Category Archives: Building Defects

Apartment Defects and a New Breed of Property Developer

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Image from Choice Article by, Jemma Castle, ‘Apartment Building Defects, What to look out for’  ( 15 September 2016) https://www.choice.com.au/money/property/buying/articles/apartment-building-defects

This Choice article is an important piece of journalism and research, not only for its exposure of the frightening scale of apartment development in Australia but the systemic failures in the industry which make our habitable apartment developments  increasingly vulnerable to defects.

Defects have always plagued buildings even with the best developers, builders and subcontractors. The quality of buildings has traditionally and historically been policed by the architect who  designed the building and together with what was called a Clerk of Works ( a long time ago)  inspected each element on site to ensure the works were installed properly.

With the advent of ‘design and construct’ practices which gathered full force in the 1980s, the architect’s role was subordinated to the builder who took over the role of design overview and quality inspection reducing the architect’s commission to a design and ‘attendance’ role which was a much diluted form of their previous ‘full supervision’ role. The Clerk of Works also vanished and is now a museum piece. (I would love to hear from Clerk of Works who worked in this important role).

Adding to this the advent of private certification in the early 2000s, the quality of BCA outcomes (fire safety and egress put simply) meant that the overall quality of both the design and the fire safety  integrity of the building was eroded further.

Adding to this the rise of private property development in Australia and its entry into the multi-apartment sector, the advent of a lawless, unknown developer employing a design and construct builder with an architect reduced to a ‘sketch designer’ status and a questionable private certifier meant that this breed of private property developer had a license to almost do whatever they wanted.

And this is exactly what is happening in a part of the multi-apartment sector which is between 3 stories and 8 stories high ( need sprinklers above this approx.). After all the quality developers and builders of which there are many in Australia can’t all be across every site that can be developed in the emergent cityscapes like Green Square.

Access to sites in these burgeoning precincts is not always the province of large balance sheet high quality developers, but that of ‘deal men’ who can put a foot on a site, package up a concept, obtain funding and become the developer of an important habitable building.

The ‘deal men’ are invisible to the naked eye and hide behind ‘sacrificial vehicles’ which are used specifically for project ventures. This makes these developers almost untouchable. This is the new breed of property developer.

Dr Jonathan Drane

www.jondrane.net

Read this article as a pdf:

dd2-the-special-breed-choice-article

 

 

 

 

 

The Developer Bond and the Invisible Developer

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The Developer Bond and The Invisible Developer
Dr Jonathan Drane

The current attempts to legislate for a ‘developer bond’ to provide security to multi-apartment strata schemes is in the process of being finalised. Forums run by the Office of Fair Trading to canvass such an initiative have been met with strong resistance by the builder and developer arena. The former because they are already seeing the developer bond being passed on into their building contracts on top of the existing defects liability provision which provides some protection to the developer/client from defects arising during construction. The latter because the developers see it as a double impost which they have to fund. The end result is that it will in many cases be passed on to the increased price of the apartment.

As I observe these ruminations, I cant help but remember why this all came about. One of the emotional triggers or markers was the terrible case of the young girls who were forced to jump off their apartment balcony to escape a fire in their apartment. One girl died in this process, a great tragedy. Her story should not be in vain.

The developer bond will not necessarily solve this nor solve the problems in buildings that are built by builder/developers who operate in the apartment developments schemes that are above 3 levels and below 25meters ( need sprinklers if greater). Whilst house building is licensed, these apartments are not. This leaves the delivery in some cases to people who call themselves developers but who are not licensed nor qualified to build such developments.

To add to this, property developers who know what they are doing will always create a special purpose legal entity to run the project through. Such a vehicle may have no funds nor balance sheet and be sacrificial in nature. The originating human developer who operates through these entities is virtually invisible to the whole process. Hidden behind the legal entity they will avoid any personal link to the liability of the project providing no personal guarantees to banks by using what is called non-recourse finance.

This, in effect is the modus and era of the Invisible Developer.

How did we get to this. An invisible developer type and people having to jump to their death in a fire?

There are many aspects to this and a deep history that has led to this endemic problem. See my article The Defects Dilemma which provides an historical view of the leading events; from the rise of private property developers, to non-recourse funding, the pre-sale agreement, design and construct delivery systems and private certification.

To solve the problem relies on a deeper understanding of this sector of the industry, its history and the increased scrutiny of developer vehicles that render the developer invisible. This however this is still just a start.

Dr Jonathan Drane

Read this article in pdf:

id2-the-developer-bond

 

The Defects Dilemma: Developers and Defects, by Dr Jonathan Drane

Jon Drane-5999

A little history of private property  development and its effect on defect levels in Australia.

Defects have plagued buildings for decades if not centuries, and no more so than in the post war era of the private developer and with the emergence of the ‘design and construct’ project- the sister act of development as a private system of creation of our titled buildings.

Although many D&C projects are created with minimal defects, the practice of D&C and its evolution out of the previous Architect and Master Builder era, has a large part to play.

This paper takes us through a brief history lesson including the emergence of private property development and D&C in the post-WWII era, and the associated vulnerability of standards of construction across professions and regulatory systems. The erosion of the regulatory process, both professional and authority-based, is also revealed in the emergence of private certification and the dilemma of the slippery deal. The end product of such a system is illustrated with a ‘horror’ case example of one of its offspring.

Finally a ‘Defects Scenario Matrix’ is put forward for ways to keep a handle on defects on the D&C project based on a review of the horror case example and then a case example with a low defects regime.

Read Jonathan’s paper:

Drane 2015- Defects A Builders View

Read this blog article as pdf:

dd1-the-defects-dilemma

 

Hello world!!

Jon Drane-5999

Welcome to my new blog and web site. It has been refined to focus on my independent research and advisory profile.

This site is designed to allow prospective clients to understand how I combine my research profile with the analysis of complex construction problems in different situations including legal cases and project situations.

My previous blog which included articles on the city dormancy and property development has been archived and key articles will be revisited here. Please contact us on info@jondrane.net if you need a particular article.

This site also caters and focuses on my research into city dormancy and urban renewal so that students are able to tap into my works. I encourage students of the built environment to continue my work in this area of city dormancy and development.

My non-fiction book collection including my books on the Camino de Santiago are briefly referred to on this web site and will be expanded in another independent web site.

Thank you for your interest in my work.

Dr Jonathan Drane