Australia: Combustible cladding assessments for building industry professionals and fire engineers: golden goose or road to ruin?

Last Updated: 21 November 2018
Article by Suzy Cairney and Krystal Bentivoglio
Most Read Contributor in Australia, December 2018

In response to public concerns about the use of combustible building materials, the Queensland Government has introduced a new regime to assess the safety of existing cladding on buildings.

On 1 October 2018, changes to the Building Regulation 2006 (Regulation) commenced, affecting privately-owned class 2 to 9 buildings of type A or type B construction, (ie mainly, but not exclusively, commercial buildings over three story's )1 for which a building development approval was given after 1 January 1994 but before 1 October 2018 for building work to build the building or to alter the cladding on the building.

The new changes have ushered in a process for such building owners to assess whether buildings have potentially combustible cladding (i.e. made of a material not consistent with the Building Code of Australia (BCA)), or deemed combustible under AS 1530.1-1994.

This new regime may provide a golden business opportunity for some building industry professionals and RPEQ fire engineers with the ability to cater to this new market need. However, building industry professionals and fire engineers should carefully consider whether to undertake this type of work as there are risks involved.

Given the possible catastrophic risk of harm to occupiers if combustible cladding is present and a fire occurs, the potential liability for some building industry professionals and fire engineers could be considerable. Certifiers, architects and engineers already carry liability with respect to their work, but arguably now in some circumstances, any incorrect assessment of cladding could also result in claims for reduced value of the building. Losses could be incurred if a certifier simply cannot find sufficient information to make a determination, and (perhaps prudently) opts to certify the cladding as non-compliant. Also, an assessment does not have to be incorrect for building industry professional or fire engineer to be drawn into claims, especially if a claim is a class action.

Combustible cladding checklist

We dealt with identifying affected buildings and the obligations of building owners in our previous article in this series here. In short, building owners must complete a three-part combustible cladding checklist (checklist) via the online system established by the Department of Housing and Public Works to identify whether combustible cladding exists, with Part 1 to be completed by 29 March 2019 by building owners. The online system can be accessed here.

Work to be carried out by building industry professionals

Part 2, to be completed by 29 May 2019, requires a deep knowledge and understanding of BCA requirements and therefore requires a 'building industry professional' (see below) to be engaged by the building owner. If the building owner already knows or suspects that the building is an affected building and gives the QBCC notice of that knowledge or suspicion, Part 2 can be bypassed and the building owner must proceed to Part 3.

The building industry professional must comprehensively assess the building, confirm the accuracy of the information prepared by the building owner in Part 1 and issue a building industry professional statement. With older buildings or buildings that have changed hands a few times, this information could be difficult to locate, or incomplete. Building industry professionals may want to ask the building owner to provide the information that is available before agreeing to undertake the assessment. It is intended that the building owner will be able to rely on the information provided in the statement to complete Part 2 of the checklist.

As part of this process, the building industry professional will make a determination about the building's type of construction and provide an opinion on whether any combustible cladding forms part of or is attached or applied to an external wall or another external part of the building. This determination will provide an indication of whether the building requires further assessment by a fire engineer in Part 3 of the checklist.

Who is a building industry professional?

The Regulation defines a building industry professional broadly to include the following:

  • building certifiers (level 1)
  • persons holding a QBCC licence of the following classes:
    • builder – open
    • building design – open or
    • fire safety professional
  • practising architects
  • practising professional engineers registered in the following areas:
    • civil engineering
    • fire engineering
    • fire safety
    • structural engineering.

For private buildings of no more than three storeys and 2,000m2, a building industry professional will include building certifiers (level 2), and persons holding a QBCC licence as builder or building design for medium rise.

Building industry professionals: Relevant skills, knowledge and experience

Building industry professionals will need to consider a number of factors in deciding whether to accept this type of work. While for many, this could be a welcome source of additional revenue, others may need to implement more protections for their businesses before venturing into this area.

Building industry professionals undertaking this work must of course have a sound knowledge of the BCA and its application to buildings as they will be required to determine if there is any combustible cladding on the building's external walls. They will also need to give due consideration to other characteristics, including whether multiple classifications or any concessions apply which may affect the type of construction, compartment floor area and volume limitations, separation by fire walls as they may relate to fire compartment floor area and volume limitations, etc.

A visual inspection of the building will be required, together with a review of design documents and specifications, façade engineering specifications and other relevant documents to confirm the as-built documentation aligns (or perhaps does not align) with as-approved documentation. Where this documentation is not available or is incomplete, this should be flagged in the statement, and we would expect this would increase the chances of a recommendation to the building owner to proceed to Part 3 (see below). All necessary and available documentation relating to the building's design and construction must be reviewed, including records for building approvals and Certificates of Classification. Building records may also need to be obtained from the local government and from the building's builders and designers.

The building industry professional may need to consider whether any product substitution or unapproved changes of cladding systems have occurred, and must ensure that evidence supporting the identification of materials used in external walls is representative of the building's current state. It is not clear how this is to be done, but physical testing is probably needed as a matter of prudence, even if the building is operational throughout this phase. The costs of that testing, plus remediation of affected parts of the building, will need to be factored into pricing.

The assessment process is intended to allow building owners to rely on a building industry professional's technical qualifications, supported by their knowledge of the BCA. Accordingly, the building industry professional makes a declaration that the information in the statement provided to the building owner is true and correct. This may not be easy to do on an older building with little available information and limited or no physical testing to be carried out.

Building owners could have as little as two months to complete this stage. Building industry professionals will need to ensure they are properly resourced to meet this time frame.

Work to be carried out by fire engineers

If, after the building industry professional's assessment, there is an indication that the building may be affected by combustible cladding, the building owner will be directed to proceed to Part 3 of the checklist via the online system.1

Part 3 requires specialist knowledge and the application of fire engineering principles, and therefore requires building owners to engage an RPEQ fire engineer by 27 August 2019. Defined in the Regulation as practising professional engineers registered (i.e. RPEQs under the Professional Engineers Act 2002 (Qld)) in fire engineering and/or fire safety, the fire engineer will provide a technical assessment and information required to answer the questions in Part 3.

The Fire Engineer will make a determination as to whether the building is or is not affected and in doing so, must issue:

  • a building fire safety risk assessment report (BFSRA)
  • a fire engineer statement.

Both documents will be relied upon by the building owner to complete Part 3 of the checklist, which together with the BFSRA and fire engineer statement, must be submitted to the QBCC by 3 May 2021.

  • fire engineers will need to provide an expert opinion on whether the building was subject to, and approved based on, an existing fire engineering assessment which addresses the relevant considerations for external fire spread in buildings and an evaluation of material and assembly fire performance against the existing building's fire strategies
  • in carrying out their assessment, fire engineers will need to review available documentation and will be required to apply detailed analysis of the building's fire strategy and quantification of the fire performance of the parts of the building's external wall assembly. The extent to which this is possible may depend, at least to some extent, on the information available about the building. With older buildings, this information may not be readily available.

Capacity and resources

Both building industry professionals and fire engineers need to be ready, with the capacity and resources (e.g. availability, systems and necessary equipment) to meet market demand, together with the time to implement proper business administration and contracting practices, carry out their inspections, and prepare the required reports and statements. The time frames for this are quite tight.

We anticipate that there will be a large demand for the services of RPEQ fire engineers as there are only around 160 in Queensland. In addition, not all fire engineers will be ready or willing to take on this kind of work. Non-RPEQ fire engineers interested in this work should consider applying for RPEQ registration here.

The capacity to undertake the work, together with the potential diversion of or investment in resources must therefore be contemplated in the context of a practitioner's overall business strategy. IT and document management systems may need to be upgraded to ensure records are complete, accurate and readily accessible.

Insurances

Adequate insurance coverage will be critical for assessing buildings for combustible cladding. Professional liability and professional indemnity insurance are a must, and it may be prudent to review whether you have a suitable level of errors and omissions, and directors and officers liability insurance. While professional indemnity insurance is a 'necessary evil' already for building certifiers, architects and engineers, the level of cover may need to be reviewed. Also, builders with open QBCC licences do not always have professional indemnity insurance and we suggest they investigate the cost/benefit of obtaining it before undertaking this type of work.

Building industry professionals and fire engineers should also take advice from their insurance providers to ensure that their current insurance coverage is not affected (or voided) by undertaking work of this nature, especially if the contracts offered by building owners impose higher liability than usual.

Contracting

We think we may see an increase in the requirement for building industry professionals and fire engineers to indemnify building owners. Building industry professionals and fire engineers should ensure that they enter into appropriate contracts adequately protecting their business. This will likely be a services based contract as the average design contracts used in the building industry may not adequately guard against liability or deal with the specific risks associated with this type of work. Building owners wishing to sell the building may want the purchaser to be able to rely on the report. That could extend liability and affect pricing.

As always, building industry professionals and fire engineers should ensure they assess contract risks as well as scope before giving a price.

The changes to legislation are to be welcomed as they should make us all safer and will generate business for many consultants. The flip side is that it will cost building owners more and may reduce the value of a building. How this will play out in the property market is yet to be seen.

The Department of Housing and Public Works has published a comprehensive guide to assist building owners, building industry professionals and fire engineers for assessing building with combustible cladding. It can be accessed here.

Footnotes

1See the QBCC's Classification summary of buildings and structures here

2See Building Regulation 2006 (Qld), section 16V.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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