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By Willow Aliento
February 4, 2019
The independent expert report commissioned by the NSW Government into the causes of the Opal Tower incident has highlighted the importance of independent verification of engineering designs.
The report noted that following the major failures of precast elements on several levels of the tower, the building’s original structural engineer proposed rectification measures of the damaged parts. However, Professors Mark Hoffman, John Carter and Stephen Foster, who co-authored the report, have recommended that “detailed plans for the proposed rectification works should be checked by an independent qualified structural engineering organisation.”
Third Party Reviews
The importance of a second set of expert eyes for engineering design is one of the key recommendations to emerge from the investigation into compliance and quality in the Australian industry. The Building Ministers Forum commissioned the research undertaken by Professor Peter Shergold and Bronwyn Weir last year.
Ms Weir, a building regulation law expert and co-author of the subsequent Shergold + Weir Building Confidence report, tells Jobsite they recommended each jurisdiction to require genuine independent third-party review of specified engineering design.
Currently, in most jurisdictions, a building certifier/surveyor can accept a design prepared by an engineer, and no independent third-party review is required.
In Victoria, there is a ministerial guideline that says a building surveyor may require independent certification for complex design. However, it is completely at their discretion.
Ms Weir says that during the BMF Assessment they heard that over the past decades, the common engineering practice of having designs assessed by an independent third party had “fallen away.” Reasons include pressures from builders and developers to keep costs down as well as a lack of independence on the part of engineers and/or certifiers in some projects.
“There needs to be a mandatory requirement for independent third-party review for complex elements of building design; otherwise, we have increased risk through inappropriate self-certification,” Ms Weir says.
Before the National Construction Code came into existence in the late 1990s, complex projects, such as towers of at least 30 storeys, would have the structural engineering, fire safety and other crucial designs elements assessed by a multi-disciplinary statutory review board, she explains.
“Third-party reviews by statutory bodies were required in many states before the introduction of the performance-based building code.”
However, the growing number of complex projects has not come hand in hand with more restrictive requirements—currently, only the South Australian government has a requirement for major projects in specific urban areas to be assessed by an independent design review board.
The transition to enable private certification in addition to local government or state building certifiers has also created issues. Ms Weir says that the push for private certification was intended to reduce the time delays in obtaining building approvals from the government. Consequently, the change shifted the risk of liability away from public authorities to private certifiers holding professional indemnity insurance.
Private certifiers are required to carry insurance, and Ms Weir says that when private certification was introduced in various jurisdictions during the 1990s, the private insurance market also offered structural insurance for commercial builders and warranty insurance for residential builders. Engineers and architects also held PI insurance.
Hole in Chain of Liability
However, the collapse of HIH Insurance in the early 2000s resulted in insurers being no longer willing to offer first resort insurance to builders. In all jurisdictions except Queensland, builders insurance was reduced to the last resort scheme (only applicable if the builder died, disappeared or became insolvent). There was a cap placed on the amount of compensation payable and insurance was not required for multi-unit residential building work of more than three storeys.
The insurance market’s decision not to insure builders left a big hole in the chain of liability. Certifiers, architects and most engineers were required to hold PI Insurance. Owners seeking compensation for defective building work were increasingly looking to certifiers since their builder’s warranty insurance would not cover the amount of compensation sought or, in case of mid- or high-rise developments, no insurance was available.
Ms Weir says there is also a body of case law about when a builder or other practitioner will be found to owe a duty of care to the purchaser of a unit/building and/or an owners corporation. That law is in a state of flux, however, as courts are more likely to find that a certifier exercising a statutory duty will owe a duty of care to a purchaser and/or an owner’s corporation than an architect or engineer. This had led to a concentration of liability on certifiers and in the wake of combustible cladding issues, insurers being less willing to offer unconditional PI insurance to certifiers.
Ultimately, Ms Weir says the creation of private certifiers would only effectively shift risk away from the government if the insurance market was willing to insure all practitioners in the chain to an equivalent level. Since the early 2000s when the insurance market decided the risks were too high to fully insure builders, it has only been a matter of time before the system would weaken and the public would turn to government for answers.
She explains other elements of the “perfect storm” typified by an incident like the alleged structural failures in Opal Tower include commercial pressures on builders, lack of competence across the sector, lack of effective compliance and enforcement by governments (including local and state governments), as well as high prevalence of the use of a ‘design and construct’ model for multi-storey buildings which squeezes the compliance checking process and results design “done on the run.”
The depletion of design, engineering and construction expertise within governments at all levels is also a factor, Ms Weir says. This has left governments with limited capability to engage in effective oversight of the sector, particularly the high-rise sector.
There is a genuine possibility the plethora of complex, high-rise buildings being completed in this scenario will result in many more massive problems that will come to light in the future, Ms Weir says.
The next meeting of the Building Ministers Forum is due to occur in February. Ms Weir hopes that the issues identified in the Opal Tower will result in the BMF having a stronger conviction to act promptly on the recommendations of the Shergold + Weir report to avoid further erosion of public confidence in the sector.
third party reviews
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