Question: An engineer’s report has confirmed we need to carry out major works to remediate footings in at least two of our six lots. What is the committee’s next step?
Following observations of external wall cracking, the committee enlisted an engineer to inspect all lots and provide a report. This report details the requirement for remediation of footings to at least two of the six lots and recommendations for preventive actions.
What is the committee’s next step? Should they communicate the report to all lot owners, hold a special meeting, and propose a remediation plan, including a cost forecast and suitable contractors? Could an insurance claim be lodged? The lots need to be vacated while the work is conducted. Who pays for relocation and other costs during construction?
Answer: Before obtaining quotations for remediation, develop a detailed scope of work incorporating the engineer’s recommendations and all other consequential work needed to achieve the desired result.
Todd Garsden, Mahoneys:
It is good that the committee has taken this step and obtained a list of remediation works that need to be undertaken.
Now that the committee has that list, it firstly needs to determine whether it or particular owners are responsible for each item of remedial works. This will require a consideration of the cause, the type of survey plan (BFP or SFP) and the maintenance obligations in the module. The committee may wish to obtain legal advice in this regard.
Once the committee understands the maintenance responsibility:
- Work for which the body corporate is responsible – quotations would need to be obtained for the remedial works. Depending on the cost and the body corporate’s spending limits, two quotations would need to be considered, and a general meeting may be required;
- Work for which the owner is responsible – approach the lot owner to determine if they will carry out the work or if they would like to appoint the body corporate to carry out the work on the owner’s behalf (which may be more suitable if some of the works cross over or if there are economies reached by carrying out the works as a single project). If the body corporate is appointed by the owner to carry out the work, the associated costs still need to be paid for by the lot owner and approved properly (which again may need a second quote and a general meeting). This also requires a service agreement to be prepared and approved by the body corporate and lot owner.
If we were able to review the report that has been obtained, CMS and survey plan, we would be able to confirm the maintenance responsibilities, the need for a general meeting and the need for a second quote.
Insurance typically does not extend to maintenance issues, but this should be explored with the body corporate’s insurance broker.
Bruge McKenzie, Sedgwick:
To further add to the comments from Todd, it is agreed that some further investigation is required to determine the responsibility of the specific issues between lot property and common property. It is inevitable, however, that the issues listed would most likely relate to common property.
What is important prior to obtaining quotations for remediation is to develop a detailed scope of work incorporating the engineer’s recommendations and all other consequential work that will need to be done to achieve the desired result. This often involves disturbance to other building elements and rectification works to return the site to the same condition. This is often missed by contractors providing quotations if there is not a clear comprehensive document to guide them on the expectations of the OC. Any additional work then becomes an unplanned further expense as a variation to the initial quote or an added expense to engage other contractors.
Unfortunately, we see this occur regularly where it is far more economical to get it addressed early prior to any work commencing. A building consultant can prepare a scope of work where all building elements are considered and combined into a single document.
As Todd has pointed out, bundling work together is the best approach. This will provide value and minimise risk when dealing with a single contractor. A scope of work can easily be divided into portions if different parties are responsible for funding different areas, where it would remain a single contract where the OC would benefit from a single warranty for the works. This reduces the risk of multiple contractors cross blaming each other if an issue arises during the works or after completion.
Review of the quotations received is also critical to ensure they present the best value beyond just cost, including items such as proposed methodology, disturbance to occupants and duration to complete. And finally, oversight of the works is the most critical element to reduce the risk of the OC ending up in the same situation in the future. Even if a contractor is reputable with a demonstrated history of good work, a professional set of independent eyes gives the assurance to both the OC and the contractor that the risk of either party needing to revisit works is minimised.
Project Management covers all of these aspects and can include a cost estimate to assist in cost forecasting. We would certainly recommend engaging a Project Manager to guide this process. Sedgwick can assist if required.
Todd Garsden Mahoneys E: tgarsden@mahoneys.com.au P: 07 3007 3753
Bruce McKenzie Sedgwick E: bruce.mckenzie@au.sedgwick.com P: 1300 735 720