"Do It Right The First Time: "

Be not one of the Owners and investors who were obsessed with obtaining the lowest possible price.  

Work worth a dollar if it is done right the first time blows out to $10 if it is fixed while the building is under construction, and the cost can rise up to $100, a specialist consultant says.

From Canberra Times on 8 December 2012, written by David Ellery

Australian builders spend twice as much to fix faulty buildings as they made in profit from the original contracts, a specialist consultant says.

Ross Taylor, a 30-year industry veteran currently working with builders and bodies corporate on some of the ACT's biggest residential developments, said consumers were at least partly to blame for a dysfunctional business model.

He said the average construction profit margin across Australia was 4.4 per cent of turnover. "Many in the residential apartment building sector work on average margins much less than this," he said.

"This contrasts industry data showing a spend of 8.41 per cent on rectification works. Once defect repair work, paid for by owners whose properties were out of warranty, is taken into account the actual total repair cost is close to 20 per cent."

Advertisement Mr Taylor said he had arrived at his figures, which were made public at a recent building science forum in Canberra, after reviewing documented industry research and a wide range of projects over the last decade.

A major issue that contributes to the blow out in rectification costs is the "multiplier" effect.

Work worth a dollar if it is done right the first time blows out to $10 if it is fixed while the building is under construction.

If the fault is not fixed until after the building has been completed but before the end of the defects liability period the cost rises to $30.

If the work is not fixed until after the statutory warranty period is ended and the matter has been decided by litigation the cost rises to $100.

"It is obviously far cheaper to prevent defects than pay to have them fixed," he said. "That said, it is too easy to demonise the builder and the last man on the job and omit the responsibilities of the developers, architects and engineers who have all contributed along the way."

Owners and investors who were obsessed with obtaining the lowest possible price were also to blame, he said.

"Builders are in a highly competitive environment that does not offer a level playing field between the honest and the unscrupulous," he said. "The unscrupulous will 'buy' the job by underquoting and then pick up their profit margin by compromising on quality. This ultimately forces the honest builder to go down the same road or to go out of business because they can't secure any work."

Because owners are making their initial choices purely on the basis of cost and location they are blissfully unaware that design detailing and actual quality monitoring is being compromised.

A shift in recent years to "managing" quality issues in the office rather than implementing quality on the building site has also cost the industry and the consumer dearly.

"It is fair to say more effort is being put into quality control but it is often misdirected. More time is spent on weighing the chook than feeding it. You can tick all the (quality compliance) boxes and still have major quality problems. We have got to a point where people can't see the wood for the paperwork."

The end result is a situation where, in Mr Taylor's experience, "most new apartment blocks in Canberra leak badly - regardless of their price or location".

The problems are surmountable but require sector wide commitment and money. Mr Taylor advocates the employment of clerks of work on every site who would act as advocates for the future owners of the buildings.

"This is not a new idea; the industry used to have them and their job was to make sure the work was done properly."

For such a scheme to work it had to be mandated with the cost being paid for by future owners as part of the purchase price on all jobs across the ACT.

"If this adds one per cent to the cost of all building work but abolishes that 8.8 per cent rectification cost then it has been well worth it," Mr Taylor said