How did the use of potentially unsafe cladding become widespread in the construction sector? What are the factors behind misunderstanding of the regulations and, in some cases, ill-informed exploitation of grey areas?
According to a report in The Australian, an audit conducted in 2015 by the Victorian Building Association found that approximately half of Melbourne’s CBD buildings used cladding that did not comply with Building Code of Australia requirements. In 2000 a Sydney supplier who switched to importing cladding with a fire-resistant filling estimates that prior to that potentially thousands of square metres of PE-filled cladding had already been used on buildings.
The Victorian Cladding Taskforce established after the Lacrosse fire identified three key reasons why potentially combustible cladding has been used so widely in construction:
- the supply and marketing of inappropriate products
- poor industry compliance
- failure of regulation.
The ACP used on the Lacrosse building was marketed and sold internationally as a product suitable for use on the external cladding of buildings including high-rise and residential buildings, according to the construction company responsible for the build. The builder added that use of the brand and similar products had been common practice in Australia for at least 40 years.
In the Lacrosse case the builder asserted that the architect signed off on the choice of cladding and also did not raise concerns with either the engineer or building surveyor officially involved with the project.
According to Gallagher’s general liability insurance expert Adam Sulway, from an insurance liability perspective whoever is responsible for importing the product is deemed to be the ‘manufacturer’ under the Competition and Consumer Act 2010. This definition raises risks for multiple project stakeholders.
“In a worst case scenario for injury and loss of life the building owner, architect, project manager, builder and materials supplier ‒ everyone involved during the construction process ‒ could be drawn into liability claims,” he says.
Under the Building Code of Australia, ACP cladding with a PE core can be used on some types of buildings less than 25 metres in height (Type C). For Type B and Type A buildings the specification is for non-combustible cladding.
Type A <25 metres in height (each storey <6m)
Type B >3 storeys, <25m in height (each storey <6m)
Type C <3 storeys
But the Code also includes a grey area in this multi-storey building cladding specification. It provides that a fire safety engineer-approved alternative solution can be employed to reduce the risk presented by ACP cladding with a PE core or PE combination core.
These design measures might include:
- fire barriers
- limiting or separating areas of combustible materials.
The Code also provides that alternative solutions must be assessed and approved by architects, building surveyors, fire safety experts and the relevant authorities. This provision has not prevented parties involved in the design and construction of multi-storey buildings from using ACP cladding with a PE or PE-combination core on external walls as common practice.
Regulatory grey area
The problem with using alternative solutions designed to limit the spread of fires in multi-storey buildings is that the actual degree of combustibility of the cladding they are intended to counteract is unknown without actually taking the panels apart and testing the filling.
The City of Melbourne Municipal Building Surveyor’s report concluded by commenting that the Lacrosse case highlighted a failure of the building regulations to reflect the types of buildings being constructed today and how they are used.
- compliance failures
- inadequate documentation
- laxity of licensing bodies
- lack of oversight of the commercial building industry
- independence of certifiers.
It called for greater transparency, rigour and accountability for design, product selection or substitution, a higher level of expertise, scrutiny and independence in the certification process and greater national unity in compliance and enforcement systems across all Australian jurisdictions.
Part 3 of this series examines the regulatory response to the cladding issue and how the construction industry needs to adapt its practices.
Gallagher brokers have the expertise and industry knowledge to formulate insurance solutions for complex construction projects and assist stakeholders with managing their risk exposures.