Opinion piece: Cost/Benefit? BC(A)R SI.9 of 2014

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The 1st of March has come and gone and the world has not stopped. With the implementation of BC(A)R SI.9 upon us, let’s look at the possible costs and benefits of this awkward regulation. Under the proposed system what is different? Is it all bad? The answer we suggest is no and yes.

Current system before BC(A)R SI.9 introduction

Department and Ministerial statements suggest SI.9 will bring additional protections to consumers. Reinforcing the current system of self-regulation (light-touch) has been targeted specifically at the speculative residential market, the “build for sale” sector. Previously we had developer-owners procuring developments without competent of formally-trained designers involvement, little or no professional inspections at site stage (no independent inspections) and very cursory inspections at completion stage by professionals who self-certified compliance, frequently based on visual inspections only.

The independence and validity of these certificates were questionable as the service was paid for by the owner-developer. Essentially the certifier was an employee. Owner-developers could create special purpose vehicles (SPV’s) or off the shelf companies that could be wound down after developments had been concluded to minimise liability. If defects occured post completion owners were left to seek redress through the high court. Developers and professionals employed had to have assets or professional insurance to target in actions. Owners were left to seek redress through the courts with no guarantee of success. Small individual owner-builders could elect to self-build, frequently building their own homes to superior standards for less than the cost of speculatively build dwellings. Farmers could build their own agricultural buildings.

Remember big developers (e.g. Zoe Developments) who completed extraordinary numbers of inner city Dublin apartments over a number of years without the involvement of architects. We are left with the legacy of incredibly poor cost-driven design for decades to come. The best way for a consumer to ensure a quality build was to appoint an architect for a full-service appointment from inception to completion.

Current system after 1st March 2014: BC(A)R SI.9

No requirement for professional or appropriately formally-qualified persons to complete planing applications, disabled access certificates or fire certificate applications (i.e. no registration of title). No requirement for professional indemnity insurances to in place post completion of projects. However there is a new requirement for professional inspections at site stage. New certifier roles are a good thing, but their influence is limited to site stage and is only restricted to building control compliance, a duty mostly completed by independent local authority inspections in most countries in the world. As owner-developers employees (in the “build-for-sale” sector) the new certifier roles may be subject to influence. Builder-developers can still create off-the-shelf companies (SPV’s) for specific developments which limit liability for them post completion. There is no requirement for certifiers to have professional indemnity insurance in place for a period after developments have been completed. Owners still left to seek redress through the courts with no guarantee of success. Individual self-builders can no longer elect to build their own homes- they now must employ voluntarily registered main contractors to undertake this role. As a result almost 1/3 of self-builders will not be able to afford to build their own homes. This may lead to a 17% drop in house completions annually. In addition most farm buildings will also be required to have a main contractor involvement along with new certifiers, increasing costs in line with those of self-builders. The best way still for a consumer to ensure a quality build is to appoint an architect (separate to certifier roles) for a full-service appointment from inception to completion.

Delays

Due to the late introduction of the final drafts of both the amendment and the code of practice the industry would appear to be not ready for SI.9. Delays that already have started happening in public and private sector projects (design team appointments etc) may be costly and also pressurise an already difficult situation for many contractors. Ill-conceived wording in the regulations may extend “untenable liability” on new roles and “vague and loose” language used may end up being proven in the courts. Recent Senior council opinion on SI.9 confirms that many serious flaws remain with very onerous implications for professionals undertaking new certifier roles. Various key stakeholders (for example the representative body for architects the RIAI) have made requests for SI.9 to be deferred on these and other grounds. Based on industry estimates the bottom line number of €600m equates to 6,000 jobs lost: the cost to the industry, government and taxpayer for this year . By 2020, in 6 years, SI.9 may cost the country close to €3bn, or 30,000 construction jobs. The recent part deferral published on 7th March 2014 SI.105 would suggest that some state bodies and departments are unprepared for the new regulations and this is confirmation. There is widespread belief by commentators that this part-deferral of hospital and school projects will be extended to other building types similarly affected (e.g. agricultural buildings, public housing, ghost-estate completions, foreign direct investment projects)

Do the benefits of SI.9 outweigh the costs?

How professionals now grapple with the complex and somewhat contradictory issues in the new regulation remains to be seen. With two weeks already gone since the implementation date we still await comprehensive professional guidance from the key stakeholder representative bodies on numerous aspects of the regulation. Two key questions remain:

1. The new system is a highly elaborate form of self-certification, which is a system of regulations by now discredited in the banking, childcare, Garda, clerical and construction sectors. Why?

2. In England, there is a simple system of “Approved Inspectors” which the client pays for but which answers to the local Council. Perfect. Zero cost to the State. Self-building is not only accepted but encouraged. Why not?

Independent Inspections are the answer.

The above opinion piece was submitted by Maoilíosa Mel Reynolds on 14th March 2014.

 

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