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A Tale of 2 Cities - Sydney and Canberra Government Recladding Programs

A Tale of 2 Cities – Sydney and Canberra Apartment Recladding Costs and Government Incentives

Across Australia people were shocked when they heard on the 14th of June, 2017, that an apartment building had caught fire. 72 people died and more than 70 were injured. This was far from a first. Reports dating back to 2010 reference a fire which spread rapidly due to combustible cladding in Busan, Korea and closer to home at the Melbourne Lacrosse Building in 2014. One could argue that well before the Grenfell building was clad or even designed, they should have known or the danger of such products, but that is another discussion for another day. Since then many commercial and residential building owners have been opting to replace this cladding at considerable expense.


Meller Quantity Surveyors have been specialising in estimating construction costs for strata repairs and recladding since 2017. The figures I have seen suggest budgeting $30,000-$60,000 per unit for a building requiring recladding. This range will continue to grow with inflation and the growing demand to make apartment buildings safe. This doesn’t even include other costs such as legal fees, potential resident relocations and compensation to occupiers and owners for use of their space to access the cladding and insurances.

There are 2 government programs which Meller have been involved in in both Sydney and Canberra and the experience and costs have been vastly different. However I hope to answer the following questions:

-          What contributes to these costs?

-          What can be done to ensure value for money in a recladding project?

-          Why is there such a difference between recladding costs in Sydney vs Canberra?

It is important to understand that with all the different variables such as the amount of cladding, the extent of repairs, site access, professional fees and labour and materials costs all contribute to the overall costs, and can make these projects particularly complicated. See below for some Q&A:

Q: What contributes to these costs?

A: With any recladding project, particularly in a strata building, there is a need for independent professionals such as Quantity Surveyors, Engineers and Project Managers. Depending on the city these costs can add up quite drastically, from around $75,000 per building for Canberra and $350,000 per building for Sydney. Hence it is critical not to assume that because a contractor has verbally told you that the material costs a certain amount and their labour and scaffolding will cost another amount, that is all you need to factor in. Without these professionals to manage time, cost and quality, the end result may be varied, or in the worst case scenario you may end up recladding in another non-compliant product.

Q: What can be done to ensure value for money in a recladding project?

A: Recladding projects are inherently complicated. Targeting your spending towards quality advice and qualified contractors who install the correct materials and in the correct way has one of the highest return on investment. The overarching point here is to do your own research.

Engaging an engineer to produce a fire engineered solution that is proven to minimise risk whilst ensuring compliance is paramount. An independent project manager will generally take control of the project ensuring that each consultant and the contractor meets their deadlines (which is very important by the way, a delayed project has flow on costs such as inflation and extra scaffolding hire). A QS will itemise every part of the project including professional fees so that firstly you know how much to budget, secondly that the design is tracking on budget, and thirdly that unexpected expenses such as reframing, insulation and refinishing are actually expected, and negotiated and controlled as the project progresses

Q: Why is there such a difference between recladding costs in Sydney vs Canberra

A: Aside from the more obvious differences (Canberra labour and materials are slightly more expensive), others that spring to mind arise from the vast difference between how the state and the territory government operates. To put it shortly, Sydney (and in fact all of NSW’s) approach is more heavily regulated. That’s not to say that owner’s corporations in NSW can’t direct a recladding project by themselves, but through the government program there are more design phases that must be satisfied before moving on to the next phase, and less selection of contractors and professionals to choose from. The following table concludes some of the pros and cons of each program:

Self-managed with low interest loan (eg. Canberra Private Buildings Cladding Scheme)

Government run interest free loan (eg. Sydney Project Remediate)

+ Low interest loan

+ 'Interest free loan'

+ Able to borrow more so long as the defect is related to the cladding

+ Can opt out of the program at any time

+ Design completed faster

+ Fire orders can effectively force strata committee into action

+ Can opt out of programme at any time

+ Detailed design leads to more predictable and equitable outcome with standard designs across all buildings

+ No need for 'gold stamp' from territory government

+ Hansen Yuncken issues assurance certificate issued to strata after an iCIRT rated builder has completed the works

+ A registered Quantity Surveyor provides their estimate with an 80% likelihood that the cost is not to be exceeded

+ Hansen Yuncken takes ownership over construction cost overruns

+ Any material that conforms to current code can be selected

+ Finishes have to be selected from a list of approved products

+ No penalties for repaying the loan early

+ Does not accept cheaper fire-engineered solutions

- Architects and structural engineers not mandatory

- Project funding is limited

- Deadlines must be met to be eligible for concessional loan

- Detailed design takes 6+ months before the builder quotes, and prices continue to rise during this period

- Fire engineered solutions are accepted

- Premium to be paid for design and consultant costs, often costing in excess of $350,000 per building, regardless of how much cladding is involved

- Less layers of approval for the proposed design, design and construct contracts are acceptable

- Potentially overengineered standard design details not suitable for your individual building and product selection

 

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Hi,
I'm Jack Meller

I have been in the construction industry since I was 18 years old and have consulted on projects in every imaginable sector across the globe. 

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