Construction in Australia is booming even in the wake of the Federal Government’s HomeBuilder stimulus. And it’s not just about detached houses. The Australian Construction Industry Forum has forecast that rising land prices will renew interest in apartment builds over the next few years.
As well, governments are spearheading infrastructure projects, with 15 of them worth $72 billion fast-tracked. Add to that another $7.5 billion the Morrison government has marked for transport-based investments.
But pundits are cautious about how long this cycle will last. That’s because of a skilled labour shortage, rolling pandemic shutdowns – including construction sites in Sydney in July – and possible interest rate rises.
So, with an eye on the clock, it can be tempting to take shortcuts. It’s not worth the risk, though, and here’s why.
How common are building defects?
More than seven out of 10 buildings erected after 2003 in Australia’s east coast states had at least one defect, a Deakin and Griffith universities’ study found. And when you drill down to each state and territory, as this ABC investigation did, it gets worse. In NSW, 97% of buildings erected in the 15 years to 2018 had at least one fault in multiple locations. Key issues were:
- Fire safety systems
- Building fabric failures
- Combustible cladding
- Faults with balcony glass panels causing them to shatter.
Meanwhile, Pica Group spells out common building problems in strata properties:
- Water leaks
- Cracks in internal and external walls
- Exterior water penetration
- Guttering issues
- Defective roof coverings
- Plumbing faults
- Tiling-related defects.
Shortcuts to trouble
Not fixing a problem such as water ingress and moisture can significantly affect multiple building systems. These include wall cladding, electrical, safety, or structural. Having an expert diagnose issues helps classify a defect as major or minor and impacts your liability as the builder.
So why are those defects happening? Design issues reportedly cause up to 45% of building issues. But human factors feature strongly. A Safe Work Australia report has found construction employers were more likely to say they financially reward their workers for breaking rules than employers in other industries. In fact, construction employers were more likely to agree that their workers:
- Ignore safety rules to complete the job
- Bend rules to meet a target
- Take shortcuts that involve little or no risk.
Meanwhile, construction workers said their site conditions stopped them from working safely. That’s despite wanting to work more safely due to concerns they could be personally responsible for someone being injured through work.
Working together to reduce your risks
In short, builders risk being a target for legal issues when faults arise, and that’s even when you’re not liable. That’s why professional indemnity insurance helps minimise your risks when third parties claim for damages or financial losses that arise from your acts, omissions or breaches, or professional duty as you operate your business. You could be exposed through the building’s design and construct or alterations made during construction, building design work, project and construction management, and product specifications.
Professional indemnity insurance covers:
- Breach of duty such as an act, error, misleading statement, omission, or breach of confidentiality
- Claims made and reported while you have an active policy
- Court defence costs for actual or alleged duty breaches
- Accusations of deceptive or misleading conduct
- Mitigation of costs coverage
- Vicarious liability.
We can package professional indemnity insurance with other coverages to reduce your risks even further. They include employment practices liability, fidelity (protects you when employee dishonesty causes a financial loss of up to $100,000), project management, public relations expenses, and third-party cyber exposure. Also, talk to us if you need builders’ warranty insurance. It’s compulsory for contracts over $20,000 (NSW and WA) or $12,000 (Victoria, ACT, and South Australia). It protects homeowners for faulty workmanship or non-completion of the contract where the builder dies, becomes insolvent, or disappears.