The Building Economist - July 2012

The Journal of the Australian Institute of Quantity Surveyors

The

Building Economist

THE GREEN ISSUE

FEATURING ON THE LEAN SIDE

KEN WALSH ON LEAN CONSTRUCTION – P10

THAT COMMUNITY FEELING ADAM BECK TALKS ABOUT WHAT DRIVES HIM – P16

STAYING AHEAD WITH CPD WE HITCH A RIDE WITH THE CPD ROADSHOW– P24

JULY 2012

2 – THE BUILDING ECONOMIST – JULY 2012

The

Building Economist

12

IONNTHESIGHT LEAN SIDE

B.E. has a chat with Dr Ken Walsh, Chairman of the Department of Civil, Construction Engineering and Management at San Diego State University and gets the ins-and-outs on Lean Construction, what it is, how it works, and if it can actually work at all. Ken came to Melbourne recently for the first Australian Institute of Quantity Surveyors Continuous Professional Development Roadshow, so we grabbed him and picked his brain. What he provided was a unique insight into where construction is headed in the future, and what we should know now to be ready for it.

30

ADDICTED TO FALSE CERTAINTY

Lump sum contracts - guest writer Adam Walker explores the problems with fixed sum contracts, and solutions.

Managing Editor Jenna Harfield Executive Editor Emma Marshall Art Director Julian Brown - Nose to Tail Chief Executive Officer Michael Manikas Contributor Ian T Blyth P.h.D

18 26

Adam Beck , the Executive

THAT COMMUNITY FEELING

Sustainable Communities for The Green Building Council of Australia talks to B.E. about his vision to leave the world a better place.

A thirst for knowledge and a need for innovation sees many

STAYING AHEAD WITH CPD

professionals going back to the classroom. We chat with CPD Roadshow Sponsor Exactal about why innovation and CPD matters.

04 09 10 24 REGULARS 32 JULY 2012 CONTENTS

SNAp SHOT

FROM THE CEO

Nuts & bolts

SOCIAL

Contributions Articles relevant to construction economics and related subjects, pictorial material, letters etc are welcome. No responsibility is accepted for unsolicited material. All contributions should be addressed to the editor: Australian Institute of Quantity Surveyors, National Office, Level 6, 65 York Street, Sydney NSW 2000.

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Tel: (02) 9262 1822 Fax: (02) 9279 1400 Email: editor@buildingeconomist.com.au www.buildingeconomist.com.au

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THE BUILDING ECONOMIST – JULY 2012 – 3

SNAPSHOT

Record Fine Hits Victorian Builder A prosecution brought by the Building

was issued. The charges were in relation

in Victoria, it prosecutes companies and

Commission against an unregistered

to illegal building work at five properties in

individuals operating without a registration

builder has resulted in one of the largest

Hume and Whittlesea.

with the BPB in the Magistrates Court.

Building Commissioner, Michael Kefford

Mr Kefford said that he believes the case

said that the case should send a strong

was not indicative of the quality of Victoria’s

Unregistered builder, Kadri Saydar, who did

message to the building industry that the

domestic building industry.

not appear in court, was ordered to pay an

Building Commission will hold unregistered

aggregate fine of $100,000 and legal costs

builders accountable.

fines ever recorded by the Victorian building regulatory body.

of approximately $20,000 on 12 June 2012.

When consumers are embarking on building projects they are advised to check whether

“This is a warning to all individuals

their proposed builder is registered with the

Broadmeadow’s Magistrates Court found

operating without the appropriate building

BPB by going to the Building Commission’s

Mr Saydar guilty of 31 charges relating

registration with the Building Practitioners

website at www.buildingcommission.com.au

to breaches of the Building Act 1993 and

Board (BPB). If you operate illegally, you

and searching the ‘Find a RBP’ section.

the Domestic Building Contracts 1995

will be prosecuted,” Mr Kefford said.

Consumers should also ask to see the

Act, including entering into a domestic

builder’s warranty insurance for the work.

contract when not registered and carrying

As part of the Building Commission’s role

out building work before a building permit

in overseeing the building control system

4 – THE BUILDING ECONOMIST – JULY 2012

SNAPSHOT

ResourceDriven growth to moderate says ACIF

winding back of Government

Non-residential building

fiscal stimulus measures.

approvals have fallen for

IN BRIEF

13 consecutive months to Engineering construction is

February 2012. ACIF says

forecast to peak at around $120

this type of construction is

billion in 2013/14, according to

expected to remain weak for

ACIF, based on heavy mining

the remainder of 2011/12. Its

activity in that year. Investment

outlook for non-residential

in both private and public

building activity is expected to

sector engineering projects

remain weak over the medium

is strong over the short-to-

term.

medium term, ACIF says.

The Australian Construction

The moderation in residential

City of Sydney retro-green initiative C

ity of Sydney has begun

Industry Forum’s (ACIF) April

“In the private sector, we see

construction is set to continue

2012 forecast says while

a number of large mining

into 2012/13 but ACIF says,

the Australian economy

projects, particularly in LNG.

in light of significant dwelling

continues to enjoy continued

In the public sector, we see

shortfalls, strong underlying

energy and water efficient,

resource driven growth, some

the impact of the NBN, along

demand and recent Reserve

potentially saving more than $1

moderation is likely. ACIF says

with strong investment in rail

Bank rate cut decisions a

million annually.

moderation will be caused by

infrastructure in QLD and

recovery is forecast as access

pressure the high Australian

NSW,” the forecast says.

to credit improves.

an overhaul of 45 of its

properties to make them more

The two-year project, which will

dollar places on export

cost $6.9 million, includes Town

intensive sectors and the

Hall House, Customs House, pools,

community

centres,

libraries and car parks.

A Broad 300 Million

The projects support the

Broad’s infrastructure

It will involve fitting buildings

strategic direction and growth

capabilities and understanding

with energy efficient lighting,

of Broad’s building and civil

of Indigenous communities

air-conditioning and heating,

divisions. The contract wins

have further strengthened

centralising power management

also reflect the company’s

after successfully delivering

systems for computers, and

new focus and commitment

works as part of the New

installing voltage reduction units

to further diversifying into

Future Alliance (NFA –

to reduce energy use by pumps,

Broad Group Holdings Pty

building infrastructure within

Leighton Contractors, Broad,

fans and lights.

Ltd, a fully owned subsidiary

the resources sector.

Ngarda, Opus) in remote areas

of Leighton Contractors Pty

of the Northern Territory for

The initiative would almost triple

Ltd, has recently secured

Some projects are situated

the National Partnership

the reduction in the council’s

more than $300 million of

in remote areas with a focus

Agreement on Remote

carbon emissions, from 6.8

major construction projects

on mining camps, associated

Indigenous Housing. The

percent to 19.9 percent, says Lord

throughout Western Australia,

infrastructure and work within

NFA has subsequently been

Mayor Clover Moore.

Queensland and the Northern

Indigenous communities.

awarded further works and the experience gained by the Broad

Origin Energy won the tender

Rio Tinto, Perth Airport

Chairman, Peter McMorrow

team has created new and

process to deliver the project, and

and the Northern Territory

said Broad is continuing to

exciting opportunities across

energy and water performance

Government.

develop and diversify as a

the country.

guarantees will be independently

Territory for clients including

market leader.

verified.

THE BUILDING ECONOMIST – JULY 2012 – 5

SNAPSHOT

Abigroup wins water recycling plant project in the Hunter Abigroup has been awarded a $40 million

the Hunter Treatment Alliance delivery

The Hunter Treatment Alliance is carrying

project by the Hunter Water Corporation to

model.

out a $240 million five-year program of

build a new water recycling plant as part of

works with the Hunter Water Corporation

the Hunter Treatment Alliance program of

“We believe that the KIWS team have

designed to enable the region to cater for

works.

found the best technical and value for

increased population growth and ensure the

money solution available to Hunter Water

plants operate reliably and sustainably into

Corporation for this type of project.”

the future.

The Kooragang Industrial Water Scheme (KIWS) involves constructing a new water reuse plant that will use Micro-filtration

The project includes an on-site education

Reverse Osmosis processes with a 9 ML/

centre building, discharge and return water

day output including provision for a future

pipelines and the design, construction and

expansion to 12 ML/day.

commissioning of all telemetry and control systems for the scheme.

Abigroup’s Ian Hutchinson, who is the Hunter Treatment Alliance Program

Site mobilisation is expected to commence

Manager, said that he is very excited that

in December 2012 and the project is

Hunter Water Corporation Board has

expected to be completed by mid-2014.

decided to deliver the KIWS project using

Pacnet Appoints Nigel Stitt ANZ Chief Pacnet has announced the appointment of

“We are pleased to appoint Nigel to the

The appointment of Mr Stitt to the

Nigel Stitt as Chief Executive Officer of its

helm of Pacnet’s Australia and New

position follows former Pacnet Australia

Australia and New Zealand business.

Zealand operations where he can fully

and New Zealand CEO, Deborah

utilize his industry expertise and business

Homewood’s decision to pursue new

With more than 21 years of IT and

savvy in moving our local business into its

professional endeavors outside of the

telecommunications experience, Mr Stitt has

next generation,” said Bill Barney, CEO of

telecommunications and technology sector.

served in a number of senior positions with

Pacnet.

Under Ms. Homewood’s leadership, Pacnet

Pacnet over the past 8 years, most recently National Sales Director for Pacnet Australia.

Australia and New Zealand has been a Prior to joining Pacnet Mr Stitt was General

significant contributor to the company’s

Manager of Techcel/CNN Internet where

overall achievements over the past 10

Since the launch of Pacnet in 2008,

he became a top revenue contributor after

years.

following the operational merger of Pacific

developing a business model integrating

Internet and Asia Netcom, Mr Stitt has been

ISP offerings with its IT integration

instrumental in delivering double-digit

business. Mr Stitt has also held consultant

growth for the company’s business across

and management positions with Forsythes

Australia.

Information Technology, Spear Technologies and Osborne Computers.

6 – THE BUILDING ECONOMIST – JULY 2012

SNAPSHOT

GHD Looks at Behaviour in design One of the world’s leading engineering,

A human-centred approach puts

“This new offering successfully

architecture and environmental

the user at the centre of the design

balances the broad range of services

consulting companies, GHD, has added

process, to enhance the functionality

we provide, to help our clients focus

new service offering Behavioural

and experiential value of a building or

on their core activities whilst we

Design, to its suite of capabilities that

urban space.

concentrate on targeted solutions.”

will provide added-value to clients.

“Climate variability, population growth

Behavioural Design combines

Led by Jonathan Daly, Behavioural

and urbanisation are all issues that

behaviour change, design research,

Design aims to bridge the gap between

currently challenge major cities. We’re

architecture, urban design, spatial

design intent and human behaviour by

pleased to have such a strong and

analysis and visualisation, to provide a

applying a human-centred approach to

experienced team to find innovative

stronger contextual fit between people

the design of the built environment.

ways to address these complex

and place.

challenges,” commented GHD Manager - Victoria, Dean McIntyre.

THE BUILDING ECONOMIST – JULY 2012 – 7

efficient • productive • conduit

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8 – THE BUILDING ECONOMIST – JULY 2012

FROM THE CEO

THE NEW LOOK BUILDING ECONOMIST I

t is with great pleasure that I welcome

they are happy to enjoy the e-book version.

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This is a project that has taken much

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On the topic of Green this leads me

it in its entirety. We hope you will be able to

Whether you are reading this now as our

seamlessly onto the theme of this issue –

pick it up and put it down many times and at

first ever e-book or as a hard copy, you will

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your leisure so you can enjoy the magazine

undoubtedly agree that the publication is

Building Economist this quarter we have

at various moments within your day.

looking and reading better than ever before.

endeavoured to explore this topic through features on Lean Construction, Green Star

We sincerely hope the new Building

The decision to introduce an e-book format

Ratings and Green Cities. We will focus on

Economist is something you will take

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a total of four different themes per year,

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we wanted to keep up with the times,

free to pass it on to friends, family and

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The magazine now has regular sections

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that will appear every issue, including;

evolving market and digital age. Secondly,

“Snapshot” keeping you up to date with the

Our people are something to be proud of

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latest news within the industry, “Social”

and we hope that this will be reflected

produced we significantly reduce the costs

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through our fantastic, recently launched,

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Awards Program (see page 18), the Infinite

effectively towards other initiatives. These

position our people and their projects as the

Value Awards www.infinitevalueawards.com

initiatives can be anything from improving

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. We cannot wait to see the diverse range

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We want to explore the talent within our

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like purchase tickets to events or webinars

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Until next time, all the very best for the new

important reason, is that by migrating over

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reduce our carbon footprint and ensure that

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Regards,

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The magazine is now designed with you in We are giving our members the choice

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Michael Manikas

as to whether they would like to continue

whose days are already bursting at the

Chef Executive Officer

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THE BUILDING ECONOMIST – JULY 2012 – 9

NUTS AND BOLTS

BUILDING FACILITIES WITH LEAN CONSTRUCTION THE SHIP-BUILDING CONCEPT

To tie in with our feature on Lean Construction, a useful example of how Lean Construction can be advantageous is the similarity between Lean Construction methods for the built environment and the construction methods used by modern ship building. This is but one aspect of Lean Construction, and is an example used in Ken Walsh’s presentation at the CPD Roadshow.

CARGO SHIP

DIVISION OF ZONES CARGO • LIVING QUARTERS • ENGINE ROOM • BOW • CONTROL DECK

10 – THE BUILDING ECONOMIST – JULY 2012

ZONES ARE MODULATED AND CREATED SEPARATELY

FACILITY

DIVISION OF ZONES

ZONES ARE MODULATED BUT NOT NECESSARILY CREATED SEPARATELY FUNCTION ZONES

PLANT ZONES

PUBLIC ZONES SITEWORK ZONE

Using the same concept of zone breakdown in ship building, facilities breakdown would be: Plant Zone(s): Mechanical areas providing heating, cooling and other utilities supporting the buildings function.

Sitework Zone(s): Structure/ infrastructure beyond the facility envelope (parking lots, utility tie-ins, substations, emergency power, etc.)

Public Zone(s): Public space within the facility (lobby area, cafeterias, rest rooms, auditoriums, etc.)

Circulation Zone(s): Zones for the movement of people, processes and/or utilities throughout the facility, both horizontally and vertically.

Function Zone(s): Comprise the primary function of the facility, such as administration (offices), manufacturing, hospital, laboratories, warehouse, etc.

A facility can have more than one or combination of these zones.

THE BUILDING ECONOMIST – JULY 2012 – 11

INSIGHT

on the lean side 12 – THE BUILDING ECONOMIST – JULY 2012

For its first CPD Road Show, the Australian Institute of Quantity Surveyors invited Dr Ken Walsh, Professor and Chairman of the Department of Civil, Construction Engineering and Management at San Diego State University, to discuss the “ins and outs” of Lean Construction. B.E. sat down with Dr Ken Walsh to discuss all things lean and if it can really work.

THE BUILDING ECONOMIST – JULY 2012 – 13

INSIGHT

“I

The principle of Lean Construction seems simple. Reduce costs by cutting waste, innovate by engaging people and organise the work-place to be more efficient. Yet many struggle to define what Lean Construction really is. According to Dr Ken Walsh, it can be this difficulty to “label” the process that is leading to a wider confusion.

14 – THE BUILDING ECONOMIST – JULY 2012

think the issue is that defining lean is actually easy to do - doing construction

with less,” says Ken. “But the method for doing that is very complex, and involves a lot of tools and approaches. Too many definitions try to capture ALL of that, and in my opinion it ends up making the idea look very complicated.”

For many people, the easiest way to understand the “lean” side of the process is to relate it to the manufacturing sector. A Japanese approach that focuses on cutting the waste whilst not sacrificing on quality, and in turn cut costs to make the business more efficient and able to respond to market needs.

Car manufacturers, from Ford to Jaguar, have applied these principles with well known success, yet the building, construction and engineering sectors are some of the last to adopt these lean practices. So why are many reluctant to implement Lean Construction principles to their building projects?

“I think there is a resistance to change in our industry. Because there is so much competition and margins are so low, there is an understandable reluctance to find new ways to do things that seem to be working now - however inefficiently. This inertia makes it hard to find time to figure out a way to change,” states Ken.

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Australia is one of the last developed

look at commissioning the design and

“The interest in lean has rocketed

countries to look how lean can be applied

construction of a building, you are

overseas due to the GFC, when things get

to the construction sector, with the

committing to a product purchase even

really tight you need to look at becoming

Lean Construction Institute Australia

before it can be described on paper.

more efficient – its common sense. Now

forming just under a year ago and its

There are so many ways the process can

with construction in our cities and towns

second conference to be held at the end

go wrong it is hard for people to see ways

becoming stressed, the interest in lean is

of August. Lean Construction Institute

of improving it, this makes it hard for

rising.”

“...defining lean is actually easy to do – doing construction with less.” Ken Walsh Australia Chair, Marton Marosszeky

people to look past the way we do things

If you want to understand how lean

believes that the complexity of the

now.”

construction can really make a difference, Dr Ken Walsh says to look no further than

process of translating the client’s brief into a product hinders the drive for

According to Marton, Australia has not

the ship building industry (See Nuts and

efficiency and hence also affects the

needed to change as it has been in an

Bolts, page 8). Considered to be one of

uptake of business improvement ideas

extraordinarily lucky position with the

the oldest professions in the world, ship

such as lean production.

minerals boom and Government both

building and its processes has undergone

investing heavily in construction, building

major transformations over the years.

“When you consider the car industry,

and infrastructure, and keeping the GFC

there is a lot of repetition and you

away from our doors. However, now

can just point at one and say ‘I’ll have

Australia’s time has come.

that one in red’. However, when you

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THE BUILDING ECONOMIST – JULY 2012 – 15

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behind Korea and Japan. Commanding up to $150million and a production time of 36 months has caused the U.S to go from leading innovators to sorry losers to the 7-10 month turnaround for only $33million of Korea and Japan. All this without compromising quality and safety has seen a dramatic shift in customer base.

When Dr Ken Walsh pulls up these figures in his presentation an audible gasp can be heard around the room and everyone immediately points to the difference in labour wages and costs for the inflated price of the Americans. In fact, when money and wage costs are mentioned one of the most common questions he receives is based on the different labour climate between shipbuilding and the construction industry.

“And my answer to that question is that obviously there are differences. Nonetheless the big changes that we have seen in productivity drive the cost differentials in shipbuilding, not the labour rates themselves.”

It is the questions that Ken has answered and the people he has spoken to throughout his whirlwind tour of Australia that has shown him that the concerns they face in the US are clearly occurring on Australian shores too. Impressed with the responses he has seen from his Australian audiences to his presentation, it has supported him in his belief that lean construction is something

13

“Quantity Surveyors are critical to the uptake of lean. They are absolutely essential to the process of quantifying value and suggesting alternate approaches to help the owner obtain more value for their expenditure.”

This product-orientated approach has seen the U.S lagging far

this industry needs.

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INSIGHT

“I think the response [to the presentation] was very thoughtful.

It was quite clear to me that there is a common recognition that

11

a change in productivity is probably needed in the construction industry, and furthermore, that such a chance is unlikely to

10

occur without a dramatic change in our approach to construction

09

processes.”

This view is supported by Marton Marosszeky, who believes that

08

people won’t be able to afford not to adopt lean practices in ten years time, with the three principles of lean already considered to

07

be the cornerstones of every business: focus on what the customer wants and add value, build productive relationships at the supplier

06

waste.

05

and sub-contractor level to ensure smooth flow, and eliminate

“Clients like the idea of lean, and the concept is already appearing in many contracts, but they do not currently really know what they

04

are asking for. Early adopters of lean will see the positive benefits,

0

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03

Ken Walsh presents at the CPD road show.

16 – THE BUILDING ECONOMIST – JULY 2012

and the rest of the industry will have follow.”

29 28 27 26 with sustainability and a focus on “going green” is so reluctant

25

It seems strange that an industry that has pushed the envelope

industry have jumped on to environmental rating tools, with design

24

to change its processes. Although many within the construction

In a world where sustainability sits high on the agenda, lean

22

value propositions rather than the solution.

23

heavily influenced by these guidelines, these can be seen as more

construction companies to improve resource efficiency, and in turn improve their bottom line. As Dr Ken Walsh states when the two disciplines are merged, “...the owner can more easily incorporate

20

it can be more sustainable too. The lean techniques can assist

21

construction can also offer environmental benefits too. If it is lean,

“Quantity Surveyors are critical to the uptake of lean. They are

18

And Quantity Surveyors have a role to play in lean construction.

17

lean concepts.”

19

green if the overall cost balance becomes more favourable due to

They are also important to drive the lean construction ideas on every project. “This means that they could play a key role in facilitating the advance of the philosophy into the minds of the

15

value for their expenditure.”

14

suggesting alternate approaches to help the owner obtain more

16

absolutely essential to the process of quantifying value and

13

owner,” he continues.

philosophies despite the benefits, where does that leave us? What

12

So with the obvious reluctance to embrace the lean construction

11

does the future hold for lean construction?

approach to construction. “Manufacturing has largely progressed to a point where any line you walk into will have been influenced by lean manufacturing ideas. Maybe to greater or lesser degrees,

09

where lean construction will become essentially the standard

10

If Dr Ken Walsh is to be believed, there will be a point in the future

From our waistline to the construction site, there is always room

07

something similar in our industry,” he concludes.

08

but everyone is now using those ideas. Sooner or later we will see

the first AIQS Road Show and ready to spread the word on lean

06

to trim some ‘fat’. With hundreds of Quantity Surveyors attending

04 03 02 01

THE BUILDING ECONOMIST – JULY 2012 – 17

0

industry cuts a slimmer figure on the Australian landscape.

05

construction, it is only a matter of time before the construction

That Community Feeling As Australia searches for its sense of community, one man is using his passion to leave the world a better place to inspire the industry to create a more sustainable place to live.

The Green Building Council of Australia is celebrating the release of the new Green Star – Communities PILOT rating tool, and at the helm sits Executive Director – Market Development and Sustainable Communities, Adam Beck.

B.E. chats to Adam Beck about what drives his enthusiasm to create better communities.

18 – THE BUILDING ECONOMIST – JULY 2012

PIXEL perfect

Pixel, a new building in Carlton, Victoria has received the highest ever Green Star Rating.

T

o Adam Beck, it is a single desire that drives his work: “I want to leave the world a better place than it was when I got here.”

It’s a big goal, and not an easy one. As the Executive Director – Market Development and Sustainable Communities for the Green Building Council of Australia (GBCA), he has seen the world change. Since the launch of the Green Building Council ten years ago, our landscape is looking a little more sustainable. There are now 455 Green Star certified projects across Australia, amounting to 7.1 million square metres of space. According to Adam, this shift to sustainability within the sector has been nothing short of extraordinary.

“When the Green Building Council of Australia was established [in 2002], the industry had no metrics or agreed methodology to measure green building practices, no assessment tools and no benchmarks for best practice. There was no organised approach to knowledge sharing or collaboration. Nor was there any way for the industry to promote or profit from green building leadership.”

Fast forward ten years and offices, apartments, schools, shopping centres and hospitals have all embraced sustainability. “And, of course, we’ve moved from looking at how we green our buildings, to how we green our entire communities and cities,” Ask Adam how he sees Australia, and in particular its major cities, in the future and he immediately pictures something that sounds idyllic as it all works together in harmony. A country designed to take a holistic approach to environmental, economic and social sustainability that results in places that will stand the test of time, whilst remaining vibrant and liveable.

“We want to see communities that promote active living and local employment and education opportunities. We want to see more communities engaged in local food production and using active modes of transport. And we want to see communities with a diverse mix of people, affordable housing and good access to amenities.”

Mixing those ingredients together has enabled Adam, with a little help from all three tiers of government, public and private sector developers, professional services providers, academia, product manufacturers and suppliers and other industry groups, to create and release the Green Star – Communities PILOT rating tool.

THE BUILDING ECONOMIST – JULY 2012 – 19

We always knew you were valuable, but now we want to tell the world.

The AIQS is delighted to announce the inaugural Infinite Value Awards.

This event celebrates the People and Projects of our members and the affiliated professionals in the Property and Construction Industries.

We know our people are something to be proud of; they work hard and are often behind the scenes in some of the world’s largest projects. Now is the time to recognise the unsung heroes of the construction industry and the many faces that are responsible for the built environment in which we live.

This annual vibrant awards program will discover, reward, and promote a wide variety of National and International initiatives culminating in a glittering gala dinner at the end of the year.

With 13 categories that aim to showcase the breadth and depth of our industry, all firms and industry members have the opportunity to enter in a variety of categories.

These are the key dates to mark in your diary:

6th August Entries Open

10th September Entries Close

17th September First round of judging

2nd October

Finalists Announced

15th November Gala Award Dinner

infinitevalueawards.com PRINCIPAL PARTNER

SPONSORS

Responding to the industry’s call for a

and off the back of over two years of

about making a difference to Australia’s –

rating tool to help transform and better

extensive collaboration, Adam has had to

and the world’s – built environment. The

plan Australia’s communities, Green Star

approach this project with much ardour

best piece of advice I’ve ever received is to

- Communities assesses the sustainability

in order for it to be a success. It has not

make others around you successful. Then

performance of projects’ planning, design

been without challenges. Engaging with

you’ll be successful in your endeavours.”

and construction outcomes against the

economists, planners, social scientists,

categories of governance, design, livability,

project managers, academics, government

After spending years trying to change an

economic prosperity, environment, and

representatives, product manufacturers,

industry and improve the buildings, and

innovation.

to name a few, was never going to be an

now the communities we live in, what

easy ride – but also presented him with

advice does he have for the next generation

something to be proud of.

of building and construction professionals?

with a proven track record of changing the

“My greatest achievement has been holding

“Don’t try to do it on your own! There are

approach to building design, why is Adam so

together - virtually with sticky tape - the

always others who will be willing to come

passionate about Green Star – Communities

energy of the Green Star - Communities

on the journey. You will get there quicker,

PILOT rating tool? Why communities and

Technical Working Committee, which was

achieve more and have more fun along the

why now?

one of the most diverse stakeholder groups

way. Also, don’t underestimate the future.

So with over 500 projects on the GBCA books hoping to achieve a Green Star rating, and

“My greatest achievement has been holding together - virtually with sticky tape - the energy of the Green Star - Communities Technical Working Committee...”

“Buildings are just one part of the

across the built environment I have ever

As Einstein once said: “If at first the idea is

sustainability equation. Broader

worked with. In fifteen years of facilitating

not absurd, then there is no hope for it.” ”

sustainability issues around our

stakeholder engagement processes, I

communities and cities are just as

have never had to engage with so many

Working in an evolving industry and

significant, such as the design of our

disciplines,” declares Adam.

surrounded by a workforce ready to make a

public spaces, the affordability of

difference drives Adam forward. He takes his

housing, engagement processes with

Whilst he looks with pride at the new Green

own advice and surrounds himself with some

our stakeholders, climate adaptation

Star tool ready to influence an industry,

of the best from across the building and

and community resilience. Improving

waits for the expressions of interest for

construction industry. You just have to take a

the sustainability of our communities

PILOT projects to come flooding in, and gets

look at who he has worked with to bring the

is our next challenge – and Green Star

ready to analyse the feedback from what is

Green Star – Communities PILOT rating tool

– Communities is a response to that

sure to be a vocal sector, Adam can take the

to fruition.

challenge.”

time to reflect.

“Australia has some of the world’s best

Supported by some of Australia’s largest

“It is hard not to try and be all things to all

brains, skills and experience when it

industry and government organisations,

people, when everyone is so passionate

comes to planning, designing and building

22 – THE BUILDING ECONOMIST – JULY 2012

A GREENER HOUSE

There are now 455 Green Star certified projects across Australia – an extraordinary shift in our culture.

sustainable cities. The richness

communities to be “liveable,

of the industry – both in terms

productive and sustainable

of its depth and breadth of

places” is evident and it is the

knowledge – is world class.

passionate people like Adam

I’m passionate about taking

that will drive the changes, and

advantage of this depth. We

just maybe, be the generation

have a strong economy, a clear

that can leave the world a

urban agenda – and the time is

better place.

now! Being able to play at the

About the Green Building Council of Australia (GBCA)

The Green Building Council of Australia was launched in 2002 with a mission to develop a sustainable property industry for Australia by encouraging the adoption of green building practices. Uniquely supported by both industry and governments across the country, this national, notfor-profit organisation created the Green Star rating tool to provide a national benchmark and reward innovation.

centre of the ‘built environment sandpit’ is exciting,” he concludes.

It is clear to see that greening the Australian building landscape is Adam Beck’s passion. His, and the GBCA’s,

What is Green Star?

Green Star is a comprehensive, national, voluntary environmental rating system that evaluates the environmental design and construction of buildings and communities. The Green Star rating tools assess building or community projects against a number of categories including management, indoor environment quality, materials, energy, water, emissions, land use & ecology, transport, and innovation.

vision of Australia’s cities and

THE BUILDING ECONOMIST – JULY 2012 – 23

SOCIAL

MELBOURNE WELCOMES KEN WALSH CPD ROAD SHOW 14 MAY, Melbourne

THE AIQS welcomes Ken Walsh to the Melbourne CPD Roadshow

KEN WALSH rubs shoulders with our best and brightest.

24 – THE BUILDING ECONOMIST – JULY 2012

SOCIAL

AIQS MEMBERS enjoying the CPD Roadshow post event.

AIQS BADMINTON 2012 Thursday, 28 June 2012 M.S.A.C, Albert Park, VIC Last month some Victorian AIQS Members got together at Albert Park to enjoy a smashing round of Badminton.

First: Kong King Yap & Prashanth Nair from Charter Keck Cramer 1st Runner-up: Joseph Lin & Vincent Liew from Aquenta 2nd Runner-up: Edmund D’Cruz & Aldo Assirvaden from Charter Keck Cramer

If you have held or attended an AIQS event in your area and want to feature it in the Social Pages please send the event details and photographs with the names of who is in the picture to editor@buildingeconomist.com.au

THE BUILDING ECONOMIST – JULY 2012 – 25

STAYING AHEAD WITH CPD A r apidly changing work environment, a thirst for knowledge and a need for innovation are sending many professionals back into the classroom.

As AIQS hits the road with its new Continuous Professional Development National Road Show, the Building Economist explores the increasing interest in CPD and chats with sponsors Exactal on why innovation and CPD matters.

26 – THE BUILDING ECONOMIST – JULY 2012

STRUCTURED LEARNING

More and more organisations are plunging dollars into developing staff and encouraging learning.

T

he idea of Continuous Professional Development, or CPD as most of us

know it, is nothing new. New government policies, changing market conditions, differing client demands, and a worldwide economic recession have sent the workforce clamouring to learn more and stay ahead of the game.

To keep a competitive edge in a constantly evolving and demanding industry, organisations have always invested heavily in product research and development.

Much time and money is often spent in developing innovative technology to meet market requirements. Leading software developers, and AIQS Road Show sponsors, Exactal, knows how important innovation is to position itself as a leader.

For Mark Kefford, CEO and Founder of Exactal, using technical brilliance guided by its internal Quantity Surveyor team to solve commercial industry problems makes innovation possible. To Mark, it is about fusing “industry requirements with technical delivery capabilities to produce the best result. Without both parties working seamlessly together, innovation would not be possible.”

Now organisations are plunging dollars into developing their staff and encouraging a more structured approach to learning.

Demand for distance learning, seminars and presentations is high and the building and construction industry sector is calling for more.

And it’s not just organisations keen to jump on board with CPD. Individuals keen to keep on top of their profession and add value to themselves as an employee are choosing

THE BUILDING ECONOMIST – JULY 2012 – 27

GOING SOLO

Many individuals take it in to their own hands to improve themselves.

to focus on CPD. Sharon Beenie, CEO and

the industry and an insight in to their

Australian Institute of Quantity Surveyors

founder of property specialist recruitment

dedication to further themselves. CPD is

CEO, Michael Manikas, believes it is even

and headhunting agency sharonbeenie,

a positive part of the industry. It allows

more important for the property and

states that although the focus is on the

employees who are not in progressive

construction sector, and in particular

experience candidates have gained and the

organisations a chance to still remain up to

Quantity Surveyors, to focus on CPD.

longevity that they have been in roles, the

date with changes,” concludes Sharon.

added value of CPD cannot be ignored.

“We as a sector are one of the most rapidly When it is just as competitive to secure

evolving, and investing in our minds is just

“A candidate’s desire to improve

roles within the property and construction

as important as investing in our materials,”

themselves independently provides a

industry as it is for an organisation to win a

says Michael. “It is the building industry

strong sense of their commitment to

project, CPD offers a double incentive.

itself that has initiated the uptake of CPD

28 – THE BUILDING ECONOMIST – JULY 2012

options, so now it is up to professional and

With industry qualified Quantity Surveyors

value to your staff, or your own CV, if you

industry associations like the AIQS to create

providing the first line of customer

want to lead from the front then it is time to

effective, accessible and affordable options

contact – whether presenting, training or

embrace CPD ASAP.

for the Australian workforce.”The CPD Road

supporting the use of the products – Mark

Shows kicked off in May with Dr Ken Walsh,

Kefford understands the importance of

from San Diego University offering insights

CPD in enabling the industry to keep

Dr Ken Walsh can be purchased as a

into lean construction (see page 10 for more

pace with changes in technology, which

webinar for $25 via the AIQS website. Visit

on lean construction and Dr Ken Walsh) and

in turn supports Exactal’s commitment to

www.aiqs.com.au for more information.

will continue throughout 2012 with more

continuing the development of its products.

topics and speakers ready to expand the minds of all AIQS members.

The Lean Construction CPD seminar with

The next AIQS CPD National Road Show “It is not enough to simply buy a new

will take place in early 2013 with a brand

piece of software. Practitioners need to

new industry topic and guest speaker. Keep

“It is up to all of our members to keep

understand the context in which industry

an eye on the AIQS website for further

abreast of what is happening within our

workflows are changing and how they can

information towards the end of the year.

industry and the AIQS will continue to

actively participate. We find that there is

strive to keep our members constantly

a lot of misunderstanding and unrealised

learning, sharing and networking. It is only

expectations arising from a lack of

by opening the mind and working together

knowledge in these areas and CPD can

as an industry that true innovation can

address that.”

happen,” concludes Michael Manikas.

Continuous Professional Development For a member organisation like the

does exactly what it says on the tin. In an

Australian Institute of Quantity Surveyors,

industry where nothing stays the same, the

delivering regular and informative events

next project is different, the next team filled

would not be possible without sponsors,

with new faces, and new challenges laid

and Exactal stepped up to support the first

out, organisations and their staff cannot

CPD Road Show.

afford to stay still either. Whether adding

GETTING EXACT WITH EXACTAL

As AIQS Road Show sponsors, Exactal recognises the importance of CPD for innovation and embracing new technologies. With a new product - CostX Live - released onto the market, Exactal CEO and Founder Mark Kefford knows the challenges the industry faces and how people need to recognise and embrace the changing face of technology to be truly successful.

In a fast moving industry, what are the most important issues facing Exactal?

The biggest issue we face is that the industry and technology are both advancing rapidly at the moment and we need to continue our large

investment into R&D to ensure we continue to produce products ahead of the market needs.

Now the entire industry is focused on BIM we are continuing to push the integration envelope whilst still focusing on the estimating or Quantity Surveying side, rather than the traditional architecture side of BIM.

out and make sense of the information for the estimator or Quantity Surveyor. Everything in CostX is still focused around the Quantity Surveyors but the information flow is much smarter and the Quantity Surveyor is now an integral part of the BIM design team.

Exactal consider themselves (and position themselves) as leaders – how?

What is CostX Live?

When Exactal produced the first version of CostX the industry was very much using scale rulers and paper drawings. CostX introduced a new way to measure and has continued to evolve ahead of industry requirements. With the architects designing everything in 3D and BIM now, CostX is still able to take the quantities

CostX Live is the newest innovation in estimating, allowing you to view CostX plans and projects in real time using the cloud. When on site you can be up-to-date with live plan data anywhere you go using laptops, tablets or smart phones. CostX Live is next step in the distribution of estimation data to the field.

To find out more about Exactal and what CostX Live can offer your next project, visit www.exactal.com

THE BUILDING ECONOMIST – JULY 2012 – 29

Addicted to False Certainty

B

ut is this method conducive to producing quality buildings via an

efficient process. Is it a methodology that is sustainable in the future? Or are we just addicted to the false sense of certainty that it eludes to?

The main problems with these fixed sum contract methods are: No fixed price - no building contract ever has a fixed price. There are always changes and when the builder is on board the room for negotiation is virtually gone. In fact the builders will be counting on changes to increase their profits on the project. They will be looking for them. The more changes the better to extend the contract period and make claims.

Are the tender documents worthy of a fixed price? - probably not. Design fees are the first place a client looks to save money. But if the documents are not complete, well coordinated and of good quality then the fixed price will be even more of a myth and the builders will be wringing their hands and firing up their ‘variation spotting’ team.

Also, if there are any ambiguities in the

Lump Sum Contr acts

documents then the items are excluded or a large cost is placed against them to cover the risk. The ambiguities inflate costs

In Austr alia we have two main procurement methods

and shift the risk away from the party that

for constructing buildings which are Lump Sum

should be embracing it.

Price and Design and Build. Both involve the builder

Us and Them - the fixed price contract

providing a lump sum contr act price based on a set of

is not really conducive to a cooperative

tender documents which are supposed to be complete,

arrangement between the client and the

coordinated and reflective of the intended risk

builder. Due to the very low margins, the builders’ prerogatives of increasing his

apportionment of the various parties. We have been

profits by pushing down subcontractor

using these contr act methods for years and obviously

prices and exaggerating variations are not

clients and banks love the promise of a fixed price.

30 – THE BUILDING ECONOMIST – JULY 2012

the same prerogatives as the client - which are keeping down costs and making sure

subcontractors are producing a quality

had a great deal to do with it. Obviously

product. The contract parties are usually

this factor is heightened by the current

pulling in opposite directions. It often ends

economic climate but they both agreed

in dispute.

that the lump sum contract puts inordinate pressure on the builders’ margins and that

Tender Wastage - there are instances

any errors made in the pricing of these

where a lump sum tender is issued to

contracts can spell disaster for the builder.

anywhere between 10 to 15 different

The pressure is high. This is obviously why

builders to price. This means that there

Estimators are paid very large salaries –

could be 15 different tender teams

and so they should be, if you understand

measuring and pricing the works, 15

the pressure they are under to win projects

different highly paid Estimating Managers

from suspect tender documents.

The efforts of the builder and all the talents of the parties involved are concentrated in achieving the project goals rather than ensuring survival commercially. pulling all the prices together, 15 different

So what is the solution? When we asked

in achieving the project goals rather than

executive teams spending time refining the

a number of prominent members of

ensuring survival commercially. This

price, multitudes of subcontractors pricing

the NSW building community including

is not to say that competitive tendering

the works and so on and so on. There is

Estimators, Consultants and Clients they

is eliminated as the competition is still

often a shared Bill of Quantities that can

agreed that the answer is a move towards

experienced when sourcing subcontractor

save on the measurement wastage but

less adversarial forms of contract such as

prices.

ultimately the lump sum tender process

Management Contracting and Construction

squanders the industry’s resources. Plus a

Management. Also, Two Stage Tendering

The move to these contract forms will

tender list with 15 names on it would scare

and Guaranteed Maximum Price forms of

benefit the health and efficiency of the

off most astute builders and so the client

contract are proving popular. With these

Australian construction market. They are

may not have access to the best companies.

contracts the builder is engaged earlier

used all over the world with continued

All this reduces efficiencies and reduces the

without the need for full documentation

success. When stakeholders and banks

chances of a quality product.

(thereby making use of their buildability

break there addiction to the false certainty

knowledge), there is more effort placed in

of the lump sum contract, then the builders

It is interesting that when we recently

pre selection of the builders so that a very

and project teams will be freed up to

asked two very prominent NSW Estimating

relevant and select tender list is compiled,

concentrate project success.

Managers whether they thought that

and a partnering atmosphere is promoted

the recent cases of builders going into

rather than an ‘us and them’ regime. The

By Adam Walker

administration in NSW was due to the lump

efforts of the builder and all the talents

AAIQS MRICS

sum form of contract – they said that it

of the parties involved are concentrated

Director at Conduit Recruitment

THE BUILDING ECONOMIST – JULY 2012 – 31

QS KIT

SAMSUNG GALAXY S I I The highly anticipated Galaxy S III Smartphone available now - Intuitive technology ready in stores around the country.

The effortlessly smart and intuitively simple Samsung GALAXY S III is now available in Australian stores in an effort to revolutionise the smartphone experience. This next generation Samsung smartphone boasts sleek design and effortless functionality with features such as voice recognition, a 4.7 inch HD Super AMOLED display powered by the Android 4.0 (Ice Cream Sandwich) and an 8MP camera.

The introduction of ‘Natural Interaction’ within the device enhances the experience between the device and the user as it includes not only facial and motion recognition but also the new ‘S Voice’1 which uses an advanced language user interface designed to listen and respond to the voice and words of the user.

The new ‘S Beam’ technology also allows easy sharing between devices by simply placing two devices back to back and pressing a button.

Music, movies and photos can be easily swapped between friends providing seamless interaction.

Access to top Australian content means that Samsung users can also access the best Apps available as well as GPS functions and an evergrowing range of movies and television.

With its great new design, leading technology and improved functionality, the Samsung GALAXY S III is set to become the leading smartphone in the Australian Market.

The Samsung GALAXY S III is available now from various retail outlets at $899 RRP outright for the 16GB device from all operators and is also available on plans.

32 – THE BUILDING ECONOMIST – JULY 2012

QS KIT

KORK 2

Braun Watch THE SPACE BAR LOGITECH SOLAR KEYBOARD

The Kork 2 for iPad 2 protects

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A favourite of us here at

It may seems strange to use

your iPad while giving you

chronograph watch features

B.E., it is also notoriously hard

a solar powered keyboard

access to all the buttons and

second, minute and hour

to buy while in stock online. If

indoors, but this sleek, low

inputs, and even integrates

chronograph dials in a sleek

you can get a hold of one, you

profile keyboard uses any light

with the Apple Smart Cover

water-resistant design that

will find an elegantly designed

source – natural or otherwise

for complete protection of

exudes Braun’s company

riser for your computer that

– to charge itself. It stays

your fruity device. It works

values and style. Ideal for

includes 6 USB ports and

charged in total darkness

as a natural sound amplifier

everyday wear for the stylish

sturdy construction of brushed

for up to three months, and

too, and has a shade mode for

QS gentleman. Available from

aluminium and plastic accents.

has a fluid and whisper quiet

using outdoors. Free shipping

Mr. Porter. Price: £150 (approx

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keystrokes. Price: $98.97 (on

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THE BUILDING ECONOMIST – JULY 2012 – 33

THENEWLOOK MEMBERS’BUSINESS REGISTER2012 REGISTRATIONSOPENSOON

AIQS QUANTITY SURVEYORS

ADDING VALUE

A NEW LOOK AND NOW AN eBOOK Previously named the Members’ Business Register, the A-list is a new look for the AIQS’ member register.

Available exclusively online as a shareable e-book, we are making the go-to guide for Quantity Surveyors easier for you and better for the environment.

GENERATE LEADS HERE AND OVERSEAS

In the past the A-list has been responsible for generating over 1,000 leads per annum. The new A-list is instantly global and available from anywhere. Your audience is now worldwide and live.

CONTACT AIQS NOW TO ENQUIRE ABOUT JOINING THE A-LIST

WWW.AIQS.COM.AU