The Queensland Steel Construction and Fabrication Industry Alliance continues to lobby for greater local content in Queensland building projects.
The Queensland Steel Construction and Fabrication Industry Alliance (QSCFIA) is seeking a strong commitment on a Queensland local industry policy in order to maximize the local fabricated steelwork content in Queensland government infrastructure spending
- There are 106,144 people employed in the steel industry nationally (Source ABS Census 2011). Queensland has 22,205 employed in the sector. With a 3 – 5 manufacturing multiplier, the number of jobs affected in Queensland likely exceeds 90,000, making it a significant employer and important contributor to the health of the Queensland economy.
- The National unemployment rate is growing, and was 6.3% as per ABS figures in February. Queensland at 6.5% unemployment in February is performing worse than the national average and needs action with regards to job creation.
National Unemployment Rate
- Maximizing Local Content is good for the State and National economies alike. An independent report by AEC for the Industry Capability Network (ICN), showed that for every $1m of local manufacturing output gained or retained there is:
1. $713,400 of gross value-added generated
2. 6 full-time equivalent jobs created or retained
3. $225,300 of tax revenue generated
4. $64,900 worth of welfare benefits saved
- Local jobs generate payroll tax for state governments, training and apprenticeship opportunities and deliver social benefits that come from growth and employment.
- QLD infrastructure projects will increase the productivity and competitiveness of the state and should also create and support jobs in QLD.
- To capitalise on the job creation potential of upcoming infrastructure projects, the QLD government requires a strong and fair Local Content Policy.
- During the recent Victorian election, both sides of politics have shown strong support for Local Content and local steel, and both leaders made strong commitments to use local steel in their major infrastructure spend.
WHAT DOES THE QSCFIA SEEK?
1. Industry Participation Policy – Commitment by the QLD Government to an Industry Participation Policy to maximize local jobs and content in QLD infrastructure projects, similar to the Victorian model which includes ‘strategic projects’ where the government can stipulate levels of local content in a project or specific sectors or specific items (e.g. steel, glass, concrete) to support local jobs and industry.
2. Industry Participation Plan – All QLD Government projects be required to have an Industry Participation Plan which includes:
- How local industry can provide local content for a project
- Provision of a full, fair and reasonable opportunity for local industry to participate
- Highlights the amount of local content and the amount of local jobs supported
- Major Project Evaluation criteria (beyond bottom line pricing) including quality, whole of life costs, jobs and local content.
The current Queensland Charter for Local Content provides guidelines for utilising local industry in state government projects, but does not require a plan to be produced in order to demonstrate how local industry will be utilized. Without a plan in place, the actions of engaging with and utilising local industry may not occur.
3. QLD Industry Participation Advocate – Appointment of a Qld Industry Participation Advocate (similar to the South Australia model) who can coordinate the engagement of local industry and maximize local content in government spends.
Architecture and Engineering Firms Worst for Software Piracy
According to the latest figures from Australia’s BSA Software Alliance, companies in the architecture and engineering sectors were amongst the worst offenders in Australia when it came to illegal usage of licensed software packages in 2014.
BSA settled 12 cases of illegal software usage in Australia worth a total of $825,000 last year, of which nearly half involved the architecture/design and engineering sectors, at 27 per cent and 20 per cent respectively.
Other industries prominently represented included the manufacturing sector at 20 per cent, sales and distribution at 17 per cent, real estate at six per cent, media at four per cent, IT at two per cent and recruitment at two per cent.
Those businesses caught using unlicensed software were made to purchase authentic software licenses as well as pay fines for copyright infringement.
One of the largest illegal software usage cases settled in Australia in 2014 involved Victorian architectural drafting firm Planning and Design. The company agreed to pay $118,000 for the unlicensed usage of software packages during a period of roughly five years, including Adobe Photoshop, Acrobat and Autodesk AutoCAD.
At the time of the settlement in November BSA Australia chair Clayton Noble said the case served as a timely reminder of the potential perils faced by businesses that engage in software piracy, which include heightened security risks on top of legal and pecuniary ramifications.
"This case highlights the financial risk businesses take by using unlicensed software," said Noble in an official statement. "It's also important to recognise the IT security risks these businesses are also taking, such as security threats from malware, leaving systems and data open to threat, which can impair productivity and cause loss of work."
Another major case settled last year involved a Perth engineering firm that had been using unlicensed copies of Autodesk since March 2012. The unnamed business settled the case out of court with BSA in September, paying $65,000 in damages in addition to buying software licenses for future usage.
Victoria has emerged as the chief hotbed for illegal software usage by industry in tandem with the heavy representation of the architecture and engineering sector amongst settlement cases. Companies in the Garden State was responsible for the vast preponderance of software settlements in Australia last year, accounting of a stunning 73 per cent of the total.
Western Australia came in second, accounting for 14 per cent of cases, while New South Wales and Queensland proved far more circumspect, responsible for nine per cent and four per cent respectively despite their larger populations.
According to BSA Asia Pacific compliance programs senior director Roland Chan, the prominence of Victorian companies amongst software settlement cases is due to the rising prominence of Melbourne as a centre for creative industries, including the architecture and engineering sectors, all of which make extensive usage of sophisticated software applications such as CAD programs and BIM.
"With this surge in industry we are seeing a notable increase in the number of Victorian businesses reported for use of illegal software," said Chan.
Published on 26 February 2015
National Structural Steelwork Certification Scheme
Compliance of construction products is of significant industry concern, impacting adversely on both project risk (including safety) and potential for significant unplanned rectification costs to meet the Standards we require in Australia.
the Australian Industry Group (AiG) recently completed a Government funded report titled ‘The quest for a level playing field – The non-conforming building products dilemma’, which may be freely downloaded here. Steel products are given a prominent focus and there are several significant and alarming examples of non-conformance in the report. A high level working group chaired by the Australasian Procurement and Construction Council (APCC) and representing a broad cross-section of the building construction stakeholders has produced a landmark guide to procuring compliant construction products titled ‘Procurement of construction products – A guide to achieving compliance’. This document is freely downloadable here.
To address this concerning trend, ASI has actioned the new National Structural Steelwork Compliance Scheme (NSSCS), the technical foundation of which is the new Code of Practice (COP) and the upcoming new Australian Standard AS 5131 Fabrication and Erection of Structural Steelwork.
The great news is that the new NSSCS has developed significant traction, with the first fabricators already certified (to Construction Category 2) and a raft of 30+ fabricators who are at various stages in the process of becoming certified!
This is an excellent result and indication that the Australian market is taking compliance and ‘best practice’ seriously, with investment of time and resources to make this happen. We encourage you to make yourself aware and, as important, provide your engineering and fabricator contacts with the reasons to get on board with this initiative.
(L to R) Brezac Constructions Director, Peter Brezac (centre) welcomes his company’s formal certification to the NSSCS from ASI State Manager – QLD & NT, John Gardner and SCA Manager, Alan Nightingale.
First cab off the rank was Brezac Constructions in Brisbane. It is pleasing that they have the honour of being the first company to complete the audit process. Brezac have recently moved into new, purpose built fabrication facilities in Crestmead representing a significant commitment to the steel industry.
Idec Solutions, Compliant Steel, Network Steel, Skrobar Trojan Structural Steel and Structural Challenge have all completed the audit process and we congratulate these businesses.
“Engineers continue to show support for the Scheme and we have now seen the first specifications and purchasing documents published, referencing the need or preference for fabricators to be certified to the NSSCS.”
Speaking of engineers, we strongly encourage all engineers to engage with this initiative in the run-up to AS/NZS 5131 becoming a Standard. Make sure you specify the relevant ‘Construction Category’ and associated information on your drawings and in the specifications you prepare on behalf of your client. It is very important the industry starts to see this information flowing through the project communication chain. As a case in point, a Toowoomba waste management facility has become one of the first projects we are aware of to be specified to one of the risk-based construction categories supporting the NSSCS. Congratulations to Knight Consulting Engineers for supporting this important initiative!
For engineers specifically the ASI have produced the new Tech Note TN011 titled ‘Structural Steelwork Fabrication and Erection Code of Practice – Implementation Guide for Design Engineers’. This document is freely downloadable from our website at http://steel.org.au/elibrary/asi-technical-notes/.
Funded and developed by the ASI, the NSSCS is broadly based on the CE Marking
scheme adopted by the European Union. The ASI National Structural Steelwork
Compliance Scheme fundamentally supports and meets the ‘12 Principles for Procurement and Conformance of Construction Products’ as set down in the APCC Guide.
This is a solution for the whole supply chain, not just fabricators, and has particular relevance to and benefits for engineers in defining what good practice looks like and establishing a common level quality bar for all steelwork product, regardless of country of origin. As the engineers who will need to specify the required Construction Category under the new AS/NZS5131, you will have peace of mind that with this comes a range of checks and balances around product compliance and traceability that are transparent, uniform and, in time, firmly established across the supply chain.
I encourage you all to take up this challenge now and become part of the solution.
Further information can be found at the SCA website.
Queensland Looks Forward to Better Construction Outlook
Despite uncertainty following the surprising election result, the construction sector in Queensland is expecting a continuation of the current modest recovery in industry conditions.
To be sure, the sector is facing a number of headwinds. With the dollar value of work done throughout the state’s engineering construction sector in the second half of last year ($16.878 billion) being down 27.4 per cent and 18.7 per cent compared with corresponding periods in 2013 and 2012 respectively, according to ABS data, the resource sector slowdown is biting hard.
That is having a flow on effect on demand for office space and new commercial construction, which in turn points to another area of weakness: at $2.455 billion, the dollar value of non-residential building approved throughout the six months to December last year was down by 31 per cent and 21 per cent on the equivalent periods in the previous two corresponding years respectively. This means the pace at which new commercial building work is coming in is actually slowing from already low levels.
Moreover, the shocking defeat of the Newman government has given rise to policy uncertainty surrounding a number of important areas, and it is unlikely that the (yet to be released) capital works program of the new government will be as extensive as that previously planned under the Newman government. The new Labor government has stated it has no plans to proceed with a program to privatise public assets in order to free up funds for debt repayments and investment in public assets.
Offsetting all this, however, is the lift in conditions in new residential housing, where an upturn which began in the middle of 2013 has strengthened to the point where building approvals are approaching historically respectable levels.
Moreover, participants in a recent Master Builders survey say conditions in commercial building have stabilised, perhaps indicating that the dire picture painted by aforementioned approval data in this sector may be misleading.
And despite uncertainty surrounding the change in government, Master Builders Association of Queensland deputy executive director Paul Bidwell expects the new government will adopt a measured approach to any critical areas of policy change.
With this in mind, builders who expect industry conditions to improve over the next 12 months outnumber those who expect conditions to deteriorate more than three to one.
While on an aggregate basis the value of non-residential building activity is set to remain flat, this overall picture masks considerable variances within individual sectors. Activity is set to remain subdued in office building due to weak demand in that market, and activity in healthcare expected to drop back but significant opportunities exist in the retail sector as well as the improving industrial and accommodation sectors.
Although resource work is dropping back, activity in this sector is still set to remain at respectable levels for some time and decent opportunities remain in this sector. Meanwhile, Queensland is expecting an upturn in activity in transport and roads as well as telecommunications thanks to work on the NBN.
Due to low levels of building activity in recent years, current conditions in the market for workers and subcontractors in the Queensland construction sector are generally subdued, with ABS estimates suggesting that the number of people who were employed throughout the sector in the three months to November last year was lower than that during the previous corresponding periods in any of the past three years.
Going forward, while participants in the Master Builders survey generally expected staffing levels 12 months from now to be roughly the same as they are today, Ronan Mulry, director of Hays Construction at recruitment agency Hays, is much more optimistic. Mulry said companies are gearing up for more construction activity and are looking at hiring commercial staff such as project managers and commercial administrators.
Published on 30 March 2015
Could Changes in Tendering Process Improve Building Project Delivery?
First, it is important to ask what constructors, designers, and other consultants want from government procurement policies and processes.
The Productivity Commission in its draft Report on Infrastructure Costs had a crack at some suggested changes, arguing that “There is significant scope to improve public sector procurement practices and lower bid costs for tenderers, with potentially large benefits for project costs and timing.”
Here are two changes in procurement approach suggested by the Commission:
- Reducing bidding costs by investing more in initial design, contributing to the bid costs of tenderers, and requiring only cost-relevant plans from all bidders, with the remaining ones required of the preferred tenderer.
- Eliciting best value-for-money bids by improving the quality of information on possible costs by developing initial designs using BIM, and, working with industry to coordinate the establishment of common technical standards to ensure that the greatest benefits from the adoption of BIM are realised.
Both make sense, and could and should be applied to commercial building projects as well as infrastructure. Here are two other suggestions from ACIF’s policy on regulation that would make a difference.
- Ensure procurement policy encourages collaborative working. Success in the future will involve greater attention being paid to collaborative working at all levels within a construction project.
- Procurement and tendering policies should support and encourage greater involvement of key stakeholders at the early stages of project development and should address the capacity of the industry to meet project objectives by allocating risk appropriately.
Government is a large customer, and it must encourage innovation by demanding innovative practices and sustainability on its projects. Done properly, demand-side innovation will not inhibit competition or transparency. It can lift standards that flow across the public sector and to the private sector. These innovations include requiring the use of integrated project delivery teams and the use of BIM.
Encouraging public sector agencies to embrace change is a challenging task. The reasons are many and well known but it is worth reflecting on how the growing tide of support for BIM and its key driver, integrated project delivery, is likely to generate sufficient momentum, and soon, to sweep away the perceived obstacles.
In the public sector, each jurisdiction and the agencies within them are moving at their own pace. Some agencies are more advanced than others – those that regularly commission projects to deliver new assets are more advanced in their thinking. Agencies at the forefront include those for defence, health and education.
Key issues for public sector agencies include:
Assessing whether the costs of requiring the delivery and use of BIM models are outweighed by the asset’s whole-of-life benefits
- Identifying minimum threshold values of projects on which to require the use of BIM for designing, constructing or managing assets.
- Assessing whether local suppliers (designers and constructors and asset managers) have the skills and resources to build and use BIM models.
- Ensuring that smaller firms – whether designers or other consultants, or constructors – that are slower than others in using BIM are not disadvantaged.
- Determining whether existing legislation, policies, or procedures are flexible enough to allow the early appointment of constructors to project teams to be part of the design process.
- Determining the extent to which internal BIM or other project management capability is required when specifying the delivery and use of BIM models by suppliers
Market research points to uptake of IPD
In a recent forecast, industry research firm IBIS reveals demand for design development services would grow over the next five years as the level of building code regulation increases and more complicated mechanical and electrical requirements are implemented.
By work type, IBIS said that demand for contract documentation and schematic design would remain relatively constant and levels of work on pre-design services would level off after a significant growth spurt.
“By contrast, the demand for drafting services, however, was falling amid competition from low-cost, international drafting services.”
IBIS warns that the sector faces structural challenges associated with growing competition as building service and engineering consulting firms become more vertically integrated in their service offerings.
This all points to the realisation by many in the construction and engineering sector, that Integrated Project Delivery (IPD) not only offers benefits to the collaboration team but is becoming essential to their sustainability.
According to the report, many firms are responding to this challenge by specialising in particular segments of the market as well as by either aligning themselves with these diversified players or increasing links to companies offering building services.
The need for work on project management and contract administration and supervision may also decrease over time as technologies like BIM allow for better testing and modelling of construction processes, thus helping to reduce the number of faults which can occur during construction.
The research firm also predicted employment levels within the sector would stabilise and return to modest levels of growth. Driving that growth will be a pick-up in commercial and institutional building, which together account for around 56 per cent of industry revenue.
“While investment into the non-residential building market is expected to be weak over 2014-15, growth is expected to increase from 2015-16, as commercial and industrial building construction heats up,” the report says.
“Large retail, office and entertainment developments are expected to contribute to demand over the period. The institutional building market is also expected to rebound over the period, with growth in the healthcare sector expected to drive most of the gains.”
While the report did not break down its forecasts on a state-by-state basis, growth is likely to be strongest in states such as New South Wales, Queensland, the ACT, South Australia and Tasmania, which are generally expecting higher levels of residential and commercial building activity in coming years.
Risk Management in the Design-build Era
With expanding populations and increased investment in commercial and residential construction, Australian cities are experiencing a renaissance.
As growing urban populations place additional demand on public utilities and infrastructure, developers continue to seek new ways to deliver projects faster and more cost effectively. As a result, more than half of current construction projects are relying on the design-build method of procurement, which can offer several benefits over traditional processes.
In addition to time and cost-savings, owners who use the design-build method can benefit from increased creativity and a team approach that encourages collaboration between all parties. As well, design-build allows for the use of emerging technologies, materials, and features that can reduce project costs and enhance the design esthetic.
With the design-build model, the owner also benefits from single-source management, contracting with just one party who acts as a single point of contact for co-ordinating the team and delivering the project. With a single contract, if something turns out to be wrong with the project, there is a single entity responsible for fixing the problem.
Elevated risk profile
While providing significant benefits for owners, the design-build method also comes with increased responsibilities and elevated risk exposure for contractors including professional liability. With single-source contracts, design-builders must be aware delays due to permitting, inclement weather, and material availability are not typically insured risks. However, under a design-build agreement, the contractor often specifies the project completion date with no exceptions. Additionally, contractors must be aware even if there is no design negligence, they may be responsible for the costs of fixing a problem related to the project suitability and may not be able to recover costs from the design team.
The key to mitigating these risks is an effective professional liability policy geared toward contractors and designers. Popular in Europe, professional liability coverage for design-builders has been available in North American since 2000. It is slowly catching on as large-scale construction projects become more integrated and technically challenging. In keeping with this trend, Australian design-builders are also starting to see this coverage requirement spelled out in contracts with owners.
Effective professional liability coverage should include features providing third-party coverage and mitigation of loss coverage. Contractors should also ensure design professionals carry adequate insurance and not overly agree to limitation of liability to their subcontracted design professionals.
The steady and continued growth of urban centres has created a unique opportunity for design-builders in Australia. The trend of single-source contracting has contributed to the current urban renewal, but also leads to a far riskier climate for those firms competing for integrated project delivery (IPD) contracts. Effective professional liability coverage is an essential part of managing these risks.
What You Need to Know about Retentions
Although Detailers are rarely subject to retentions, it might help to know a bit more about them.
How retentions are valued
The contract will set a percentage, usually five per cent of the total contract sum. The thing most often missed is the basis upon which the total retention figure is based. It can be the contract sum with variations or without them. This is important as variations can dramatically alter the value of the work. Often, an upline contractor will include the value of variations and so the retention figure goes up. But when you look at the contract, the contract sum is defined as the amount agreed in the contract itself, with no reference to variations. This means that variations do not enter into it.
Either way, I often see retention amounts that do not relate to any contract sum or any percentage. Often this is because someone has made a mistake somewhere and it got transposed to subsequent claims. That is, no one bothered to recalculate the retention amount.
As stated above it is usually five per cent but sometimes it is 10 per cent of the contract.
Amazing as it may seem, I have seen contracts which do not provide for retentions, but where the subcontractor has had retentions held for long periods of time. The opposite has also been true; a contract with retentions, but none held at all! That is, no one bothered to even look at the contract!
When is it payable?
You are entitled to claim your first retention when you reach practical completion and the final retention at the end of the defects liability period. Too many contractors think they can claim for their first retention before they complete on the assumption that it will be a long fight so they may as well get the ball rolling early. This is not the case; you can’t claim until you’re entitled to. That said, there are always arguments about whether or not completion has been reached. This will be defined in the contract, but if it isn’t then generally when the works can be used for their intended purpose you ought to be able to hold your hand up for that first retention. Many of these disputes end up in adjudication to decide if completion has been reached.
The final retention is payable at the end of the defect liability period. This is often 12 months from completion but I have seen them at three and six months. Again you can only claim this payment at the end of this period. If you are in dispute about the completion date then you need to either have that decided in adjudication or in contract dispute resolution.
What are they for?
Retentions are described as ‘security’ over the works. They act as a bond to give the up line contractor funds from which to draw on if the works need rectification and the contractor does not, or will not, rectify them. This is relevant, as often the up line contractor will seek to back charge for allegedly defective works well after completion and in addition to the retentions already held. Often the contractor will not want to return to site and would be pleased to have the cost deducted from retentions only to have that refused. In these situations it is simply an attempt at not paying what is due.
Keep in mind that retentions are there for a specific purpose. They are not an ‘all purpose fund’ for the party holding them.
When it’s over, it’s over. It’s amazing how often we see a head contractor insisting that the subcontractor carry out defect rectification well after the end of the liability period; and refuse payment of the final retention if they don’t. Because that’s what it is…a period for which the subcontractor is liable for defects to the work. When that period ends, so does the liability for any defects. After all, it is the head contractor’s job to review the work as the end of the period approaches and see that all defects are closed out.
So pay special attention to the clauses around your retentions. Five per cent is a lot. It is often your profit on the job. Pay attention to retentions.
Published on 30 December 2014
- See more at: http://sourceable.net/what-you-need-to-know-about-retentions/#sthash.hjhlgSFw.dpuf
The Risks of Do and Charge
I am constantly amazed by the scale and value of work being carried out under so called ‘Do and Charge’ arrangements.
This is a loose arrangement where the work is being carried out on a ‘reasonable value’ basis. A lot of variation work is initiated this way. Our members will know what I mean. This kind of arrangement is meant to be for small works. In my view, it should be used for work valued at under $2,000, and everything else ought to be under a proper contract, schedule of rates or lump sum.
Yet we continue to see significant detailing works, and I’m talking tens of thousands of dollars, being carried out on a ‘do-and-charge’ basis. Not surprisingly, many customers raise a host of objections once the work is done. There are some yawning gaps to the ‘do-and-charge’ setup that makes it a very attractive option for the non-payer.
|Trust me, I’ll be a good client.
One of the first responses to your claim or invoice will be a challenge to the value of your work. Your client will say that the work is not worth what you are asking. Even through you have claimed what you think is ‘reasonable,' that is a subjective view and your client will offer their own version that may be ludicrously low. The bottom line is that ‘do-and-charge’ arrangements do not give you any control over how your completed work is to be valued. The client can advance any theories, valuations, and calculations they like and you’ll need to deal with them. Many detailing contractors simply cut a deal and lose some money just to get something for the work they’ve done.
This leads me to the next problem: a loss of leverage.
The ‘do-and-charge’ deal means that most of the time you have completed the work, in its entirety, before you put out your hand out for payment. So the arrangement hands all the leverage to the client who has the work while you still need to get your money.
It is all too easy for the client to argue about value or scope at this point because they already have the work! What can you say in response? The ‘do-and-charge’ deal often has no terms or is an oral arrangement at best. You are left having to persuade your client that the work is worth what you are asking, but there is little motivation for the client to agree with you, and this is where most disputes stall.
It’s not uncommon for the client to say that they authorised the works but not the value, or never gave you written consent to do it. Another problem is retrospective quoting. This means your client will wait for your invoice and then show you a few quotes for the work from other contractors that - surprise surprise - are less than half your price. So now the client is arguing that your work is to be valued on lump sum basis after you’ve done all the work on a ‘reasonable value’ basis! Hindsight is always 20-20.
For many do-and-charge arrangements there is no agreement on the scope of works to be carried out. A recent, classic example of this is from New South Wales, where a detailer began work on a project using incomplete design documentation, (so no formal scope), and very loose discussions with his client regarding value or payment. Soon enough, the project stalled due to a lack of design information and unanswered RFI’s, however, the detailer had already issued drawings for much of the job to his fabricator client. Some time later, when design was complete, the fabricator gave the balance of the project to a different detailing firm for a lump sum and refused to pay the first detailer for the work he’d already done on the job. In this case, nearly $20,000 worth.
As you can imagine, all the defences came up as outlined above and the detailer had zero leverage. But the real problem here is that the first detailer did not stop to present the client with the actual scope of what had to be done or communicate the escalating value of work along the way. As it is not documented, you are again left to argue what was orally agreed at the time or what ‘common sense’ suggested was the scope of your work. Both positions are pretty weak and your client knows it.
I think for drafting jobs that fall under $2,000 'do-and-charge' is a viable alternative, but it really is a business risk you’ll have to make. There is a good argument to lower that cap. In any case, generally try to avoid ‘do-and-charge.’ It has too many risks with very little upside other than the time saved to prepare a quote. The ‘do-and-charge’ also tends to attract clients who like to ‘duck and weave.’
And who wants clients like that?
Who Should Develop a Construction Industry Strategy and How?
It’s high time an industry strategy was devised for the construction industry, but the questions of who, how and what remain.
This is not an academic exercise – we are an industry that employs a million people even in tough times, contributes 10 per cent and more to GDP, and provides indispensable shelter and social and economic infrastructure to every other sector of the economy.
The industry gets a patch press, too often characterised as “tough”, with what are too often presented as intractable problems – industrial relations, insolvency, quality issues and high costs compared to some of our international trading partners. We are regularly accused (often by those with little knowledge of the complexities of the reality of producing bespoke assets) of having poor productivity.
I’d guess that we have had more enquiries and reviews that any other sector over the last 30 years, looking at all these issues, and yet the issues and poor press continue to be downers for us.
What do we need to deal with this, and the undoubted underlying issues? Certainly not any more delivery strategies – I’m old enough to remember when successive silver bullets promised to be the answer to all maidens’ prayers - fast track, project management, construction management, design and construction, two stage engagement, partnering, alliancing, early contractor involvement, and I daresay I’ve forgotten some. Many had merit, and still have their place, but none have met the expectations of their many fervent advocates.
This is not straightforward, we all know that, but that should not be reason to sit on our hands. There’s too much at stake. So let’s at least look at some of the structural issues that make development of a concerted and focused industry strategy so daunting, followed by some examples of how we can break out of the cycle of reviews and enquiries and take charge of our own destinies.
The industry is diverse and populated primarily with small firms. Whilst the major contractors, consulting firms, and specialist contractors, might be capable of developing uniform or at least complementary approaches to the issues, the vast bulk of the industry is more concerned with where the next job is coming from and making a quid from the current order book than looking over the horizon.
Government has vacated the field, both as a policy maker for the industry and, by and large, as a client. Housing aside, there is no focus on the capability of the industry to sustainably deliver for its clients (that’s all Australians) or to prosper. Government agencies delivering services in part through procurement of assets have outsourced most of the capability they once had to contribute meaningfully to procurement or industry policy. There are some important exceptions – Defence, the health and education departments – but their skills are siloed and not available to other agencies in their jurisdictions.
We are a project-based industry, with all firms generating output substantially outside a central manufacturing or assembly location. It is hard for any firm, regardless of size, to adopt an organisation-wide approach to all projects, because each project is different. I’d guess that there would be few firms that would have order books that did not turn over completely within two years. Every project brings together a new team drawn from many firms as sub-contractors and consultants and suppliers, numbering from dozens to hundreds. Each project has a unique team and unique culture. It's hard for any of those firms to mimic a static manufacturing enterprise and maintain a consistent approach to how it works regardless of project type or location.
The needs, behaviours, and experience of clients vary from project to project. Service providers must, by definition meet the needs of their clients, and manage the expectations they have for each project. It is common (and commonsense) for the same firm to carefully match the client’s profile and culture with that of their own project team members – tough guys for tough clients, collaborative approaches for collaborative clients. Hard to craft a uniform “this is the way we do things here” culture against that reality. Hard, but not necessarily impossible. Many clients prefer to use the same service providers because they get on well and respect each other.
The last time Australia had a go at a national strategy for the industry was more than 20 years ago. The Construction Industry Development Agency was set up as a sunset agency, part funded by the Commonwealth Government over its three-and-a-half year life, from late 1991 to June 1995.
What can we learn from the CIDA experience?
CIDA attacked the then big issues (dominated by industrial disruption in the 1980s from competing brands of far left union leaders) by identifying “clusters” of issues and asking practitioners from industry and government, as well as academics and union officials, to join “Action Teams” to propose solutions. The idea was that involvement would lead to ownership of the solutions, and lead to commitment from the industry to their adoption and implementation. More than 200 people worked on Action Teams.
The other big element in the strategy was that governments, as major clients of the industry, would adopt those solutions and require their service providers to adopt them too. Every jurisdiction would have a consistent approach to what was expected from service providers, led by central works agencies with the skills and experience to manage design, procurement and project management. It was a top down approach if you will.
Most state and territory governments and the commonwealth signed up to the approach in an In Principle Agreement. They then promptly folded their arms and waited to see what would happen next; most did little to honour the approach or their in principle commitments. Most of them also, in the grip of the early infatuation with economic rationalism and at the urging of industry associations, began to outsource their internal design and project management capability, and liberate individual agencies from the control of the central works agencies.
As well, conservative state governments were innately suspicions of the agency and its tri-partite structure. They saw the agency as a deliberate attempt by the Keating government to distract or defer their attempts to address the industrial relations issues that had occupied so much of the work of the Gyles Royal Commission in to the industry in NSW. Top down died as a viable strategy before CIDA could finish developing its solutions.
The CIDA Board was drawn primarily from the private sector, but with two members drawn from the commonwealth government, at least one from state government, and two members from the union movement. The composition of the Board was an issue from day one, and remained so until the agency shut its doors in 1995. The Keating government of the day was persuaded that Board members should be appointed for their personal qualities, rather than for the sector of the industry they represented. A sensible approach I hear you cry, and so it was. The problem that arose immediately was that industry associations felt disenfranchised and disinclined to support let alone promote the work of a body of which they were not a part.
CIDA answered to a committee of the Commonwealth Cabinet, primarily to the Ministers for Industry, and Industrial Relations. And there were lots of them – 11 Ministers over three-and-a-half years. As each was replaced, the newcomer would approach the agency with suspicion, often delaying for months adoption of recommendations from the CIDA Board to improve its own structure and operation. Too many “courageous decisions” deferred or avoided entirely – in one case, recommendations were adopted after a Ministerial adviser spent six months conducting an internal review of the agency’s work.
A small team of staffers, also drawn primarily from outside government, managed the work of the CIDA Action Teams. Communication with the industry was conducted primarily through hard copy newsletters, annual conferences, and six monthly briefings to industry associations who were members of a Construction Industry Development Council. Draft documents or tools to address issues were circulated with invitations to comment. No matter how worthwhile the tools, it was all but all but impossible to persuade industry associations to overcome their suspicion of a body that did not include one of their representatives. Given that the agency operated pre email or internet, communication was, by current standards, clumsy and patchy.
So what could be done differently if an attempt were to be made now to develop an Australian Construction Industry Strategy?
- Set up a dedicated organisation focused on identifying solutions, drawn from the private and public sectors, including clients, with a Board drawn primarily from industry, and including representatives of industry association as well as others chosen for their personal qualities.
- Do not expect governments to fund the work entirely.
- Invite industry to frame the agenda – identify the issues, the desired outcomes, and benefits to individual firms that are strategic objectives. Make sure there are measurable success markers and report against them regularly.
- Invite industry to contribute time and skill to proposing issues and framing solutions through ongoing working parties.
- Consult regularly with industry more widely through briefings in each state and territory.
- Communicate with industry and government regularly through newsletters, invitations to comment on proposed solutions, and briefings.
Guess what? There are two initiatives underway to develop strategies for the Australian Construction Industry. ACIF and the Australasian Procurement and Construction Council set up the Strategic Forum for the Australasian Building and Construction Industry in September last year. It published the first of its tools for the industry in December – a Framework for the adoption of Project Team Integration and BIM.
Peter Barda has been Executive Director of ACIF since January 2008. He is a lapsed construction lawyer, and a former CEO of the Building Industry Specialist Contractors Organisation of Australia, the Property Council of Australia, the Commonwealth Government Construction Industry Development Agency,...
In Queensland, meanwhile, the newly minted Construction Q (chaired by ACIF chairman Robin Fardoulys) has developed a comprehensive 20-year strategy for the Queensland industry. It has adopted a wide ranging consultative approach to identifying solutions.
Note: The writer was CEO of the Construction Industry Development Agency from April 1992 to June 1995.
Hundreds of Construction Jobs Cut at Roy Hill Project
About 250 jobs have been cut at Gina Rinehart’s Roy Hill iron ore project at Port Hedland in Western Australia.
But the company insists the termination of a multi-million dollar contract and job losses will not delay the $10 billion mine, port and rail project in the Pilbara.
Head contractor Samsung C&T has terminated a contract with subcontractor Laing O'Rourke to construct steel and mechanical, piping and electrical works for the port landside infrastructure.
The contract is believed to be worth around $200 million.
A Roy Hill spokeswoman said Laing O'Rourke workers and staff were advised of the decision to shed 150 blue collar jobs and 100 white collar jobs on Tuesday as a result of "commercial considerations".
"Samsung is ultimately responsible for delivery of the project within budget and schedule and we respect their right and ability to make this decision," the spokeswoman said.
"This change has not impacted the completion date as per the overall construction schedule."
She said construction was progressing well, with more than 74 per cent of the project complete.
Up to 150 sacked workers will be able to express interest in working on the Port Hedland project with a new sub-contractor once it is appointed.
Roy Hill's iron ore mine was recently issued two prohibition notices by Western Australia's Department of Mines and Petroleum over safety concerns after several serious incidents at the site in the past 12 months.
By Kim Christian
Greater Vigilance Needed on Imported Steel Quality
The quality of steel imported into Australia can vary markedly. With structural steel usually utilised in ‘safety critical’ items, meeting the quality standards expected in Australia should not be negotiable according to Australian Steel Institute (ASI) national technical development manager Dr Peter Key.
“Overseas standards are not necessarily compatible with the performance requirements inherent in the quality level expected by developed nations like Australia and that presents significant risks for the unwary choosing steel purely on price,” he said. “There are numerous reports, both real and anecdotal, of quality and potential safety issues from the use of sub-standard imported steel.”
|Dr Peter Key
Key said there have been some very serious instances of fraud in documentation of overseas building materials and processes being misrepresented as meeting the relevant Australian Standards where they knowingly do not.
A commercial infrastructure development in Penrith NSW, for example, had to be completely rebuilt by a local steel fabricator due to the plethora of compliance issues with both the steel material and also the fabrication (welding). The irony was that the local steel fabricator lost out on the original contract.
“Many stakeholders in the Australian steel supply chain fear that our governments will not seriously address the issue of non-compliance of construction products until a building catastrophe threatens or takes lives. This has striking similarities in scenario to the recent situation with imported frozen berries,” said Key.
According to a recent report by the Australian Industry Group titled “The quest for a level playing field - the non-conforming building products dilemma”, over 95 per cent of respondents said they encountered non-conforming building products in the steel supply chain.
Europe now has legally mandated independent certification under the European Union’s CE marking compliance scheme. As Australian compliance regimes are not legally mandated, Key said a higher degree of vigilance by the local industry is in order.
In a Local regime response, the ASI has advocated four key requirements:
- All steel is to have test certificates viewed by the engineer/building contractor and/or the project documented for steel is to be subject to a third party certification scheme.
- Welding programs are to be specified to the technical standard AS/NZS 1554 and paperwork is to be made available to show compliance for the engineer to inspect for critical welds.
- All structural bolts and nuts used in the design are to be supplied with basic test certificates and these are to be viewed by the engineer for critical applications.
- The fabricator is to demonstrate basic capability through a prequalification and accreditation process assessed by an independent body.
“Up to quite recently, the lack of rigour covering the supply of structural steel has led to an unacceptable degree of unsuitable and often faulty steelwork for development projects in Australia, and therefore risk across the supply chain,” Key said. “There has been little independent testing of materials undertaken or onus on procurement or design professionals to take responsibility for enforcing materials specifications.”
“Exacerbating this issue, ASI engineering members are under constant pressure to accept non-compliant materials based on a lower price and often only with limited if any test results, bypassing the compliance and test certificate process”, Dr Key said.
480 Queen Street Project Presentation
Steel Framed High-rise in Brisbane
The building is targeted to be the only premium grade, 6-star Green Star rated tower of the three new office towers currently under development in Brisbane.
This is the first steel building of this type in Brisbane. It utilises a steel system that has never been used in Brisbane before on a large multistorey building.
It comprises approximately 5000 tonnes
of steel made up of approximately 2500 tonnes of universal sections, 500 tonnes
of fabricated beams, 1000 tonnes of tubular columns and 1000 tonnes of steel decking.
Presenters from Grocon (D & C Builder & Developer), BVN Architecture (Architect) and Aurecon (Engineer), will bring a high level of project experience in discussing the innovative design and structural challenges of this iconic building.
David Emery - Group Engineering & Innovation Manager, Grocon
Brian Donovan - Director, BVN Architecture
Aaron Toscan - Associate, Aurecon
Scott Thomson - Project Manager, Grocon
Gabba Cricket Ground in Legal Stoush over Poor Stadium Design
The builders and engineers behind the redevelopment of Brisbane’s most iconic sports ground have been sued over allegations that shoddy design meant the roof was unable to withstand heavy wind and rain during severe storms in 2008, media reports say.
The Courier Mail has reported that Stadiums Queensland is suing construction giant Watpac and engineering firm Robert Bird Group for $7.5 million, alleging negligence in the design and building of a cantilevered roof built in 1999 after two parts of a sail structure were blown away and supporting pylons were damaged when the small scale tornado hit during a series of storms which impacted southeast Queensland in 2008.
In its claim, the government body said Watpac’s work was not ‘good, proper and workmanlike,’ and that the engineers had offered misleading information by claiming the roof was strong enough to withstand winds of the Australian standard of up to 216 kilometres per hour.
Although no readings were taken at the ground on the day in question, the closest reading at Archerfield airport suggested that wind speeds reached 81 kilometres per hour.
Watpac has denied liability and has counter-claimed against Robert Bird Group, which in turn denies it was negligent and will soon file an expert report.
The latest developments come amid a challenging time for Watpac, which saw a 16 per cent slide in first half profit and suffered a $20 million revenue hit earlier this month when resource outfit BC Iron announced early termination of Watpac’s mining services contract for the Nullagine Joint Venture in the Pilbara region.
AISD (Qld Inc) AGM 2014
The AGM for 2014 was held at Diana Plaza Hotel Woolloongabba on the 19th of November.
To kick off the evening before the meeting started, drinks and nibblies were consumed by the 20 odd attendees.
At 6.30 the meeting was opened by Clayton, who started by listing the AISD achievements for the year and some of those were:
· A brief history of the AISD
· Acknowledgment of the continued support of the ASI
· While we are/still unqualified, we do have world’s best practices in what we do
· Clayton acknowledged Rebecca’s continued contribution to updating and maintaining the website
· Webforge visit by members
· Business owners meeting
· ASI magazine items
· ASI steel awards and the change to IPD award
· QUT presentation to students (Thanks to Phil)
· Steel Convention (national detailing forum)
Following closely after this introduction to the night were the AGM formalities.
The financial report was delivered by Brad for Kerry (who was absent) – The audit was accepted with a majority show of hands
All office positions were made vacant and Clayton presented nominations
o Kerry (Treasurer)
o Phil (Secretary)
o Clayton (President)
o Peter Hempsell
These positions were supported unanimously by all present.
Hallahan and Co were proposed as the auditors for 2015.
After the AGM concluded at 6.30PM, a general meeting was held and was chaired by Clayton.
Topics like Local Content and software piracy were discussed as these affect our industry the most. It was discussed that the local content issue was losing focus from
industry groups as perhaps it might be seen as too big of a problem to tackle?
IPD "Integrated Project Delivery" was mentioned as being perhaps a mechanism to tackle local content issues, where by the industry evolves to be more collaborative
and inclusive of the various skill sets from all disciplines in the documentation sector.
Clayton delivered a presentation on the galvanising chart Steelcad Drafting has been developing for Galvanizers Association of Australia.
Essentially they have developed a new more informative venting and draining chart, with a lot of different images on ganvanising which is to be used for the website
they are developing.
After the formalities of the general meeting were over, a dinner was provided. Once dinner was finished a presentation on BIM and Point cloud was delivered by AISD
member Ian Woodforth. Ian explained how he used point cloud surveying with his Steel Detailing and the benefits to be had when using this accurate method of
obtaining site measurements. Many questions were asked and the AISD committee would like to thank Ian for taking the time to show this workflow.
After the presentation an open forum was held and topics such as the list below were discussed:
· There was a general acknowledgment of the committee for their work
· There was discussion regarding the galvanising and where the cut off was regarding for detailers – various opinions were offered
· IPD was discussed as the push forward for the AISD
· Associations with other supply chain members was discussed
· Payment options was brought up by one member and briefly some payment topics were, end of month, part payment, contracts, and getting professional advice.
The AISD committee would like to thank everyone that attended the AGM and look forward to catching up again later this year.
1. Revit RTC conference 2015.
I have been asked to present at this even again this year, its always a thrill to be asked to speak at technology events, especially when its held by a design software maker. RTC for the last few years has been seeking presentations from the wider industry, perhaps to broaden the field a little and make the event more educational.
This year ill be involved in two presentations:
- Positioning BIM for Construction. (Point cloud to 3D modelling)
- BIM - "Building Integrated Models" - Collaborate digitally to transform design workflows (Educational regarding collaborative BIM)
Whilst researching the second presentation above, which is the one ill be doing on my own, I came across a couple of interesting articles on the construction industry which back up what the AISD has been saying for some time now - collaboration is necessary if the construction industry is serious about reducing waste.
The Warren Centre has written a paper on construction industry waste.
For further reading, click here.
The Australian Construction Industry Forum has written a paper outlining what the construction industry means in terms of GDP to Australia and also points out the areas in need of change and evolution.
For further reading click here.
For more information - speak to Phil Shanks
2. Productivity through Digital Collaboration in the detail design phase.
I have decided to get a group together of various experts in the design documentation sector to discuss collaboration between the different disciplines and see if there is a presentation which can be delivered to industry to shine a light on the progressive workflows of many and the changes which could result if some of the workflows were taken up as business as usual.
Following on from the presentation ill be delivering at RTC on collaboration, I decided to contact a number of people I know and see if there was any interest to form a group. The players thus far are:
- Steel Detailer
- QS / Academic
- Engineering Draftsman
- Concrete Detailer
- Software and BIM expert
Im refraining from naming individuals at this stage as we only had our first meeting last week, before the BrisBIM event.
The meeting went well and there was a lot of enthusiasm and ideas from all in the group.
Essentially the focus of the group is as follows;
There are many of us in the design to construction industry who believe passionately in change, change fit for the 21st century in relation to the way that we work. Many workflows in this space are still based on traditional workflows designed to work with a paper based delivery of design and its clear to many that processes and workflows need to evolve to be in keeping with the possibilities of technology.
The purpose of this group is to gather experts in as many of the documentation sector fields as possible and work through the missing links in collaboration across discipline and develop a workflow or series of workflows which could be shown to industry as a solution for modern times.
Listed below are a number of headings and points to get the conversations started;
What we will all need are three things:
1. Commitment to the longevity of this group
2. Patience for the time it may take to get the end result right
3. A willing participation to contribute
We don’t believe we can change the industry over night, but as a collective voice, even though small, we can have a large impact if we do this right.
Consider not just a name but a series of pillars which can underscore the very reason for change – why is this important and why make changes?
· A better product all round
1. What has been done?
2. What has been achieved?
3. What new things became possible?
4. What measurable outcomes?
5. Any lessons or guidance for others?
6. Why do we believe in collaboration?
7. Who does it benefit and what are the potential savings?
8. Why if the current model for design to build broken? Or is it broken?
A second meeting has been scheduled for late May and will be like a show and tell of collaborative works delivered by the companies of the individuals. This is to showcase what worked and what didnt in real projects delivered and be used as a base to work from for further strategic developments.
Ill keep the AISD updated on how this group goes over the coarse of this year and where we end up heading.
Any questions - call Phil Shanks
Just for Laughs...
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