The requirement by Local and Government authorities for Dilapidation Reports to be carried out before construction, and civil work commencement is becoming more of a standard requirement.
Construction companies are now finding themselves having to factor these costs into budgets and their due diligence process. Many councils will not allow commencement of a project until a Dilapidation Report has been carried out and signed off by a PCA (Private Certifying Authority) or council themselves.
Treating Dilapidation Reports as just another box to tick can be a very big mistake. In my experience, many project managers do not treat this seriously and either carry out quick assessments themselves or engage consultants based on keen pricing rather than reliability, quality, detail, and accuracy of the inspection and report. It’s often the case that these reports are not even reviewed at the point of delivery. This places the construction company at unnecessary risk, especially if they are later looking to rely upon them for detail to ultimately protect them against any potential claim.
I recently worked with a construction company who had found out the hard way. The project manager had engaged a consultant to carry out the reports on their behalf and ran into problems when they received a complaint from a property owner during the construction of a major highway. The construction company had not placed a great deal of importance on choosing the consultant and was price-driven, nor had they looked at the reports at the time of the delivery. And it was only when they needed to rely upon the reports that it was evident that the detail wasn’t there to protect them and their risk mitigation strategy had failed. As a result, this dispute caused lengthy negotiations and unnecessary additional work and stress for the Project Manager and his team.
Unfortunately, all the inspections and reports were unacceptable, and all of the inspections had to be carried out again, which caused over-runs in time and budget.
It seems most construction companies take the punt on taking the easy path; however, on a risk matrix, it could be considered high risk depending on the complexity and proximity of the construction to building structures. Most projects can run smoothly and have no issues from property owners, but if you do, you want a report that is going to protect you against a claim.
Unfortunately, we have seen situations where property owners use the opportunity to take advantage of a building defect that already existed and use the construction work as a catalyst to try and get it fixed. Cracking is a good example of when detailed photos need to be included to demonstrate the size of a crack before construction commenced, which brings me to the next point. The importance of quality photos and location reference points is critical in being able to prove a defect may have already existed, and if not, you may have no leg to stand on.
So, in summary, Dilapidation Reports are becoming a commonplace. I encourage construction companies to take this process seriously and ultimately reduce your risk or at least mitigate your risk getting it wrong could be a costly mistake.
The photos above clearly detail the size of cracking and where and when it was identified (source: supplied)
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