NSW builders must win back customer trust, says commissioner

apartment buildings in sydney

With the introduction of government bills to force change, now is the time for quality market participants to back an overhaul of the state’s construction industry and rebuild customer confidence, argues the NSW Building Commissioner.

The NSW government’s Design and Building Practitioner’s Bill (D&BP) and the Residential Apartments (Compliance and Enforcement Powers) Bill (RAB) will face the NSW Parliament in coming weeks.

Since the publication of the Shergold Weir Building Confidence report on the industry, NSW minister Matt Kean’s discussion paper, Building Strong Foundations, and the appointment of the state’s first Building Commissioner, hundreds of interested parties have set aside their individual agendas to work together to rebuild confidence in the NSW construction industry.

Peak industry bodies too have embraced this opportunity for change.

Like all of these conversations, it is impractical to have every voice in the tent or to embrace every idea offered up.

It is impossible to create a consistent position even among organisations that come to the table with a positive attitude.

And, of course, there are always outliers resistant to change or who are welded to traditional solutions that no longer apply.

The contestable viewpoint should always be honoured and engaged but to do that you have to be informed. That is always a challenge for those in leadership positions because it is impossible to deal with all views.

Business-as-usual not acceptable

After many months of collaboration, the industry now has an opportunity for meaningful and long-overdue change.

There is acceptance that the same old game is no longer tenable and that it is time to turn a self-facing past into a customer-facing future.

It is customers who vote most loudly, either by strong advocacy that “enough is enough” or by simply leaving the market.

When this happens, everyone suffers. Especially in the housing sector where the supply of new stock and the flow-on social and economic impacts are so interconnected.

To turn this around, the core ingredient will be trust– trust that a new value proposition is on the table.

The centrepiece of a new value proposition must be that what we build is fit for purpose and that those offering them to the market are accountable for any defects or problems.

For example, when an occupancy certificate (OC) is issued for a new building, it turns a purchaser from being a depositor to being an owner. The OC is the single most important intersection in the transaction between developers and/or builders and their customers. An OC should provide the confidence that all of the steps leading to that point are compliant and authentic, and that they can be trusted.

The buck stops with builders

The OC intersection is a point where all of the vendor’s efforts can be scored. If the design is inadequate, contracted works are unclear or supply chain inputs are not validated, accountability must rest with those at the helm of projects.

There can be no other point of clearer accountability. The D&BP Bill establishes those clarities. The recently enacted Building and Development Certifiers Act establishes the framework in which key players should conduct themselves.

Here again, it is fundamental that those who commission projects, be it a developer or a builder, are mindful of the risk of getting it wrong. It is developers and builders who ultimately become the pivot point from which customers will be satisfied or not.

The winds of change that are now blowing across the NSW construction industry are starting to unsettle some who have traded at the margins and now see the prospect of challenge.

It is likely that this group only represent a small proportion of the industry, but they affect the whole industry. It is the good players who see their brand and that of the industry’s being put on trial with the result of system-wide distrust among customers.

There is now collective support for action to sort the wheat from the chaff. Unfortunately, the good players are less likely to mobilise to advocate for change and stand up to those who want the status quo maintained.

Bad apples in the barrel

It is now time to speak up or wear the consequences of silence.

Over the past weekend, some articles appeared in the media that seemed to represent the voices of the marginalised, the misinformed, the sceptics and those with the most to lose. See here, here, and here.

But those who argue for no change, less regulatory intervention and declare that more red tape will destroy the economics of projects are essentially asking to be able to reap unentitled gain.

This is gain derived by cutting corners, by transacting through vehicles deliberately intended to avoid accountability and by being in denial of the legacy costs left to unsophisticated purchasers.

Unfortunately, there are many such projects, but the new D&BP and RAB bills will wave red flags over them.

The RAB Bill will make the most and immediate impact. It will challenge bad OCs that cannot demonstrate there has been sufficient design that complies with a development consent, performed by qualified practitioners and the Building Code of Australia and that construction inputs have been performed accordingly.

The powers that will go with the RAB Bill will enable the regulator to undertake a deep dive into all of the steps leading to the making of an OC and where these cannot be adequately demonstrated, to stand in the way until they can.

It is at this juncture, where those who have committed and performed projects that are not worthy of public trust will be disrupted.

Scrutiny from auditors

It will become clear that leaving critical element design and construction to be made by the lowest cost provider has a price. It is at this juncture that the value of getting it right or facing the consequences will become stark.

It’s time for developers, those who fund their projects and those who construct and certify stop cost shifting past practice to unsophisticated purchasers.

“Boots on the ground” auditors will start to draw a line in the sand. This will be followed by further resources to test the quality of declared designs and then declared as-built drawings and manuals.

From the moment the new bills are enacted, there will be a clear platform of new standards and enforcement that will demonstrate the game has changed and that the industry’s compass is facing a new priority – the customer must come first.

These changes will be good news for quality developers, designers,  contractors and their suppliers who have been disadvantaged by cutthroat providers willing to cut corners.

Most importantly, the bills will be good news for quality certifiers who have been compromised and admonished as a result of the behaviour of a few, not the majority who care.

Designers must now step up and lead this change. It is time to stand up for a new deal that enables self-respecting declared designs to be made and become the basis for respectable constructors, sub-contractors and suppliers to do work they are proud of.

It has become clear to everyone that we have been overlooking risk for too long. Good players now realise they can use data-driven tools to identify the riskiest market operators and ensure their behaviour  attracts censure.

Deploying smart technology

Recognising risk is now an operational asset.  Smart technologies  can gather individual project data that could lead to new products such as 10-year warranty insurance. These products will not need legislation but rather will be enabled by the ‘first-movers’.

Building customer trust is not a confidence trick. It requires evidence and “walking the talk”. It requires material assurances that change the trust equation. Customers need to believe that the days of buying into a building that turns out to have major structural faults, , waterproofing problems, faulty fire safety systems, and dangerous and illegal building materials are gone.

The first 10 years of ownership should be a joy not a nightmare.

The message must be that if you caused it, you pay to clean up the mess. If the cost of doing it right the first time is a little higher for a while, then so be it. A new customer-facing value proposition will save owners huge cost and stress later on.

And if some advocates are masking those that are habitual “phoenixors” then let’s call that out.

The NSW government has signed off on a six pillar strategy to drive systemic change. Those that are suspicious of the strategy should take the time to understand all of its moving parts and the comprehensive steps being taken by the government to restore confidence in the state’s construction industry.

It is starting with the most pressing residential problems and will expand to other sectors within a few years.

Turning around the state of construction in NSW and nationally is an industrial-scale challenge that needs an industrial-scale solution. The NSW Building Confidence reform strategy will deliver the biggest micro-economic transformation the state’s construction industry has ever seen. It will measurably rebuild customer confidence.

The next month will be critical to cementing long overdue change. It is imperative that disparate views are not able to be leveraged to create a canvas of uncertainty that impales the positive collaborative work of so many to this point. Passive acquiescence will have a high price if the interests of a few prevail. There has never been a more important time for our industry to stand up for its future.


David Chandler OAM BSc Build (UNSW) is the NSW Building Commissioner. You can contact the office of the NSW Building Commissioner here.

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Comments

One Response to “NSW builders must win back customer trust, says commissioner”

  • Karen Stiles says:

    Bring on the commencement of these two critical pieces of legislation! They will benefit good industry operators, and the industry as a whole, as well as consumers and the broader community paying the high price of avoidable defects.

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