Anyone been stung here? Stories to share?

Imagine paying a 90K commission for a new build also!

Building expert commissioned to investigate industry warns 'I wouldn't buy a new apartment' - ABC News (Australian Broadcasting Corporation)

 

Most mentors on this forum would rather swallow glass than buy a new apartment. We have been warning against them for the entire ten years I have been a member.

 

Will be an interesting Four Corners tonight that’s for sure.

 

Listening to some commentary this morning on the ABC, a little thing struck me - the vast majority of incidents on poor quality of construction is occurring on residential property (ie not commercial, industrial or retail).
Why?
What makes commercial etc less likely to have issues?

A little bit of scratching leads me to the conclusion that the model of development is different.

Commercial constuction tends to be geared toward the develop/buy and hold whereby the developer has a vested interest in providing a product to a quality standard that is acceptable to the market and is aiming for a high rate of return on capital invested whereas residential developers are inclined to cut every corner possible to exit the market as soon as they deliver their product. (There are some exceptions of course).

Commercial developers engage the consultants for the duration of the project - all detailing is provided by the consultants, services are designed into the building, the construction management team are skilled in project management, buildability, deliverables, contract administration etc.

Whereas residential builders try to save costs at every turn - good designers are dumped after the DA is achieved and the glossy brochures hit the market for the OTP sales. There is no continuity in the design process from concept to the detailing, from the use of skilled project managers (and a team of experts) to the expectation that the details will be sorted out 'on the fly' by subbies using 'deemed to satisfy' provisions.

It seems to me that the model is broken.

 

agree,

but I doubt anyone would havepredicted values to plummet overnight because of a cladding/structural problem

 

Touché

 

Still are popular - plenty of buildings being converted (old warehouses, offices etc).

As for the cladding, what stamp do you want on it?

 

Following from above points I work as Project Manager for a medium sized building company. All our work is primarily for the NSW government or sub branches. Now this is due to a number of factors which I won't go into.

But a huge factor of choice for builders is how you get into the market. First, you start at a carpenter or another tradie. You see how easy it is to make money so you open your own building company with your brother and do handyman style jobs due to price and quick turnover. You grow a client base then move into renovations. Then you move into Rebuilds or new builds and then townhouses, or small flat then a large block of units.

Now the question you may ask is why not commercial builds or government work or industrial.
Commercial / Industrial - Normally repeat clients with a solid contractor base. The client would be typically experienced in the field because of the costs of commercial builds. Needs to maintain decent contractors for future works. There will be the odd one but enough experience to find the issue and fix it before completion.
Government - Crazy regulations and standards need to be met. Most government work requires you to be on a panel and meet many levels of certification. Experience and reputation are definitely important. Our overheads mean that if we were to quote on a new residential build it would cost atleast 100% more. I would even say a $1Mil project in a government environment could probably be build for around $250k in the private market.

So when you look at the above it is very simple. Residential work is cheap and easy to access for new builders. It is driven for turnover and quick money. Return clients are not really important.

I have seen it first hand the difference between our contractors and resi contractors. It is so bad that even though we are profit driven, I would never choose a resi contractor even if they met all the requirements and are 50% cheaper.

 

It'd be a reasonably safe bet. It is less likely that Multi's, Mirvac, Stocklands etc being ASX listed companies are going to do a runner, wind up a small offshoot etc considering the fallout would be $B.

 

Got me whilst I was editing.

 

All very true. I think a big difference between commercial and resi is, as alluded to by @Rugz06 , commercial costs more and is built to a generally higher spec by good quality contractors. Commercial clients expect these costs, plus everything will be depreciable so I think there is not the same aversion to capital costs. You get what you pay for.

 

Without a doubt better. Then have a reputation to uphold.
It's not blanket rule obviously.

Multiplex would self deliver a lot aswell. They have teams inhouse. PMs, CMs, CAs, Site Managers etc whom are very well paid. A Site Manager on a block of units or commercial build would be on $200k+

 

What about Meriton?

 

Generally speaking yes however also lot depends on the team you have on site. However Design and QA a lot better with big companies.

 

There are those that I mention and more so those that I don't.