Comment: You could never accuse David Chandler of being a shrinking violet.

In a few years of writing for The Fifth Estate on how to improve building quality and various related issues he always made his views clear and strong.

Now he’s NSW Building Commissioner he’s being a tad more careful about how he reveals his plans for improving the industry – until he’s good and ready.

But what is already clear is that he wants to use positive reinforcements to improve the industry. He’s mentioned Mirvac as an example of a good builder/developer and you’d have to agree Mirvac’s call to action for better building standards added to kudos to its brand. Likewise its offer this week to remedy any problems with flammable cladding on its own sites, namely its 1 Darling Island Road premises that house Nine Publishing and Google at a cost of $350,000. Even though an independent fire engineer is understood to have said the cladding was low risk. It was “actively working with owners and relevant authorities” to deal with other buildings it owned, The AFR said on Thursday.

If only other developers and builders could be so gutsy. Certainly Lendlease has also owned up to some problems with the cladding mess. But where are the other tier 1 builders and REITS offering to likewise clean up their own mess? Maybe their silence is saying they have no mess.

I had an interesting off the record chat to a major developer recently who told me that his own company is no angel; they get things wrong; it’s inevitable. All builders do. It’s part of the ethos or habit of expecting to re-do quite a chunk of work, especially on residential which is tricky because of its multiple wet areas and the need for waterproofing. So, you forget to put in a bracket; you rip out the work, and call back all the relevant trades –  chippies, wet trades, whatever. The habit is to build top to bottom and then come back down the floors and fix all the problems, he said.

This does not happen in car manufacturing. You plan precisely where the various elements go; you don’t build the car then go back and rip out the floorboard and remove the pedals so you can retrofit a piece of metal bracket.

Culture problems? Habit?

Maybe we need to look a bit deeper than that.

As our very interesting source said, he recently told a government minister that in criticising the construction industry it was good to keep in mind that it’s the often the same developers, the same builders and the same certifiers that manage to produce high rise commercial buildings with few of the problems that have emerged in the residential sector.

If there is an issue, the developer will ensure the builder rectifies to the correct standard.

Guess what? It’s their name and reputation on the line, so there is a deep incentive to get it right because the developer or the ultimate investor has a long term interest in the building. The future economic viability of the building relies on producing good product that the tenant is happy to pay good rent for.

In the residential world there is no such incentive.

The apartments are sold – without warranty if they are more than three storeys – and suddenly it’s the new owners’ problem.

The difference is the financial structure. In the commercial world there is a strong financial nexus between the owner (developer or investor) and the viability and quality of the product because the building is generally leased for long terms to corporate tenants. In the residential sector there is no such relationship, other than what can be proved by law, and that can get messy in the extreme.

Like so much that underpins the way things are done in this world, it’s the financial structure that makes the difference.

Owners protect their corporate tenants because they want them to be happy and keep paying rent.

Consumers might feel at times they’re thrown to the wolves.

Chandler’s focus on positive reinforcement – that is, reputation that could be quantified in some way, sounds good. It absolutely works for the commercial sector, but it’s unlikely to work in the residential sector because as well as the big companies it’s full of smaller operators, some of them new, some of them focused on quick easy profits, some focused on getting in and out as quickly as possible.

Not until we change the law.

Not until we make phoenix companies illegal. (In what world can you build a car, find the brakes don’t work or it falls over going around a corner, but are then allowed to shut the company down and start another one doing exactly the same thing?)

So one of the other big ideas Chandler has already flagged is to focus on insurance.

Because they are the people who are even more powerful than the financiers. They protect the money. They protect the investment.

Technology might be the answer. Perhaps it’s now sophisticated enough to track every part of the construction process, including materials all the way from their manufacture to their installation onsite and their method of their installation so that the quality of the overall product is guaranteed.

In which case the insurer gets money for jam… but when was it ever not thus?

Interesting to see two articles this week that throw a new light on the problem, one from professors Martin Loosemore and Bill Randolph from UNSW asking where the actual evidence is for a crisis. The other is asking why our Australian Standards on construction cost so much. Shouldn’t they be free?

It’s like getting a licence and then having to fork out thousands to access each of the road rules.

By the way, David Chandler will be one of our key speakers at our upcoming Tomorrowland19 event. Alongside keynote speaker The Hon Rob Stokes MP, Minister for Planning and Places? 

It’s on 31 October at the Clayton Utz offices at 1 Bligh Street. We checked out the space yesterday – and it’s great!

Details to come soon.

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