“…It seems we’ve finally had it with apartment living – the thrill has gone as one bad news story after another has taken the sheen off our shiny dream homes in the sky. From collapsing blocks and flammable cladding to “ghost” buildings whose overseas tenants have returned to whence they came, the outlook has never been more bleak for apartments.”- Jimmy Thompson, ‘Apartment builds are crumbling whilst townhouses are on the rise’, AFR, 5 March 2021

Last week's column on the travails of the NSW Building Commissioner elicited almost as many comments as my previous 135 columns. I discussed the relationship between developers and their consultants, and who to blame for shoddy building. I got brickbats and bouquets, the former from those who seek to control the industry, the latter from those who work in it. Here’s my takeaway.

Building quality reports

Firstly, a brief summary for those who came in late. The quality of building construction is the hot button topic du jour. The consensus is that construction standards, particularly in apartments, are much poorer that in used to be. Report after report detailed failures by builders and subcontractors to build in accordance with documentation, the NCC (old BCA) and Australian standards. The consequences varied from purchasers’ disappointments to major (but not catastrophic) failures.

In 2018, a summary report entitled Building Confidence (otherwise known as the Shergold-Weir report for the two lawyers who authored it) looked at “improving the effectiveness of compliance and enforcement systems for the building and construction industry across Australia”. Note that it didn’t directly address the quality of construction, but “compliance and enforcement” to get there.

The NSW government then moved to further regulate the building industry through a building commissioner, David Chandler, whose resignation prompted last week's column. My argument was that his demands that architects, engineers, and certifiers act as ‘building police’ was attacking the wrong end of the problem. Rather, look to those who most benefit: the developers (and their amanuensis, the builder).

Carrots, sticks and bigger sticks

Attacking the quality of construction through consultants as ‘building police’ is using a series of ‘small sticks’. The consultants are hired by developers to do their bidding (even if at arms’ length through builders). Their code of conduct requires them to act on behalf of their clients, within the laws of building, but they are regularly compromised, or cut out of the loop when dodgy deeds are done. Consultants have little agency in the context of the developer’s money, influence and power over them.

I suggested that holding developers financially accountable was a far more effective ‘big stick’. Developers are directly involved in a project from the beginning to the, hopefully profitable, end. Anything that could affect that happy outcome sharpens their mind to quality control. They would then have to rely on their consultant ‘police’ to ensure they build a quality building rather than trying to cut corners.

The carrot was: build a good building, pass go and collect your reward (profit). Build a bad building and lose your dough. My three solutions for the ‘big stick’ were changing the laws to prevent phoenixing, requiring insurance, or sequestering a bond.

All three are difficult. Corporate law that protects directors goes back to the days of the Rum Corps. Insurers know how bad apartment building is now, and don’t want a bar of it. Bonds would be resisted by developers because they know how much it might hurt them.

But all three make sense. Reining in the developers may be hard, given they have politicians as their best mates, but it’s a far better option that trying to get the consultants to go in hard against their paymasters. Nevertheless, that is where we are: punish the meek and weak and let the rich profit.

Brickbats

Most brickbats failed to grasp this argument. A few defended the work of the commissioner, which I never questioned. Au contraire, the building commissioner has done an admirable job, but within the confines of the approach that he was required to take. I'm simply suggesting a different approach was, and is, needed.

The commissioner wrote on LinkedIn that there were differences between the Shergold-Weir report and the way in which the commissioner's remit was established. I don't doubt it, but again it misses the point. Both are tinkering at the edges, heading away from the key issue: holding those who direct the works, and profit from it, to account.

The commissioner said that I was “uninformed”. Perhaps he meant ill-informed, so here’s my credentials. In the last 15 years I've designed 42 apartment buildings, comprising more than 1200 units. 33 have been built, and of those I documented most, and administered contracts on about half. I know a little of what I speak.

All of them were for developers, some were the very good (often the big end of town), some were the equally diligent not-for-profits, and some were shockingly and shamelessly building something that bore little resemblance to what was drawn, and they could bully like you wouldn’t believe.

The commissioner has ensured that those ‘bottom feeders’ are under pressure, but from what I've seen, developers will still seek to cut as many corners as they possibly can because they know there is no financial no penalty that they face for instructing the contractor to build poorly.

One aspect that plays heavily in the lower end of the market is the demand by banks that developers pre-sell some apartments as their financial security. This can have a disastrous effect on the incentive to build well as there is no possibility for increased profit from a better apartment – a catastrophe that is discussed in detail in ToT’s Shoddy Apartments - blame the banks.

Bronwyn Weir, one of the authors of the aforementioned report, criticised the solutions I proffered because no government would “come at them”. My point, exactly. Developers are beyond the bounds of control, so they’ve convinced their mates to find solutions by tinkering at the edges.

Bouquets

These mostly came from working consultants who agreed with the thrust of the comments. One pointed out that, in the intervening week, we learnt that the reason, at least in part, for the Building Commissioner's departure was that he felt he was being heavied by certain developers, with access to politicians, who have both denied any such thing. My correspondent pointed out the irony that he succumbed to the very pressures that architects, engineers, and certifiers feel every working day.

Another pointed to the role that project managers (PMs) play as loyal lieutenants to developers. Regularly readers will know that I have no love for project managers who, as the tagline goes, “promise you a baby in one month using nine women”. They are particularly adept at ‘value engineering’ or ‘value management’, cover words for ‘cost cutting. Another’s opinion of project managers is unprintable.

And one regular correspondent pointed to the dreaded Design & Construct (D&C) contracts (one of the Commissioner’s pet hates). He says “In my experience D&C is a recipe for bad building. The architect is expected to inspect and provide a ‘report’, but a project manager can, and often does, sign off on the progress payment even when the architect is not satisfied with the quality of the work.” As Norman Day so memorably once said, “You can’t be both Umpire and Player”.

And…finally

The power play in apartments is enormous. The amount of money at stake is huge. The pressure on consultants is high. So, whilst he additional pressure that came from the commissioner was welcome in some parts, it has also seen the consultant design industry become much more stressful, hardly laying a glove on the developers. Was the outcome worth the pain. The jury is out.

Tone Wheeler is an architect / the views expressed are his / contact at [email protected]