The cost of non-compliance and its residual impact
Building compliance – nothing new, yet it’s a current concern and there is a lot you can do to prevent substantial revenue risk from non-compliant design.
Developments classified as or holding a component of ‘class 2 residential‘ zoning particularly get the spotlight, following 2 significant building issues last year. The focus goes back to projects completed in the last 10 years, and forward to newly proposed residential & mixed-use developments.
How the new Compliance Act is playing out:
With structural compliance a current concern, David Chandler’s (NSW Building Commissioner) appointment is dedicated to overhauling an industry rife with building defects following high-profile failures. More about that here.
The commissioner said about 20 per cent of apartment buildings in the state had “significant issues” such as structural, waterproofing and fire-rating systems, that he needed to resolve.
What we do know is compliance can be the ‘make or break‘ in your state-of-the-art development, and early prevention is key to;
- 1. saving you from unnecessary on-going expenditure, and
- 2. protecting your reputation by eliminating issues in non-compliant designs.
Further information and Podcast resources regarding the Compliance Act can be accessed here.
The key areas of non-compliance risk:
Our findings, from working within the industry over the past 10 years, show significant risk to organisations where design, quality, and particularly waterproofing of wet-areas do not comply to standards.
Quantified compliance impact to annual turnover:
Consider the residual impact of non-compliance a in 455 room apartment, annually:
- Poor-quality, faulty fixtures and product replacements could end up costing $171,000 annually
- Major Defect rectification, even in 2% of the rooms, may leave $54,600 at risk
- If these 2% of bathrooms leak (predominately an issue with unlicenced trades onsite) it may contribute a further $273,000
- Following loss in 4-5% tenancies from poor reviews & public exposure from non-compliant trades, as much as $745,290 could be wiped from revenue annually
$1.24M is a significant cut to annual revenue, when compliance issues could have been prevented upfront.
Compliance, beyond the project:
We understand the above calculations are hypothetical, however it is important to consider how and what your organisation may be overlooking in strategic planning moving forward.
As always, Interpod takes compliance, design standards and Australian-sourced materials very seriously to ensure Bathroom Pods provide you with quantifiable certainty long-term.
Lessons learnt by our clients are something we are open to sharing to prevent your organisation experiencing similar pressure.
You can request these insights here.