Recent Developments in MMC in Australia

  Increasing industry capacity and funding

 

Over the last few months there has been significant progress in advancing the use of modern methods of construction (MMC) in Australia. MMC ranges from products and kit-of-parts to prefabricated components to modular and volumetric buildings. This post looks at these developments and assesses the current use of MMC in Australia.

 

The post has three sections. The first is on the Commonwealth Government and national developments, covering the Australian Building Codes Board’s Prefabricated, Modular and Offsite Construction Handbook, the March budget and National Productivity Fund, the, the National Construction Industry Forum’s draft Blueprint for the Future, and the Commonwealth Bank of Australia’s MMC financing initiative.

 

Ther have also been developments around the states. NSW has a MMC Taskforce, in Queensland there was a change of government however no changes to the MMC policy have been announced. Western Australia is building industry capacity, and there have been deliveries of social housing in South Australia, Tasmania and Victorie.

 

Commonwealth Government and National Developments

 

ABCB Prefabricated, Modular and Offsite Construction Handbook

 

The Australian Building Codes Board (ABCB) is the agency responsible for the National Construction Code (NCC), and the WaterMark (plumbing) and CodeMark (product) Certification Schemes. The Handbook does not introduce any new standards, but ‘has been developed to increase the understanding and effectiveness of existing building standards and regulations’ and to answer ‘questions about determining evidence to support compliance and common NCC compliance risk areas.’

 

The Handbook published in December 2024 is not ‘a document that sets out specific compliance advice for developing solutions to comply with the requirements in the NCC.’ The emphasis is on Deemed-to-Satisfy (DTS) compliance when applying the NCC to residential buildings and shows: 

1. How to determine the evidence required to demonstrate NCC compliance and fitness for purpose through documentation. 

2. How to avoid common NCC compliance risks that affect MMC and other products. 

 

The Handbook notes some products only require relatively simple evidence to demonstrate compliance. However, ‘complex products, including volumetric forms of construction may be subject to multiple NCC requirements and require extensive documentation to demonstrate compliance.’ Key points are 

·      Buildings using MMC, including prefabricated and modular buildings, are regulated in the same manner (except for plumbing products) as other construction products.

·      There are 3 compliance pathways: DTS Solution, Performance Solution, or a combination of the two.

·      The Handbook includes a 4-step approach to assist determining the evidence to demonstrate fitness for purpose and NCC compliance.

·      Fitness for purpose is supported by evidence of suitability and construction/installation in an appropriate manner.

 

The Handbook does not address state and territory legislation covering planning, building and plumbing approvals, licensing, and mandatory inspections, and does not cover ‘the end-to-end process of the use of MMC … nor does it provide a how-to-construct or how-to-install manual for the thousands of products and MMC in use.’

 

Given the extent of what the Handbook does not include, how much of a contribution does it make to promoting MMC? First, it establishes the requirement to comply with current standards using the compliance pathways available, and the explanation of how to establish fitness for purpose is useful. Second, by discussing specific forms of MMC like precast, SIPs, wall panels, floor and roof systems and light gauge steel the Handbook is an important first step in determining evidence on compliance with the construction code. 

 

March 2025 Commonwealth Budget

 

In the pre-election March budget the Albanese Government allocated $54 million to MMC, with $49.3 million to help states and territories develop programs to support MMC, and $4.7 million towards the  voluntary certification process announced in November 2024. There are no details on what exactly this funding will cover, who will do it and  how certification will be done, what might be in the MMC programs and whether they will be coordinated across the states is unknown, and approaches using volumetric, modular and kit-of-parts are not explained. 

 

The budget allocation adds to funding in the $900 million National Productivity Fund announced in November by the Treasurer, which included an unspecified amount for removing barriers to MMC and improving development approval processes. 

 

The Commonwealth also currently has two working groups, One is on MMC as part of a National Construction Strategy. The second is a Federal Treasury Workshop on Removing Barriers to MMC Finance. Ther are no reports from those groups available. 

 

NCIF Blueprint for the Future of Construction

 

In March the National Construction Industry Forum released their draft Blueprint for the Future: A building and construction industry that works for everyone. The Forum is an advisory body under the Commonwealth Department of Employment and Workplace relations with 16 members from industry associations and unions and three ministers. 

 

‘The Blueprint sets a path to address challenges and build a stronger construction industry. The NCIF identified eight themes, with associated challenges that included insights like contracts are unfair, procurement focuses on price, there are skills gaps, and under Financial Viability ‘Limited investment in innovation e.g. modern methods of construction, digitisation.’ This is the sole mention of MMC in a document called Blueprint for the Future. The following section on Opportunities includes contracts, security of payment, phoenixing and insolvencies, but not MMC. 

 

Figure 1. NCIF themes

 

Source: NCIF Blueprint

 

The Blueprint is the latest in the long sequence of worthy, wordy, and optimistic documents that clearly explain the issues and problems, identify potential responses and remedies, and promote collaboration and cooperative tripartite solutions. How many of the 45 Opportunities it suggests exist will be realised is an open question, but the history of these proposals is not encouraging. For example, security of payment and the apprenticeship system have been reviewed and recommendations made but little has changed, phoenixing has not been addressed by ASIC for decades, proactive enforcement of regulations requires resources, and there have been numerous industry charters and codes of conduct. There is no commitment to any specific action by the members of the NCIF, and not recognising MMC (if done well) as a major element in future construction is a glaring oversight. The NCIF future looks very much like the present.  

 

Commonwealth Bank MMC Financing

 

In January the Commonwealth Bank of Australia became the first bank to endorse MMC and provide financing, when CommBank announced a partnership with prefabAUS, and became the organisation’s first bank member. The bank agreed to sponsor the development of a standard form contract for MMC to simplify and speed up the process of financing a prefab home. 

 

Limited to fixed price contracts for offsite work up to $1.5 million, CommBank offers construction financing while a prefab home is being built offsite, for the lowest of 120% of the land value or up to 60% of the contract price, or 150% and up to 80% from a manufacturer accredited by the bank. After final completion the home is inspected and the rest of the construction finance is released. 

 

In October National Australia Bank announced $6 billion in funding for affordable and specialist housing by 2029, with modular construction playing a key role. 

 

ABCB Building Product Registration Scheme Proposal 

 

In September the ABCB opened public consultation for a month on a proposed risk-based Building Product Registration Scheme, aimed at addressing product conformity and traceability issues. Minimum standardised information for all building products would be required, with traceability through labelling and a national product register, compulsory registration of high-risk products, and voluntary registration for other products. It will take years for the scheme to be implemented.  At the Offsite 2024 conference Gary Rake, the CEO of the ABCB, included the slide below. 

 

Figure 2. Building Product Registration Scheme

 

Source: G. Rake Offsite 2024

 

On building products, in January 2025 the European Union’s Construction Products Regulation replaced the 2011 framework. This introduced Digital Product Passports (DPPs) to provide performance metrics, and compliance with sustainability and safety standards. For modular construction, DPPs presents significant opportunities because they enable tracking of prefabricated components through their lifecycle. 

 

 

Around the States 

 

New South Wales

 

In March 2025 the NSW government released its industry policy, covering housing, net zero and the energy transition, and local manufacturing, The policy links modular construction to increasing housing supply and affordability. 

 

In August 2024 the Building Commission NSW released a position paper for consultation on Regulation of Prefabricated Buildings for a new building bill that would include MMC. The paper redefined prefabricated buildings as ‘building work’ not ‘building products’, and showed the stages in the delivery of a prefabricated building (Figure 1A), highlighted the role of the certifier and proposed consumer protections (Figure 1B). The draft of a new building bill has not yet been released. 

 

Figure 3A. MMC stages

 

 

Figure 3B. MMC certification and consumer protection

 

Source: NSW MMC Position Paper

 

 

In the 2023-24 budget the Minns government committed $10 million for modular social housing trials. In July 2024 four sites in Port Macquarie and three in Wollongong were announced. 

 

The Modern Methods of Construction Taskforce was established in November 2023 to investigate the ‘use and potential for off-site manufacturing in NSW Government housing projects.’ The Taskforce has met twice, with the last meeting in June 2024. Meeting notes are on the website. 

 

In May 2024 the Homes NSW MMC Procurement list was opened for suppliers who provide off site manufacturing and prefabricated products. In March 2025 there were 28 suppliers on the list.  

 

The Homes NSW MMC Program commenced in May 2024 as a partnership with the Building 4.0 Cooperative Research Centre (CRC) focused on developing strategies and methods to utilise MMC to deliver quality social housing faster. The Program aims to define products and components for design and construction of medium density homes (4-6 storey buildings) using a standardised kit-of-parts manufactured offsite (i.e. bathroom, kitchens, balconies).

 

NSW Department of Education 2024 Pattern Book set out standardised, repeatable designs for schools and preschools, and promotes modular and prefabricated construction for 3 storey new schools. Other school buildings including halls, COLAs, pre-schools, single and double storey buildings will be added to the 2025 Pattern Book.

 

 

Queensland

 

There was a change of government in October 2024 when the Crisafulli LNP replaced the Miles Labor government. So far there have been no changes to the MMC programs of Homes for Queenslanders or QBuild announced. 

 

The Homes for Queenslanders policy aims to deliver 53,500 new social homes by 2046, The Miles Government June 2024 budget included $2.8 billion for up to 600 modular homes in 2024-25, with the goal of social housing production of 2,000 homes by 2027-28. There are 11 industry partners: Ausco, Fleetwood, Hutchies Modular, Modscape, Blok Modular, Eco Cottages, James Engineering, ModnPods, Saltair Modular, Volo Modular, and WestBuilt.

 

In February two modular homes were delivered to Thallon in South West Queensland, as part of the Quickstarts Queensland initiative, built by Oly Homes. By October 2024 Fleetwood had delivered 40 of 60 homes contracted. In September a Cairns project commenced for 490 homes built by Modscape and FCC Construction, funded by ANZ, Housing Australia and the Commonwealth and State Governments. 

 

QBuild has three Rapid Accommodation and Apprentice Centres for MMC, in Brisbane at Eagle Farm and Zillmere, and Cairns. Qbuild has standardised floor plans for four house types: studio; 1 bedroom; 2 bedroom; and 3 bedroom.  

 

Victoria

 

In December 2024 the Federal and Victorian governments announced joint funding for a $50 million Future of Housing Construction Centre of Excellence (FHC CoE) at Melbourne Polytechnic’s Heidelberg campus, the first training facility in Australia focused on MMC, expected to start in a temporary location in mid 2025.

 

In September 2024 the Victorian Prefabricated Construction Directory was published, with profiles of 24 firms using MMC in Victoria. All were manufacturers, eight firms coved all five capabilities of architecture, assembly, engineering, manufacturing and project management. 

 

Western Australia

 

Before the March election the Cook Government said If re-elected it will commit $50 million to boost modular and prefabricated housing. The Housing Innovation Program will provide competitive grants of up to $3 million for WA-based businesses involved in modular or prefabricated housing. 

 

In addition to grants, the government will allocate $20 million in low-interest loans to help businesses adopt new technologies and expand their operations. Opportunities identified include automation in steel frame and concrete slab manufacturing, enhanced wall and ceiling construction processes, and expanded capacity for window, door, and cabinetry production. There is already an $80 million allocation for transportable classrooms by 2026. 

 

In February 2025,16 modular tiny homes for Geraldton were commissioned from Summit Modular for delivery in mid-2025. In January three new modular homes in Manjimup were delivered by Fleetwood. 

 

In October 2024 eight two-bedroom modular social homes in were completed, built by Murray River North and Modularis. In September the Federal and WA Governments provided $6.3 million for 12 social modular homes built by Dale Alcock Homes in Perth.  In August Sheraton College opened a modular two storey building from Ausco Modular. 

 

South Australia

 

In March Renewal SA’s Office for Regional Housing began a pilot program of six homes, expected to be completed by September 2025, constructed using SipForm structural insulated panels (SIPs), a prefabricated building system manufactured in Perth. 

 

Tasmania

 

In February six new modular units were installed in Burnie, built offsite by Podmatrix. The government has a target of ‘more than 200’ modular homes over the next four years.

 

The Chandler Critique

 

David Chandler became the inaugural NSW Building Commissioner in 2019 after the Mascot Towers building failure highlighted the extent of building defects and non-compliance with the NCC. He was responsible for implementing the NSW construction reform strategy, establishing the Building Commission with 400 inspectors, introduced the iCIRT ratings scheme for developers and contractors, and decennial liability insurance for apartment buildings. By the time he stepped down in 2024, his focus on consumers and compliance had begun restoring public confidence in new housing.

 

Soon after finishing as Building Commissioner, he gave a presentation on MMC at the Offsite 2024 Conference. His concern was that ‘An unregulated MMC market could introduce a new cohort of modular building defects.’ Chandler has supported MMC for many years, for example he was involved in setting up the Centre for Smart Modern Construction at the University of Western Sydney in 2017. However, in his presentation he argued there are unresolved issues with MMC, such as integration of components, fire and water management, training and qualifications of workers, compliance of offshore suppliers and quality of components. He emphasised the lack of performance measures and data on MMC. The slide below is from the presentation with a list of issues that he believes need to be addressed.

 

Figure 4. Chandler MMC issues

 

Source: D. Chandler Offsite 2024

 

Since then he has frequently posted on LinkedIn about his concerns with MMC and its focus on producers rather than consumers. A lightly edited version of his post in response to the announcement of the CommBank financing of MMC is below:

 

‘Funding for prefab leaves many questions unanswered. Bringing Prefab Housing into the mainstream construction domain has been the quest of many for nearly 2 decades in Australia. Despite government endorsement, research grants, policy announcements and uptake by social housing organisations, there is still no clear regulatory or legal framework for this procurement method. 

 

The first question deals with what building contracts are proposed to be covered by the prefab off-site payment arrangement? Who are the parties to these transactions. Will the home purchaser be required to authorise these payments? Will the home purchaser be protected by a Home Building Insurance Scheme if the builder of record has engaged or has been given permission by the home purchaser to procure between 60 to 80 percent of the build cost by way of prefab. Will the builder of record (which may include a licensed prefabricator) be satisfied that the on-site components of the work are adequately provided for? How might unforeseen variations be dealt with, especially with high LVR loans. 

 

What criteria will CBA deploy to distinguish an accredited v unaccredited player? Will off-shore prefabricators be included in the mix? What happens if the prefab provider goes broke before the house is completed? There could be the discovery of building non-compliances post the occupancy of substantially prefab buildings. There could be a mixture where both on-site and off-site inputs give rise to a serious defect. What then? 

 

There is a need for a full disclosure about all these issues, not just in the lender's interests, but more importantly for the borrowers. I am a proponent of modernising Australia's construction industry including the embrace of MMC. This evolution must start out as customer facing, or it runs the risk of undermining years of good work … unless consumers, compliance and public confidence become the centrepiece of these conversations, they are bound to end in tears.’

 

In a September 2024 interview Chandler argued for single-point accountability, ensuring one entity is responsible for the entire project, from design and manufacturing to onsite assembly, to create clear lines of responsibility and reduce the chaos caused by fragmented accountability.

 

Conclusion

 

In April 2025, what progress has been made in the promotion of MMC in Australia over the last year or so? One positive development was the Commonwealth Bank agreeing to provide mortgage finance for prefabricated houses. Another was the ABCB Prefabricated, Modular and Offsite Construction Handbook on determining evidence on MMC compliance with the construction code, a first step in the long process to arrive at a set of standards for MMC and a product compliance regime with digital product passports in Australia. There was also an unspecified amount for removing barriers to MMC and improving development approval processes in the National Productivity Fund announced in November.

 

Funding of $160 million for industry development is promised from governments. There is $50 million on offer from both the Albanese Commonwealth Government (if re-elected in May) and from the recently re-elected Cook Government in Western Australia, and $10 million from the Minns Government in NSW for social housing trials. The Federal and Victorian governments are funding a $50 million Future of Housing Construction Centre of Excellence in Melbourne. 

 

In Queensland QBuild has three MMC centres operating and the Homes for Queenslanders program is still running, which will deliver possibly hundreds of prefabricated houses this year. Western Australia is building capacity and has delivered several projects over the last year. NSW, South Australia, Tasmania and Victoria have small scale prefabricated social housing programs. There continues to be demand for institutional buildings like schools and hospitals, particularly for regional and remote locations. All this adds up to steady if not spectacular production of MMC buildings for the public sector. However, the number and value of private sector deliveries of prefabricated buildings is unknown, as is the extent of prefabrication 

 

NSW established a MMC Taskforce and in mid-2024 released a position paper for consultation on Regulation of Prefabricated Buildings for a new building bill that would include MMC. The paper redefined prefabricated buildings as ‘building work’ not ‘building products.’ The 2024 Homes NSW MMC Program is a partnership with the Building 4.0 Cooperative Research Centre on developing strategies and methods to utilise MMC to deliver social housing. The 2025 industry policy linked modular construction to increasing housing supply and affordability.

 

Therefore, on the one hand, there is currently substantial funding on offer for industry development from the Commonwealth and three state governments, and there continues to be institutional buildings and prefabricated social housing in regional areas delivered. On the other hand, when and what that funding will actually be used for is still unclear, and prefabrication is still reliant on public sector clients. There are also many unresolved issues with MMC, such as certification and product compliance, the regulatory and legal framework (which is what the funding seems to be directed at), the lack of standards and slow progress on updating the National Construction Code. 

 

 

 

Grenfell, Cladding, Compliance and Building Safety

 Recommendations from the UK Inquiry and Combustible Cladding in Australia

 

 

 

 

 

The second report from the Inquiry on the Grenfell Towers fire in London in 2017 has been released. It is an enormous report of 1,700 pages that covers many topics in 7 volumes and 112 chapters, and makes 82 recommendations [1]. Some are specific to the UK, but many are relevant to Australia, in particular, the recommendations on regulation and combustible cladding.

 

Cladding is a product used on the exterior walls of buildings, made of two thin sheets of aluminium with an internal layer of insulation, known as Aluminium Composite Material (ACM). It comes in sheets that can be cut to size and fixed to the building with rivets or a frame, and has been widely used on high-rise buildings. The insulation layer is a foam, often made from polyethylene, with different performance specifications, the most important being the effect of fire and whether it is fire resistant or not. Flammable cladding is combustible and not fire resistant, and its use is restricted by building codes, typically to buildings under a height limit (in the UK it is 18 meters or seven stories) at the maximum reach of fire brigade ladders and hoses.

 

This post is on combustible cladding and product compliance in the UK and Australia. Parts of the second Grenfell report and recommendations are extracted, then the Australian response to cladding fires through revisions to the building code, recommendations on regulation, and state audits of buildings with combustible cladding is covered.  

 

The relevant section of the Grenfell report is The testing and marketing of key products. This is Volume 2, with a detailed history of the testing and performance of the cladding products used on Grenfell, their certification and publication of test data. All the quotes below are from the 48 page summary of the report here.

 

Since Grenfell, the UK has committed £5.1 billion ($10 billion AUD) to remove and replace cladding through five different funding schemes. In the 81^st monthly Building Safety Remediation data release in July 2024,there were 4,630 residential buildings 11 metres and over with unsafe cladding, 949 buildings had started remediation works and 1,350 buildings had completed remediation under the schemes. There are thousands of smaller buildings whose owners or more often leaseholders will have to pay for remediation, where residents are paying for fire alarms and fire watches, with higher insurance premiums and lower valuations.

 

The UK Government Ignored Warnings

 

Between 2012 and 2017 the Department for Communities and Local Government received numerous warnings about the risks involved in using ACM and knew about cladding fires in London 2009 and abroad (Melbourne 2014, Dubai 2012, 2013, 2015). “However, despite what it knew, and the warnings it received from some quarters, the department failed to amend or clarify the guidance … on the construction of external walls.”

 

The report also found that over this period “the government determinedly resisted calls from across the fire sector to regulate fire risk assessors and to amend the Fire Safety Order” and the government’s deregulatory agenda “dominated the department’s thinking to such an extent that even matters affecting the safety of life were ignored, delayed or disregarded.”

 

Industry was Deceptive and Dishonest

 

There were three building products responsible for the 72 deaths in the Grenfell fire. The Arconic Reynobond 55 PE rainscreen panels, used on the external wall of Grenfell Tower, were made of two thin sheets of aluminium with a polyethylene core to provide stiffening. From 2005 Arconic “deliberately concealed from the market the true extent of the danger of using Reynobond 55 PE” but “was determined to exploit what it saw as weak regulatory regimes in certain countries.” After the cladding fires in Dubai in 2012 and 2013 “Arconic did not consider withdrawing Reynobond 55 PE in favour of the fire-resistant version then available. Instead, it allowed customers in the UK to continue buying the unmodified product, giving them to understand that it would tell them if it was unsuitable.”

 

Celotex manufactured RS5000, a combustible polyisocyanurate foam insulation, marketed as “the first PIR board to successfully test to BS 8414” and “acceptable for use in buildings above 18 metres in height.” However, the test on which Celotex relied in support of that claim had been manipulated with the complicity of the Building Research Establishment (BRE), with fire-resistant magnesium oxide boards placed to ensure it passed. Celotex then “embarked on a dishonest scheme to mislead its customers and the wider market.”

 

Most of the insulation used on Grenfell Tower was Celotex RS5000, but about 5% was K15 Kooltherm manufactured by Kingspan Insulation. From 2005 Kingspan falsely claimed that K15 had been successfully tested under BS 8414 and could be used in the external wall of a building over 18 metres, and “Tests performed in 2007 and 2008 on … K15 were disastrous, but Kingspan did not withdraw the product from the market.” Kingspan “dishonestly relied on the results of those tests to support the sale of K15 for use on buildings over 18 metres” and “cynically exploited the industry’s lack of detailed knowledge …  and relied on the fact that an unsuspecting market was very likely to rely on its own claims about the product.” The inquiry found “levels of competence in the construction industry are generally low” for contractors, designers and building control officers. 

 

Testing and Certification

 

On the Building Research Establishment the report said “BRE held a trusted position within the construction industry and was recognised both nationally and internationally as a leader in fire safety. However, from 1991 much of the work it carried out in relation to testing the fire safety of external walls was marred by unprofessional conduct, inadequate practices, a lack of effective oversight, poor reporting and a lack of scientific rigour.” Senior staff gave advice to Kingspan and Celotex on the best way to satisfy the criteria for a system to be considered safe, and “we saw evidence of a desire to accommodate existing customers and to retain its status within the industry at the expense of maintaining the rigour of its processes and considerations of public safety.”

 

The report found a “significant reason why Grenfell Tower came to be clad in combustible materials was systematic dishonesty on the part of those who made and sold the rainscreen cladding panels and insulation products. They engaged in deliberate and sustained strategies to manipulate the testing processes, misrepresent test data and mislead the market. In the case of the principal insulation product used on Grenfell Tower, Celotex RS5000, the BRE was complicit in that strategy.”

 

The inquiry also found the British Board of Agrément (BBA) and Local Authority Building Control (LABC) failed to ensure that product certificates were accurate and based on test evidence. The UK Accreditation 0ervice, responsible for oversight of those certification bodies, failed to apply proper standards of monitoring and supervision. The BBA was technically incompetent and failed to manage the conflict of interest between its customers (the manufacturers) and its responsibility to certify products as compliant. The LABC failed to scrutinise the claims made by the manufacturers and “was willing to accommodate the customer at the expense of those who relied on the certificates.” Both the BBA and the LABC were victims of “dishonest behaviour on the part of unscrupulous manufacturers.”

 

Recommendations

 

The five relevant recommendations, numbers 19 to 23, quoted in their entirety below, are: 

 

19. It is essential that those responsible for designing buildings have access to reliable information about the materials and products they wish to use. In their product literature manufacturers make many claims for their products, some of which are not of an overtly technical nature but are calculated to give the impression that a particular product has passed a particular test or has been shown to be suitable for a particular use. That was one of the marketing devices employed by those who manufactured and sold the rainscreen cladding panels and the insulation used in the refurbishment of Grenfell Tower.

 

20. Manufacturers were able to use misleading marketing material in part because the certification bodies that provided assurance to the market of the quality and characteristics of the products failed to ensure that the statements in the certificates they issued were accurate and based on appropriate and relevant test evidence. The United Kingdom Assessment Service (UKAS), the organisation charged with accrediting them, failed to apply proper standards of monitoring and supervision. The fact that three separate manufacturers were able to obtain misleading certificates relating to their products is evidence of a serious failure of the system and points to a need for a different approach to the certification of construction products.

 

21. We do not think that the appointment of a National Regulator of Construction Products will solve the problem because the system will still depend on the effectiveness of the conformity assessment bodies and the limited oversight of UKAS. Conformity assessment bodies provide a commercial service combined with an element of regulation, but the two functions do not sit easily together. Pressure to acquire and retain customers can all too easily lead such bodies to be less rigorous in their examination of products and materials and enforcing their terms of contracts than could reasonably be expected of bodies acting in the public interest.

 

22. We therefore recommend that the construction regulator should be responsible for assessing the conformity of construction products with the requirements of legislation, statutory guidance and industry standards and issuing certificates as appropriate. We should expect such certificates to become pre-eminent in the market.

 

23. In our view clarity is required to avoid those who rely on certificates of conformity being misled. We therefore recommend:

a. that copies of all test results supporting any certificate issued by the construction regulator be included in the certificate;

b. that manufacturers be required to provide the construction regulator with the full testing history of the product or material to which the certificate relates and inform the

regulator of any material circumstances that may affect its performance; and

c. manufacturers be required by law to provide on request copies of all test results that support claims about fire performance made for their products.

 

Ineffective Regulation 

 

Recommendations 22 and 23 refer to a construction regulator. This relates to the inquiry’s first recommendation, which was for the establishment of a single construction regulator as the “focal point in driving a much-needed change in the culture of the construction industry.” The regulator would be responsible for the testing and certification of construction products and issue certificates of compliance with legislation, statutory guidance and industry standards. This addresses the problem of the inefficient and complex regulation of the industry which, as the section quoted in full below shows, was hopelessly fragmented:

 

“At the time of the fire the Department for Communities and Local Government was responsible for Building Regulations and statutory guidance, the Department for Business, Energy and Industrial Strategy was responsible for regulating products and the Home Office was responsible for the fire and rescue services. Building control was partly in the hands of local authorities and partly in the hands of approved inspectors operating as commercial organisations, enforcement of the law relating to the sale of construction products was carried out by Trading Standards and commercial organisations provided testing and certification services to manufacturers of products. UKAS accredited organisations operated as conformity assessment bodies. In our view, this degree of fragmentation was a recipe for inefficiency and an obstacle to effective regulation.”

 

The Australian Response to Grenfell 

 

In Australia, combustible cladding first became an issue with the Melbourne Lacrosse building fire in 2014, and after the Grenfell Tower Fire in 2017 state governments set up taskforces to audit buildings for use of combustible cladding, and to assess the level of associated risk. The results of those audits and state policies for rectification are detailed in the next section. In this section the two key actions at the national level are reviewed: the revision of the Building Code of Australia (BCA); and the commissioning of a review of regulation and building defects that became the Building Confidence report. 

 

BCA and JAS-ANZ

 

A revision of the 2016 BCA was not scheduled until 2019, however the Australian Building Codes Board developed an out-of-cycle amendment for cladding products, known as the 2016 Amendment 1 that was legislated in all states in March 2018. This updated the performance requirements on spread of fire and evidence of suitability of combustible cladding.  

 

Cladding manufacturers had used the product certification scheme known as CodeMark, accredited by the Joint Accreditation System of Australia and New Zealand (JAS-ANZ). A certificate of conformity contains information about the purpose and use of the product, how the product complies with the BCA, and conditions and limitations on use. In February 2019 JAS-ANZ withdrew certificates of conformity for nine cladding products. In July 2019 JAS-ANZ suspended all accreditations of CertMark International which had issued those certificates of conformity but, after a review, in October 2019 lifted the suspension subject to conditions. 

 

Building Confidence Report

 

In 2018 the Building Confidence: Improving the Effectiveness of Compliance and Enforcement Systems for the Building and Construction Industry Across Australia report by Peter Shergold and Bronwyn Weir was published by the Commonwealth Department of Industry, Science and resources [2]. Their report found problems with product compliance and fragmented regulation in Australia, and made 24 recommendations that “if adopted by all jurisdictions, will lead to a degree of harmonisation which does not presently exist.” Construction is regulated under both state and federal legislation implementing the BCA, and through the National Construction Code (NCC).

 

After investigating building failures that highlighted problems with defects and lack of compliance with the NCC,Building Confidence found: 

·      Compliance failures included non-compliant cladding, water ingress, structurally unsound roof construction and poorly constructed fire resisting elements;

·      Practitioners may lack competence and do not understand the NCC;

·      Design documentation is generally poor and results in inadequate information;

·      Licensing bodies, regulators and local governments can be inadequately funded or lack skills and resources; and

·      Supervision has generally been by private building surveyors who are not independent from builders and/or designers. 

 

The report concluded “The compliance and enforcement systems have not been adequate to prevent these problems from emerging and they need to change as a matter of priority. There is no panacea or ‘silver bullet’ to resolve these problems.” The key recommendations 6 and 7 were for effective regulatory powers and recommendations 18 and 19 for proactive regulation with mandatory inspections.

 

Recommendation 1 was for registration of building practitioners involved in the design, construction and maintenance of buildings, and recommendation 10 was for building surveyors. Recommendation 3 was for practitioners to undertake compulsory Continuing Professional Development on the NCC. Recommendation 17 was for an independent third-party review of the designs before work commences. 

 

Other important recommendations were 12, for a building information database that provides a centralised source of building design and construction documentation, and recommendation 20 for a building manual for commercial buildings to be available on completion. Recommendation 21 was for a compulsory product certification system for high-risk building products. These recommendations addressed the serious problems of building defects and use of non-compliant materials that had become widespread in Australia. 

 

Although it preceded the Grenfell Inquiry’s second report by six years, the Building Confidence report is in some respects the Australian equivalent. Commissioned in 2017 after Grenfell, the Introduction noted “Our Terms of Reference do not specifically refer to the concerns regarding combustible cladding. However, this issue has been a dominant underlying theme of the consultations we have held.” There were two recommendations specifically on fire safety.

 

Recommendation 8: That, consistent with the International Fire Engineering Guidelines, each jurisdiction requires developers, architects, builders, engineers and building surveyors to engage with fire authorities as part of the design process. The report found “the role of the fire authorities in building approvals differs across jurisdictions. In some cases, the involvement of fire authorities is a source of frustration because of their lack of resourcing for this role. There are complaints that some fire authorities oppose designs on issues which are beyond their expertise. Furthermore, there is a lack consistency in interpretation of the NCC.”

 

Recommendation 19: That each jurisdiction requires registered fire safety practitioners to design, install and certify the fire safety systems necessary in Commercial buildings.

This requires “mandatory certification of the testing and commissioning of fire safety systems” and “testing and commissioning should not be performed by the system installer.”

 

Recommendation 19 is closely related to the two preceding recommendations: 17 for independent third party review for specified components of designs and certain types of buildings; and 18 for on-site inspections of building work at identified notification stages.

 

 

Combustible Cladding Audits by Australian State Governments

 

In a recent report for the Australian Building Codes Board, the Centre for International Economics included the table below on apartment buildings that may have combustible cladding. Note that these estimates do not include commercial and public buildings, that the audits below do include. As the audit results show, these estimates are reasonably accurate for the number of high risk buildings. The three large states of NSW, Victoria and Queensland have over three quarters of the estimated number of apartment buildings with combustible cladding. 

 

Table 1. Share of apartment buildings that may have non-compliant cladding

                                                                        NSW     Vic          Qld         SA           WA         Tas         NT           Act

Apartment bldgs that may have          

non-compliant cladding          163         385         144         22            42            0               7               29

Estimated no. of apartment bldgs

built between 1997-2017        4701     2937     2147     196         538         6               124         402

Possible non-compliant

bldgs. share of total                     3%          13%       7%          11%       8%          7%          6%          7%

 

Source: Centre for International Economics, 2024: 8. Proposed Changes to Building Product Regulation: Cost-benefit analysis. Canberra. 

 

Victoria

There have been two cladding fires in Victoria, the 2014 fire at Lacrosse Tower and the Neo 200 building fire in 2019, both in Melbourne. After Lacrosse a taskforce was set up in 2017 that found  potentially 1,400 buildings could have combustible cladding, and recommended the government establish a dedicated cladding agency. In 2019 Cladding Safety Victoria (CSV) was established within the Victorian Building Authority (VBA), and legislation in 2020 made CSV the world’s first stand-alone cladding rectification agency, funded by a levy collected by the VBA that is added to building permits. 

 

The cladding rectification levy began in 2020 and applies to Class 2 to Class 8 buildings [3] and is expected to raise $433 million. The CSV 2022-23 Annual Report had a final figure of 1,588 affected buildings, including those where remediation is complete or underway. Below is the figure from the Annual Report on the work done and different levels of fire risk from flammable cladding. 

 

Figure 1. Cladding Safety Victoria: Assessed fire risk and remediation

 

Source: CSV Annual Report 2022-23: 16. 

 

A 2023 Cladding Review found between 2019 and October 2023: 828 buildings have been referred to CSV for funding consideration; 365 buildings have been granted funding approval for rectification; and 276 buildings have had cladding rectification works completed. There were also “approximately 800 buildings with combustible cladding, which will not be funded through the Private Residential Cladding Rectification Program.” Only buildings with Unacceptable risk have rectification funded by CSV, although in 2022 $32 million of levy funds were provided to local councils and owners corporations for management of Elevated and Low cladding risk in a Partnership Program.

 

New South Wales

The NSW Government responded to Grenfell and Lacrosse with the Fire Safety and External Wall Cladding Taskforce in June 2017. By February 2023 the Taskforce had inspected 4,182 buildings, cleared 3,803 of them, and had 379 buildings under review, assessment and remediation, of which 192 had remediation underway, ordered or approved. 

 

In 2020 NSW started Project Remediate to remove combustible cladding from high risk apartment buildings. It provides a 10-year, interest-free loan to fund the cost of remediation, using cladding products and systems endorsed by the Cladding Product Safety Panel.  It also provides program management, inspection, design, building, assurance and certification services with Hansen Yuncken as the Managing Contractor, so it is a complete package. Owners Corporations register their building, it is inspected and two designs prepared and costed. The Owners Corporation then decides if they want to proceed with the agreed design and join the program, or exit at no cost. 

 

Queensland 

Queensland has had a chain of responsibility law since 2017, to stop the use of unsafe products on buildings. This makes all parties in the supply chain, including manufacturers, importers, suppliers, and installers, accountable for compliance with standards and regulations. The Building and Construction Legislation (Non-conforming Building Products—Chain of Responsibility and Other Matters) Amendment Act 2017 restricted the use of non-conforming building products and included a requirement to report their use. The legislation also extended the powers of the Queensland Building and Construction Commission (QBCC) to investigate and take enforcement action.

 

In 2018 legislation required all private owners of affected buildings to complete a combustible cladding checklist to determine the type of cladding. Buildings with an identified cladding fire risk were required to display a Form 42 - Affected Private Building Notice – at the entry, and building owners had to implement fire safety risk mitigation measures between identification of cladding fire risk and completion of rectification, which was their responsibility. Between 2019 and 2023 there was a Safer Buildings Taskforce to advise the government on policies and actions, on how to rectify combustible cladding and support building owners through the process. 

 

Owners are not required to rectify their building, however cladding risk and rectification costs must be disclosed when selling. As of 31 May 2024 more than 18,000 private buildings [4] had been cleared. There were 976 requiring a solution to address the risk, and 308 potentially at risk and needing to complete the checklist process. There were 345 buildings that had notified removal or rectification. In August 2024 elevenpublic buildings still needed rectification and some unknown number had been rectified and removed from the online list. 

 

Other States and Territories

 

The building audit in South Australia was completed in 2018. It found 2 public buildings were high risk and 50 were low or moderate risk. There were 96 private buildings with low or moderate risk, 21 with high risk, and were 7 rated as extreme risk. A concessional loan scheme began in 2023, with a fixed rate and term of up to 10 years for a maximum amount of $15 million for each building being remediated.

 

The 2017 audit in Western Australia found 50 public buildings and 52 private buildings needing rectification. By 2024 work on 31 public buildings and 47 private buildings had been completed. 

 

The ACT Government audited public buildings in 2017. In 2021-2022 a Private Buildings Testing and Assessment Scheme provided grants to owners corporations worth up to $20,000 as a rebate on the cost of testing and assessing of cladding.  A Concessional Loan Scheme has provided owners corporations access to a low-interest loan for remediation. 

 

In Tasmania the audit found 42 of the 43 buildings where ACM is in use can be classified

as low risk. One building, a hospital, was classified as high risk and needed urgent rectification.

 

Implementation of the Building Confidence Recommendations

 

A detailed review of progress on implementing the report’s four recommendations mentioned above on building safety, across the states and territories, was done by the Australian Construction Industry Forum in 2023. The results for the four recommendations on fire safety for design consultation, certification, design reviews and onsite inspection are in Table 2.

 

Table 2. State and territory implementation of recommendations

Recommendation        Full implementation                    Partial implementation

8                                 NSW, Qld, SA, Tas, NT                Vic, WA, ACT

17                              NT                                                                 Vic, Tas

18                              ACT, NT, Tas                                         NSW, Qld, SA, WA. Vic

19                              NSW, Qld, Tas                                    Vic, SA

 

Source: A Cross-Jurisdictional Review of the Implementation of the Building Confidence Report, Australian Construction Industry Forum, 2023: 24-25. 

 

Conclusion

 

The second report from the Inquiry into the 2017 Grenfell Towers fire in London that killed 72 people has found government, industry, regulators and product certifiers all culpable. Government ignored warning about combustible cladding, whose manufacturers were deceptive and dishonest. Testing did not ensure compliance, and certifiers did not do their job. Regulation was excessively fragmented across multiple agencies, and being ineffective suited the prevailing deregulatory approach that allowed designers, fire safety engineers and contractors who lacked expertise to approve use of combustible cladding. 

 

Governments had been aware of the combustible cladding problem after fires in high rise residential buildings in London 2009, Dubai 2012, 2013 and 2015, and Melbourne 2014. In Australia, after Grenfell there was a revision to the BCA in 2018 and nine cladding products had their certification cancelled in 2019. The Building Confidence report on defects and product compliance was published in 2018, with 24 recommendations, 2 specifically on fire safety.

 

Beginning in 2017, Australian states and territories began audits of public and private buildings to determine the extent of the problem and each building’s level of combustible cladding risk. Most have published the results, and from the available records 3,571 affected buildings have been identified: Victoria has 1,588, NSW 379, Queensland 1,284, South Australia 176, Western Australia 102, and Tasmania 43. Most of these are classified as low risk. It is not clear how complete this data is. 

 

The cost to governments of remediation have been very large, in the UK £5.1 billion has been budgeted across five remediation schemes. Australian states and territories will have spent hundreds of millions on audits and billions on rectifying cladding on public buildings, although the actual amount has not been disclosed. In Victoria 130 public buildings were affected, in South Australia 52, and in Western Australia 40, but numbers in other states are unknown. Perhaps 400 public buildings in all, and assuming average remediation costs of $5 million a building gives a starting guesstimate for the states of $2 billion. It could be much more. 

 

 Most of the expenditure on remediation has been on public buildings. For private buildings it is the owners, or in the UK the leaseholders, who are responsible. In Australia two states and the ACT have concessional loan schemes, and in Victoria a cladding rectification levy began in 2020 that is expected to raise $433 million. The eventual cost to owners of private buildings can also be expected to be in the billions. 

 

To describe the widespread use of combustible cladding on buildings as a regulatory failure understates the scale and scope of the problem. There were multiple points of failure, not just by ineffective and under-resourced regulators responsible for building permits, safety and product compliance, but also by the architects, fire safety engineers, contractors and subcontractors responsible for the work. With clients asking for cheaper combustible cladding, often on the basis of dishonest marketing by manufacturers, they did not have the necessary information or expertise to prevent its use. 

 

Fundamentally, the construction industry needs to improve understanding of compliance requirements by the professionals responsible for building designs and permits, and they all need to be included in a chain of responsibility to ensure products are safe and comply with the building code. Contractors should be able to stop work and seek advice if they believe designs are unsafe, and the conditions for such action should be codified or legislated. Designs and fire safety plans should be lodged with a regulator, product traceability and registration compulsory, and inspections during construction mandatory. 

 

There are no easy or simple solutions to the problem of building safety. The Hackett Review and Grenfell Inquiry in the UK and the Building Confidence report in Australia made similar recommendations on regulation of construction, enforcement of compliance with building codes and standards, revising building design, approvals, permits and procurement, and improving industry expertise. Implemented together, these recommendations would lead to systematic change in construction. Implemented piecemeal the problem cannot be solved, and there will be more building failures, and potentially tragedies like Grenfell, in the future. 

 

*

 

[1] This was the third report on the Grenfell Towers fire. The first was the 2018 Hackitt review’s Building a Safer Future. Independent Review of Building Regulations and Fire Safety that examined regulations, compliance and enforcement, all of which were found to be inadequate, and was critical of procurement practices. The recommended regulatory changes led to the 2022 Building Safety Act and a Building Safety Regulator for the UK. The second was the Inquiry’s first report in 2019 that focused on the night of the fire, its cause, and the actions of the London Fire Brigade. 

 

[2] See also Compliance in Building Design from Cladding Safety Victoria, 2024 here and  Rebuilding Confidence: An Action Plan for Building Regulatory Reform, Building Products Innovation Council, Canberra 2018 here.

 

[3] Classes in the Building Code of Australia are: Class 1 (houses), Class 2 (apartments), Class 3 (residential buildings including hotels), Class 4 (dwellings attached to commercial buildings), Class 5 (offices), Class 6 (shops), Class 7 (car parks and warehouses) and Class 8 (laboratories and factories), Class 9 (health and civic) and Class 10 (non-habitable). 

 

[4] A ‘private building’ is a two or more storey residential building (excluding houses), health care or aged care building, or a three or more storey office, retail carpark, warehouse or factory building; that received development approval to build or to alter the building’s cladding between 1 January 1994 and 1 October 2018; and is at least 50% privately owned.