[+] Will Developer Ratings Weed Out the Shonks?

Few could argue that the New South Wales construction and development industry desperately needed an overhaul given the damage to its reputation during the past few years. Building defects have been in the spotlight after multiple tower evacuations, prompting industry watchdogs and the government to look at how to make developers more accountable for their work. In fact, research found at least one in four apartment blocks in Sydney between 2007 and 2017 had one or more defects, including cracking, fire safety concerns such as shoddy cladding, or water ingress and flooding issues. The UNSW Sydney and the University of Technology Sydney report reveals 51 per cent of buildings, with adequate documentation included in the sample, had at least one type of building defect. About 28 per cent had at least three types of defects and 12 per cent had more than 10 different defect types. But the new Independent Construction Industry Rating Tool (iCIRT) promises to weed out the bad apples, and construction firms and developers in NSW are currently working to complete their certification requirements. NSW Building Commissioner David Chandler has ushered it in as part of six pillars of reform. Created by Equifax, the iCIRT aims to provide national and globally facing capability records, with plans to expand from the early works in NSW to other states and territories. But it’s an intensive process for time-strapped builders and developers, prompting questions about whether it’s a barrier for newcomers entering the industry. Equifax confirms 75 builders and developers are currently going through the certification process, including Deicorp, Helm and Ultra Building. A further 100 construction companies are also in line to undertake the certification. Undertaking the certification is anything but easy. Luxury apartment builder Helm chief executive Mark Monk says it took his team more than 300 hours to complete the certification. “It’s incredibly arduous. It’s not a simple process in any way. It took us about three months or longer to get rated, so it’s a very intensive process,” Monk says. ▲ Helm’s Ora at Dolls Point: the certification process is ‘arduous’. Auditors required three years of audited accounts, he says. “There’s a lot of back and forth in terms of questions and wanting to know what’s happened throughout the life of your business, right back to your credit history with sub-contractors to ensure you’re honouring payment terms.” Conscious of the negative media reports about developers being unable to fund projects and sloppy work, he signed up to complete the iCIRT process. “We wanted to stand out from the crowd. This was a differentiator for us, which we believe will set us apart in the future,” he says. “There had been nothing that differentiates our business from the bottom 20 per cent in the industry. And there’s nothing that rewards us in terms of recognition for the reputation we’ve earned over the years, compared to the companies that we continually read negative things about in the media. “The rating system goes some way toward recognising that we do have the right systems and processes in place and that we’re financially stable and well resourced. There needs to be something that differentiates the better players from the poorer ones.” Monk warns the certification will prove an impediment for unprepared operators trying to enter the industry. “I certainly think it will stop builders with two wheelbarrows and a ladder from trying to start a construction business, and I don’t have any problem with that to be perfectly honest. It’s the people who come into our industry under-resourced and under-funded that create a lot of the issues in our industry. “But for the people who have done their homework, have a business plan and are well funded, this process won’t be any impediment at all.” ▲ Ultra Building Co’s managing director Adrian Sicari said he was happy with the company being awarded a four-star rating. Ultra Building Co is also one of the first to complete the accreditation, which managing director Adrian Sicari says took over four months “and a huge amount of time involving Ultra’s resources providing evidence of compliance”. The firm walked away with a four-star rating of a possible five. “I’m happy Ultra Building Co are the only builder with four stars but was not happy at first with a 4-star rating—Ultra wanted five stars, but I understand why,” he says. “We asked how a builder gets five stars and iCIRT gave us a few items to improve on—one was a succession plan as part of our leadership team so there’s someone else in place with the power to make decisions if I passed away.” He hopes the rating system will be better understood by the broader industry and potential clients in time. “All stakeholders need to be aware of the importance of being rated. The consumer needs to be made aware of the importance of a builder having a iCIRT rating, giving confidence and certainty of high quality successful project outcomes,” he says. ▲ The tool is part of NSW Building Commissioner David Chandler’s sweeping reforms of an industry desperate to rebuild its reputation. The new Equifax tool was developed to carefully consider the assessment of new entrants and small businesses, Equifax head of product and rating services Brad Walters says. He expects to be rating builders and developers through iCIRT on an ongoing basis, anticipating the number of rated constructors to continue. Equifax uses an auditable process to consistently assess structured and objective data, removing the potential for parties to “game” the system. “For newly-established operators, the tool reviews the character and capability of key persons, including their track record, past projects, experience and qualifications, as well as the capitalisation and funding of the business, existence and maturity of their plans, processes and controls,” Walters says. “We will be releasing a public-facing register of trustworthy constructors within the next few weeks to recognise those who have obtained at least three gold stars and have demonstrated their commitment for improved transparency by publishing their rating.” While some countries have explored a subjective consumer-input, industry-influenced, social-scoring model, these have had limited success due to their reduced quality, integrity and objectivity, he says. Equifax says it will maintain audit records to support independent and analytical reviews of rating outcomes, and perform annual reviews of its models, methodologies and performances. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Will Developer Ratings Weed Out the Shonks?

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[+] Will Developer Ratings Weed Out the Shonks?

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