Transparency Key to Fixing the Building Products Industry

Lacrosse building fire, Neo200 building fire, 150 Collins Street window replacement, Perth Children's Hospital asbestos-containing roof panels, exploding glass balcony balustrades, Infinity cable recall.

The list of non-complying building product (NCBP) incidents continues to grow. And these are just the ones getting press. Nearly anyone who works in the industry could tell you about their personal experiences with non-complying products. "Nearly anyone" is not a hyperbole either - in AI Group's industry survey and report into NCBPs, 'The quest for a level playing field: The non-conforming building products dilemma', 92% of 222 respondent companies reported non-conforming products in their market sector.

I would hate to be a building surveyor right now. The system in which they work is broken. Importation of products is unmanageable. Ambiguity is rife. Frauds and cheats have found loopholes to take advantage of the sector: "Oh, you need a compliance certificate? Sure, here you go - I promise it's from an approved lab!"

Time for change.

It is great to see that the industry is now getting the attention it deserves, at least. The December 2018 report from the Senate Economics References Committee, 'Non-conforming building products: the need for a coherent and robust regulatory regime'handed down 13 recommendations to improve the currently inadequate compliance and regulatory framework (see here for a summary of the recommendations from the report).

I think the recommendations are great. They would undeniably add value to improving many of the existing shortcomings of the industry. The report demonstrates a thorough understanding of the industry and has considered the input and submissions from various industry participants.

But, the biggest problem with the recommendations may be the enormous task of implementing them. It seems to me that many of these 13 recommendations would be too costly that would scare off any Government action.

It will be interesting to see the NSW Government's response to the inquiry. After they loosened building defects laws in 2014, can we trust them to implement any meaningful changes to benefit building end users?

Sure, they are making some movement on reforms after the release of the Building Ministers' Forum's Shergold and Weir Report, 'Building Confidence—Improving the effectiveness of compliance and enforcement systems for the building and construction industry across Australia'. But it took a near tragedy, residents evacuated on Christmas Eve night, and a media storm to spark this action.

My prediction is that changes to building product regulation coming from the Senate inquiry, if any, will undoubtedly fall short of making a real difference to the industry.

But, the easy thing to do would be to blame government. The reality is that the shear complexity and enormity of this issue is something that not even the government has the resources or budget to deal with appropriately. Someone has to pay for it all.

Utilising innovative process and technology is one way that the enormity of this task may be overcome. And I would argue that the government are too inefficient, ineffective and technologically averse to deal with this complex problem anyway.

Summarising the problems in the industry outlined in the Senate Inquiry, AI Group's investigation and my own experiences, they could be generally categorised as follows:

  • Lack of transparency
  • Poor information flows & education
  • Insufficient accountability
  • Ambiguous role definition
  • Absence of a feedback loop
  • Enormity of auditing/verification effort

Measures that focus on improving the industry's information flow, transparency, accountability, and feedback loops are more realistic and achievable in the short-term than overarching compliance and regulation. A system that inherently drives accountability and transparency allows the market to regulate.

Building Identification and Incident Register

When buying a car, TV or a phone, I like to know who manufactured it. By doing so, it gives me the ability to check reputation, reviews, any significant incidents and make an informed decision.

When Samsung's Galaxy 7's started exploding and their washing machines started catching fire, Samsung could have laughed because many of these machines were out of warranty. But Samsung had a couple of problems. Firstly, the ACCC enforced a recall. But most importantly, they had something a lot bigger to worry about: REPUTATION.

What incentive does Toyota have to build quality cars that withstand the test of time? REPUTATION.

What an incentive to build quality products.

At the moment, if a supplier or a builder found out that defects were discovered after the warranty period, they would laugh their way to the bank.

So why doesn't the building industry work this way?

Because there's no transparency. There isn't an easy way to find out who built a particular building, who supplied the concrete and who declared it fire compliant.

A publicly-accessible national building identification and incident register would change this. By opening up the building market to public scrutiny it would provide an inexpensive means of holding builders, suppliers, designers and certifiers accountable for their end products.

This may involve all buildings being added to a central register at the time of CC and given a unique identification number, much like a car's VIN. This will answer the simple questions of 'who designed what?','who built what?', 'who supplied what?' and 'who approved what?', providing a platform for an incident register recording faulty design, specifications, products, approvals and work.

Let's harness 'reputation' as a key driver to reward designers, suppliers, builders and approvers, for great work and hold those accountable for dodgy work. Once homebuyers start making purchase decisions based on brand and reputation, this will inherently create accountability in the industry and I guarantee we'll see change in the attitude of industry participants and improvement in the quality of construction.

Centralised Database of Construction Documentation

Recommendation 10 of the Senate Inquiry gives in-principle support to Recommendation 12 of the Shergold Weir Report for a "building information database that provides a centralised source of building design and construction documentation."

The Shergold and Weir Report suggested the following information be included:

  • the name of the appointed building surveyor or issuing authority;
  • a description of the proposed building work;
  • details of all practitioners engaged;
  • details of design certificates relied on and any information about third party review;
  • details of any performance solutions and any information about third party review;
  • inspection records;
  • enforcement actions taken;
  • final approval information, including details of certificates relied on and fire safety maintenance requirements and any design assumptions that must be maintained or considered in future changes to the building; and
  • details of compliance inspections/certificates issued in relation to ongoing maintenance obligations through the life of the building.

This follows on from the previous point regarding a unique building ID register. Accompanying the ID register should be a ledger and documentation database which holds all construction details, drawings, certificates, products, inspection information, approvals, changes, etc. enforced using a blockchain-style verification system. All as-built construction drawings should be included and kept on record and made accessible for decades. Undoubtedly, this will help drive greater responsibility in the industry.

I would also go so far as to suggest that this blockchain ledger continue through building operation and maintenance as well, just like a car's service logbook, but thats a whole other kettle of fish.

Building Products and Supplier Register

Within their recommendations, the Senate Inquiry mentioned the concept of a "national database of conforming and non-conforming products" (Recommendation 9).

NATSPEC's NCPR provides a difficult-to-use system for checking product accreditations and third-party certifications. It's a good start, but it's just not enough to protect builders, subcontractors and building users.

It doesn't even scratch the surface in terms of suppliers. It doesn't, for example, tell us that the non-conforming glass supplied to the 150 Collins Street project were supplied by China Southern Glass and thereby alert other builders to avoid this supplier.

The ABCB has introduced a non-conforming building product reporting scheme providing an online means of reporting non-conforming products on their website. But we are yet to see an output from this - there is still no readily available report of breaches or blacklist of non-conforming products or suppliers.

In fact, I couldn't find an industry alert about China Southern Glass anywhere other than in the government inquiry documents. When I Googled them, I found promotional material on the Architecture & Design website!

What we need is a comprehensive register of products and suppliers, with monitoring, reporting and blacklisting undertaken on suppliers to avoid the need for each contractor to conduct their own due diligence.

This register would only be as good as the feedback loops that supports it. So it must encourage reporting and allow anonymity, allowing employees, subbies, contractors, certifiers, engineers and building users to feel safe in reporting product issues without personal consequence. (Sources must also be verified to prevent fraudulent reports).

In turn, an efficient supplier register can help to minimise the price war that revolves around winning projects by reducing the inclusion of cheap, non-conforming products in bid prices.

Conclusion

Monitoring quality and compliances for building products is a huge and complex issue that will not be fixed overnight. Much more detailed discussion is required to implement effective strategies and we must avoid a knee-jerk, hasty implementation of substandard measures.

Higher levels of transparency, accountability and responsibility can provide an inexpensive means of regulation forming a starting point for change. It will hold manufacturers, suppliers, builders, designers and certifiers more accountable, incentivising a higher level of quality of their final products and services.

The shear quantity of materials used on building sites means we must look beyond traditional means of regulation. This calls for the need to harness the power of new technologies through private enterprise. Whether its blockchain as a verification system in construction reporting, the Internet of Things to manage and control supply chains or big data and machine learning for audit and quality control procedures.

Let's band together against substandard imports, level the playing field, end the price war, and build quality projects.

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