NEC4 Contracts The Quantity Surveyor and Regulations

THE QUANTITY SURVEYOR AND REGULATIONS By Geoff Hanmer

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

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. 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 fire I .

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

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 loads II .

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

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