Big River Group supplied a vast range of formwork and building materials for the redevelopment of the 100-year-old A-Shed warehouse in Fremantle, Western Australia. A diverse manufacturer and distributor of timber and building products, Big River was involved in the build from the very beginning.

In a first-of-its-kind transformation, ICS Australia completed the building works on the heritage-listed goods shed located at Fremantle Ports for the state’s biggest brewer, Gage Roads. The $10-million conversion not only created Gage Roads’ flagship microbrewery but also delivered an iconic destination in the city’s inner harbour.

Gage Roads Freo, which opened in January 2022, operates as a brewery, restaurant and family-friendly venue with capacity for 1,500 patrons.

Occupying a total land area of more than 3,000m², the dockside cargo shed takes full advantage of the building’s heritage features and A Berth frontage to the port. Refurbishment was undertaken to plans approved by Fremantle Ports in accordance with its heritage obligations. Fremantle Ports also provided guidance and assistance throughout the planning and build phases.

Big River offered a one-stop-shop solution for the transformation, which included structural repairs to the shed’s timber frame and footings.

“We have supplied the project from the beginning of the build right through to the completion of the building phase in late 2021. We were able to supply cost-effective formwork products to the project through our engineered and dimensionally stable LVL formwork and hardwearing formply, Deckply and Armourform,” says Alex King – operations manager at Big River Group’s Midland Timber and Prefab branch in Bellevue.

Further products that were supplied to assist in creating the durable skeleton of the redeveloped A-Shed included Big River’s structural plywood products, Laminex Trade Essentials’ particleboard flooring, LVL13 structural beams, both BGC and CSR fibre cement products as well as internal pine framing solutions.

To assist in maintaining the original integrity of the 100-year-old structure, Big River locally sourced Jarrah bush poles, which were supplied along with external pine framing and Glulam beams. James Hardie’s Linea 180mm fibre cement weatherboards were also used to further support the waterfront aesthetic.

Big River Group has been operating for over 100 years, manufacturing and distributing timber and steel formwork products, timber flooring, building products, structural plywood and related timber products. It also distributes a broad range of other building products, including MaxiWall and MaxiFloor, primarily to the commercial, residential and infrastructure construction market segments.

Original article from architecture and design. 

Following the failure of a formwork deck during an active concrete pour on a construction site in Canberra in early 2020, a national working group agreed on a country-wide response to the incident.

Workplace Health and Safety Queensland conducted formwork audits in late 2020 which focused on compliance with the Formwork Code of Practice 2016 (Queensland is the only jurisdiction with a formwork code of practice). Inspectors looked at 116 formwork installations and while most were compliant, there were issues on just over a third of them. Almost half of the issues related to design and maintenance.

A quarter of the non-compliances identified related to the engineering specifications or documents. For example, the designer’s safety report outlining the hazards associated with the design was not available; formwork drawings were not available or did not include the maximum point loadings for stacked materials on a deck; an engineer’s certificate was not available for non-proprietary equipment, variations or mix and match components, and some installations were inconsistent with the design documentation.

Another 19 per cent of issues related to the formwork structure itself. Common issues identified were access and egress, missing stretcher stairs, how the formwork was built, and damaged formwork components. Inspectors issued 83 notices and another 21 non-compliances were rectified while they were on site.

Other States are conducting formwork audits.

How compliant is your formwork?

Avoid fines and endangering your workforce by complying to the various codes of practice. Click the link below to access all State Codes, SafeWork Australia's guidelines and other important documents to assist you in your compliance and safety.

Codes of Practice & Regulations

Additionally look out for the launch of a new Formwork Safety Program, created by the FIA, as an introduction to Formwork Safety for all site workers.

The advocacy work and campaigning for safety education and training across the country is an important aspect of your membership. Spread the word and support your ONLY industry association to advocate on your behalf and ensure workers return home safely to their families.

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. 

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 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 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. 

NINA HENDYWED 13 APR 22

URBAN DEVELOPER

 

SafeWork NSW is set to crack down on dangerous work practices with a targeted three month operation across the state.

Inspectors will be on the lookout for unsafe concreting practices, issuing on-the-spot fines of up to $3,600 for safety breaches.

Minister for Fair Trading Eleni Petinos said the construction industry employs over 360,0000 people across New South Wales and inspectors will continue to take a zero-tolerance approach to lives being placed at risk from formwork and concrete placing equipment activities.

“Falls from heights is the leading cause of fatalities on NSW construction sites, with falls from formwork being among the top five causes of serious falls reported to SafeWork,” Ms Petinos said.

“An example was in May last year when two workers suffered fractured ribs at a Westmead construction site when an unsupported formwork platform collapsed, causing them to fall over three metres.

“When it comes to concrete placing equipment, the major risks are workers being hit by the hose or concrete, or the boom hitting a structure or powerlines.”

Over the next three months, inspectors will be referring poor quality construction builds to the Office of the Building Commissioner and Fair Trading. They also will be issuing on-the-spot fines and ordering work to stop on sites if businesses are not managing risks correctly.

Learn more about formwork and concrete placing equipment safety launch on the SafeWork NSW website.

CLICK HERE

For more safety resources including a video on formwork safety visit SafeWork NSW or the FIA Knowledge Channel.

FIA SAFETY CHANNEL

Published: 11 Apr 2022

Released by: Minister for Fair Trading, Minister for Small Business

From April 2022, SafeWork NSW inspectors are targeting concreting safety in construction, with a focus on formwork and concrete placing equipment.

Formwork

Falls from heights is the primary cause of traumatic fatalities on NSW construction sites, with falls from formwork being in the top 5 serious falls reported to SafeWork.

On a construction site, formworkers and other workers are at risk of falls from formwork decks or through penetrations, formwork collapse, and falling timbers or crane loads.

Principal contractors and site supervisors have a duty to provide and maintain a working environment that is safe and without risks to health and safety, so far as is reasonably practicable. This includes working from the ground where possible, ensuring formwork is erected on solid foundations, using edge protection and covers, having exclusion zones in place to prevent unauthorised access during erection and dismantling and having a competent person sign-off before pouring concrete.

Site supervisors can use this *new* formwork safety checklist, to help keep your site safe for workers on or near formwork.

Concrete Placing Equipment

When it comes to concrete placing equipment, workers are mostly at risk of being hit by the hose or concrete spray, and the equipment coming into contact with powerlines, scaffold or a building.

Principal contractors and site supervisors should ensure safe systems of work for set-up, placement and concrete operations, safe distances to overhead power lines are maintained, pre and post start checks are undertaken and exclusion zones/traffic controls are in place.

For more Information on how to work safely around formwork and concrete placing equipment, see the SafeWork NSW website and the FIA Knowledge Channel.

Working Safely At Heights

FIA Safety Channel

Adam Merlehan writes a very interesting article on the recent Condev and Probuild collapse, which is very relevant to sub contractors and the market we operate in.

Will the current traditional business model continue to exist in the current market or future market with many changes happening? How will it change? What do you think and how will it affect your business? 

We'd love to hear your thoughts - get in touch.

Article:

Condev Construction, a major builder in the South-East Queensland market, has appointed liquidators, having failed to receive financial support requested from its developer clients to avoid the collapse of the business.

Condev’s liquidation follows national builder Probuild’s collapse only weeks earlier.

Much will be written about Probuild’s, and now Condev’s collapse. Some will suggest it is an example of a broken adversarial market forcing builders to participate in a zero-sum game for razor thin profits. Others will wave the concern away, describing Probuild and Condev’s predicament as outliers.

The truth, though, lies in the numbers.

Besieged by a profitless boom

As a large proprietary company, Condev filed annual audited financial reports with corporate regulator ASIC and this publicly accessible reporting tells the story.

In the end, it is another sad tale growth business owners can empathise with — one involving top line revenue growth but with low conversion to bottom line profitability unable to sustain the business through the current unprecedented challenging market conditions.

Between the 2014 financial year and the 2017 financial year, Condev experienced rapid revenue growth year-on-year, peaking at $219 million in annual revenue in 2017. Net profitability after tax peaked at $3.2 million, equating to a thin, but consecutively improving 1.46% net profit margin.

Then, things suddenly changed.

In financial year 2018, revenue halved to $99.8 million, reportedly “a result of [Condev’s] smaller residential developer clients leaving the market in FY 2018”, with the business reporting a net loss of $336,145.

By the 2019 financial year, a strategy pivot towards targeting large national developers saw revenue rapidly climb back to $142 million, however net profitability was a mere $497,000 — a wafer-thin net profit margin of 0.35%.

Then, COVID-19 struck.

In the 2020 financial year, revenue continued to grow to $175 million, but conversion of that top line revenue to bottom line profitability continued to drift backwards, to a razor thin net profit margin of 0.31%.

By the 2021 financial year, revenue had further climbed to $181 million, but the negative bottom line conversion trend continued, this time seeing the business report its second annual net loss over the eight year period of $358,732.

A bad situation yes, but not a terminal one, particularly given most of the previously earned profits remained held as retained earnings in the business to achieve statutorily required net tangible assets/working capital requirements. All material commercial builders licensed in Queensland are required to maintain a net tangible asset level set by the Queensland Building and Construction Commission to maintain a commercial building licence. This NTA level is set relevant to annual turnover of the business.

The final straw though was the disaster that 2022 has become for all large commercial builders.

But first, some context.

The commercial fallacy of a traditional business model in novel market conditions

Fixed price contracts that see builders adopt the risk of escalation in the cost of materials and downstream labour are common. Their prevalence is driven by developer clients pursuing perceived certainty to underpin the feasibility of their projects, to the comfort of their bankers.

Ordinarily, lump sum contracting is fine. Cost escalation is somewhat predictable in ‘typical’ market conditions by reference to leading and lagging indicators through the construction market cycle and macro economic indicators. Builders simply estimate their projects when tendering work to account for reasonably expected escalation in the cost of goods, materials and labour over the duration of the project, so to ensure the job is profitable.

The same situation applies with respect to the occurrence of inclement weather delays.

Weather has typically been predictable enough, at least to inform an acceptable risk adjusted price and plan for completing projects. Again, developer and principal clients prefer less risk and greater bankability of their projects by transferring cost or time risk (or both) associated with inclement weather to the builder. Builders are often willing to bid a ‘wet program’, including their own assessment of inclement weather allowance and accept inclement weather risk.

The builder then, despite assuming these risks, backs itself to manage and complete the work below its internal budget (and with limited defects) to produce acceptable levels of profitability. Realistically, this requires the builder to drive the performance of its subcontractors and suppliers on site, and adequately monitor quality and performance against plan, to ensure its budget and program assumptions are met.

Any unbudgeted bump along the way or the materialisation of a risk that was contractually assumed by the builder (but not adequately budgeted for in the tendered price for the job) erodes profitability of the project. With razor thin profit margins of less than 5% involved in some projects, it can quickly tip a profit making job into a loss making dilemma for a builder.

Why 2022 was the beginning of the end

The 2022 financial year has produced an extraordinary set of circumstances that has thrown the above standard playbook into disarray for most major builders.

Supply chains are constrained globally as the world gets back on its feet following the heights of the COVID-19 pandemic and the construction industry is not immune to this phenomenon. Delays in sourcing glass and steel for construction projects has become a common problem, as has procuring bespoke off-shore engineered items.

In addition to the supply chain problems, inflation has now taken off in most foreign jurisdictions in the western world, adding fuel to the already upward price pressure caused by scarcity of supply due to the lingering supply chain congestion.

In the meantime, locally, the economy is flush with money as the federal and state government COVID-19 stimulus packages (including Job Keeper and the federal government HomeBuilder renovation and construction stimulus package) kept businesses afloat throughout the pandemic, and consumers buffered from the worst of the impacts from the pandemic. The current record low interest rates has fuelled speculation in property markets, driving construction activity and associated demand (and cost) for building materials to new highs, and this is not abating.

The above conditions translate to serious headwinds for the builders who agreed to lump sum pricing many months ago on now outdated assumptions when bidding for projects that are only now entering execution.

If that were not enough, add to the equation the current La Nina weather pattern and unprecedented levels of inclement weather experienced in South East Queensland year to date, as well as the effects of the failure of Probuild on subcontractor and supplier availability. This is causing increased supply costs as builders are required to procure materials from alternate suppliers at increased prices, and with potential delay.

The market conditions served up by the 2022 financial year make it almost certain that a builder bound to major lump sum contracts signed months ago, on marginal terms to begin with, now finds itself in an untenable situation.

The outlook is also not optimistic.

Supply and materials cost increases do not look like abating quickly.

The latest anecdotal concerns in the industry surround rapid escalation in the cost of timber used in most construction projects due to the Russia/Ukraine conflict and international trade sanctions. Russia is currently the largest exporter of soft timber, globally. One only needs to look at the prices currently displayed on petrol bowsers around the country to see how rapidly macroeconomic disruptions flow through to the local economy, including the construction sector.

Unfortunately, large commercial builders sit at the bottom of the pile of all of these pressures, with most of these economic risks contractually transferred to them to manage by clients. The problem is that low (or no) capacity exists for builders to manage these risks effectively in unique economic environments like the current one. They are beholden to market forces.

So while rapid revenue growth with low efficiency in converting that growth to the bottom line may have played a role in the lead up to the liquidation of Condev, it is not an uncommon problem for a major commercial builder successfully competing in a tough industry renowned for razor thin profit margins.

The core driver of the downfall was rapid, severe and unexpected deterioration in market conditions – circumstances entirely outside the control of the business.

The solution

Debate could be had about what a healthy risk appetite and risk tolerance should look like for major builders in this new era:

Debate might also be had about how promptly the construction sector should move to recalibrate its behaviours to mutually share (and therefore reduce) the commercial risk assumed by contractors in periods of extreme uncertainty and volatility (like the current market).

This could be done by:

Of course, it is easy in hindsight to analyse and offer suggestions. That is one of the core problems of expecting a market to correct itself in a highly competitive setting and to do so within time to achieve a recalibration without carnage. It is particularly so in a market with high levels of competitive rivalry, low bargaining power for suppliers, high bargaining power for buyers and a high threat of substitution from other suppliers.

Those conditions are not conducive to timely market led change, and they are the conditions that currently persist.

Why the solution is not easy to implement

A commercial builder who decides to shift the dial ever so slightly to a more risk averse appetite when bidding jobs in a heated market can see its tender success ratio diminish rapidly and its market share decline. This is particularly so if others are willing to step in and assume that risk. It is also particularly the case if clients are not discerning or sophisticated enough to preference sensible risk adjusted pricing over lowest bottom dollar logic.

However, the reality is the same set of circumstances that have brought Condev and Probuild’s businesses to the point of liquidation are currently untenable for a large number of other major contractors.

The only saving grace for other major contractors dealing with similar pressures, and what may determine whether they can trade through current market conditions, will be whether:

At the moment, the harsh economic rationality of the free market is beginning to shake out those participants with low financial, operational and business model resilience in the prevailing market conditions.

That is why extreme caution needs to be taken by regulators looking to impose new laws such as Mandatory Project Trust Accounts within the private sector at this time. It risks tipping the scales for contractors currently operating with a low level of business resilience in the current market conditions to a terminal level, creating more insolvencies and setting off a contagion effect within the sector.

Where to from here?

The consequence of the current insolvencies of Probuild and now Condev will produce a reckoning for not just the contracting side of the market but also client-side developers and project owners (and their bankers). Each need to adjust their expectations now in what is set to become a less competitive market place, where only the fittest contractors will survive the longer the current market conditions and participant behaviours persist.

For developers and clients directly caught up in the collapse of major contractors, they too will feel immediate economic consequences. In our experience, projects impacted by the insolvency of the main contractor, almost without exception, end up significantly delayed and significantly over budget when finally completed. Often too, project owners find themselves caught up in the long tail of a lengthy liquidation process of the former main contractor. This not uncommonly involves significant legal expense.

In the end, there are no winners on either side of the market when major contractors of the scale and respectability of Probuild and Condev fold. On this sad occasion, it is no different.

We are currently supporting industry participants navigating these developments and current market conditions. Our thoughts are with all affected by these recent developments, including the founders, staff and families of these once very successful businesses.

This article was first published by Merlehan Group and then by SmartCompany.

SOURCE: SmartCompany.com.au and SPLASH/ANTHONY FOMIN.

In a Northern Territory first, construction company Kalidonis NT Pty Ltd has been charged with industrial manslaughter after a fifty-year-old man died after being struck whilst operating a faulty excavator.

The company’s director has also been charged with industrial manslaughter and faces a fine of up to $600,000 and/or gaol for up to five years, if he is convicted.

The company itself could be fined up to $10M, if it is found guilty.

The excavator contained a chain that broke whilst the deceased worker was towing another excavator that weighed approximately 36 tonnes. The chain broke, recoiled and then struck the operator, who was sitting in a cab with no windows.

The windows had been removed because of fears of vandalism.

The company that was charged describes itself as one of Darwin’s biggest construction companies.

The matter is back in Court on 10 May 2022 and is a stark reminder of the need to risk assess all work activities and to make sure that plant is properly maintained.

This case continues the trend of safety regulators across Australia focusing on whether businesses and their leaders are proactively considering and verifying whether their businesses have appropriate and robust safety systems in place. Businesses are specifically required to assess the risks of their operations and provide safe plant and equipment for their workforce. Officers (defined to include directors and business decision makers) are required to take reasonable steps to exercise due diligence to make their businesses have in place the required safety systems.

FIA members are reminded to continually risk assess their activities, consult with their workforce, ensure that they provide training, instruction and information, provide proper supervision, and check that the processes and systems put in place are working to achieve safe workplaces.

John Makris Erica Elliott
Partner Special Counsel
Kingston Reid Kingston Reid
+61 2 9169 8407 +61 2 9169 8409
email email

Following recent construction collapses it appears from discussions with many industry associations, major subcontractors and other stakeholder that there inherent issues that need to be treated but they need not be terminal.

The inherent issues on supply chains and increasing costs that make fixed price contracts uncommercial are well documented and treatment is needed for projects and key parties to survive.

The treatment for these issues requires a rational, transparent and common sense discussion with all parties on projects, as similar issues arose previously, but this does require trust and transparency. This can lead to understanding of the movement in timing and costs for the project and consideration of adjustment to contracts to minimise losses by parties - or projects may stop that could create greater impact and further collapses.

Working with our clients and managed completion of projects we understand the difficulties particularly the personal toll that confronts owners of businesses.

There are cost effective ways to get construction businesses through this process, save jobs and keep projects moving, the industry has always been supportive of those having a go and trying to the right thing

There are ways of getting a little help to assist in confirming the reality and bring options (some new and some old) forward to keep the industry that accounts for 30% of the economy building moving forward.

Please reach out to your industry association for help, understand your position and options or give the team at HLB Mann Judd a call on 02 9020 4285 to discuss.

Todd Gammel
Partner – Advisory
HLB Mann Judd

The start of 2022 has felt eerily similar to 2021 with many starting the New Year in self-isolation following the rise of COVID-19 infection due to the Omicron variant. While we anticipate that the next 12 months will be riddled with ongoing COVID-19 response action by employers, we also anticipate that employers will be faced with new challenges and opportunities in a year where industrial relations is likely to become a political hot-potato as we head into the federal election.

We’ve set out some of the key issues that employers will need to stay focused on in 2022.

Read Full Article

Did you know that construction industry compensation claims for work-related violence and aggression (WVA) injuries have more than doubled over the past five years, predominantly affecting men under 44 years of age?

It’s also suspected there’s under-reporting of WVA incidents in the construction industry, which points to a larger problem. WVA between workers at a construction site can place workers at risk.

For advice on how to manage the risk of WVA, check out Workplace Health & Safety Queensland's 'Work-related violence and aggression in construction guide'.

The guide includes industry statistics, employer duties and how to lower the risk of WVA to workers.

Download the Work-related violence and aggression guide for the construction industry now.

DOWNLOAD GUIDE