An industry-wide shift to digital construction records could hold the key to rebuilding the credibility lost amid the cladding catastrophe, high-profile pundits suggest.
The limitations of paper construction records have been further illuminated during the cladding crisis, with authorities left scrambling to determine which major buildings across the country posed a flammable risk.
A big part of the problem was the fact that records were paper-based, and stored by various stakeholders, rather than in one central place.
Tracking down the manufacturer, installer and developer for each project has been a nightmare for authorities, who are still scrambling to assess more than 3400 residential apartment buildings constructed with cladding that have been deemed flammable.
The shift away from paper would ensure project managers store the hundreds of pieces of information such as design plans, costings, construction and supplier details, manufacturer details, approvals and the rest all in one spot.
Now, key industry players are throwing money behind digitalisation projects that would allow developers to have true project visibility. They believe that this could provide certainty to developers and help rebuild the credibility crisis damaged by the cladding catastrophe.
Big four accounting firm KPMG has committed to creating the first working model of the Building Assurance Solution within six months under a NSW Building Commissioner contract won by a consortium of KPMG, Microsoft and Mirvac, ASX and the Western University Sydney. It will be piloted on cladding rectification projects.
The building assurance solution will use several advanced technologies, like blockchain, to store detailed records throughout the development and construction process, including materials and methods used, certifications achieved and contractor details. One of the other key players already in this market is Aconex, which offers a product for the construction sector.
NSW minister Kevin Anderson says the goal is to drive transparency and lift standards in the construction sector.
The building assurance tool will allow the regulator to easily identify and respond to defective products and take action against the riskiest practitioners by knowing which buildings they have worked on.
“This [work] will help measure the quality and insurability of buildings by identifying which buildings are trustworthy, from measuring compliance with design and construction standards to traceability of materials all the way back to the manufacturer,” Anderson says.
“This will show us what products were used, who made them, what testing certifications are held, and who installed and certified the building work. Practitioners who build and design in NSW will now have a digital fingerprint that will attach to every project they have worked on.”
The government intends to reach out to other jurisdictions to collaborate on the project.
Laszlo Peter, KPMG Partner and head of blockchain for Asia told The Urban Developer that digital records can unlock the full traceability of a development.
“Every building now contains material from many markets around the world. This system is designed to be a multi-jurisdictional solution to meet today’s global supply chain ecosystem.
“Digital records can provide a digital footprint that will improve the trustworthy rating of a building.”
Future applications could include a carbon registry based on embodied and operational carbon accounting, or commercialising supply chain data, Peter says. Digital records will also enable consumers to better understand the environmental impact of a building, raising the value of an asset.
How far away the tipping point of paper to digital will be will vary significantly by record type, according to Mirvac’s chief digital officer, William Payne.
“Adoption will always be the key challenge. People must want to use these different new approaches, and that comes from clever design that makes the experience better, or in some cases—for example with digital native consumers—more familiar,” he says.
Payne suggests that legislative changes could kickstart the shift, both in terms of accepting new forms of digital record over paper, as well as help support the wider adoption agenda.
“The more depth and accessibility of information across the entire lifecycle of a building can only serve to improve understanding and awareness of an asset, both in terms of how it was created and how it operates,” he says.
Developers could learn a lot from what’s been happening in the commercial setting for years, points out the head of construction project management platform InEight, Rob Bryant.
Bryant says digital data records save time on surveying to create, rather than validate.
“Digital records can provide an immediately available auditable record of materials used—in the event of future changes to standards, recalls or safety concerns—which can add significant value and save time,” Bryant says.
However, whether digital records could raise the asset value on an open market is questionable, others say.
Sydney property developer Mila Mikhaleva isn’t convinced the shift to digital records will add value.
“Currently, we put disclaimers in our report stating that the lender should sign asbestos reports, cladding, etc, before making a decision. However, it would definitely help us and other professionals dealing with the building in obtaining more accurate information.”
When working in Russia, valuers regularly referred to a document known as a “building passport”—centralising the details of a property in one place, which was useful, Mila says.
CEO and co-founder of proptech industry leader Archistar Benjamin Coorey says paper-based records are inefficient, create delays and add cost to the process.
Despite being a digital advocate, he’s not convinced the shift will equate to higher asset valuations.
“I don’t anticipate that digital records would make the valuation higher or lower, but digital records can improve the valuation process, as it allows for faster decision-making and easier access to information to make decisions from,” he says.
However, Kevin Brogan, director of group risk and compliance at Herron Todd White says anything that gives buyers more certainty over the history of a building is beneficial.
“As construction costs increase, there is the potential for materials substitution to occur, and so a register that can provide a confirmation of materials provenance and compliance with appropriate standards will be valuable. Some combustible cladding materials were found to be cheaper substitutes for the specified cladding, for example,” Brogan says.
A market response from insurers is yet to be seen, but better transparency could result in better products in the future.