TIMES FOR DESIGN AND CONSTRUCTION AND INCLUDES A SUMMARY OF THE PAST, PRESENT AND ESTIMATED FUTURE CONSTRUCTION COSTS.

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Level 3, 70 Pitt Street, Sydney, New South Wales, Australia 2000 +61 2 8234 4000 www.aiqs.com.au