Protecting your business from the cladding controversy

The use of external cladding has been in the news all too often recently. In response to recent tragedies, our Federal and state governments have put in place measures to address the use of combustible cladding, like flammable aluminium composite panels (ACPs), and other non-conforming building materials. These measures subject the facilities management area to higher scrutiny and regulation as businesses, governments and tenants try to protect themselves and reduce their risk.

In this article, we outline the regulatory responses and highlight some things that you can do now to manage your risks.

The government has responded at all levels

In June 2017, Prime Minister Malcolm Turnbull asked all state and territory governments to make sure similar tragedies were prevented in Australia. As a result, there has been a lot of action at each level of government. The responses to date are:

  • Federal: A Senate inquiry has been called into non-conforming building products and an interim report addressing ACPs was released in September 2017. The report called for a ban on ACPs, and the Senate has responded by introducing a Bill to ban them from being imported, sold or used in Australia. The Bill is currently before the Senate, with the final report of the Senate inquiry expected in April 2018.
  • New South Wales: This state has responded on several fronts. A building audit has so far found over 1,000 buildings potentially with dangerous cladding and the Minister has released a 10-point plan to address the issue. The plan places responsibility on owners to inspect and remove potentially dangerous cladding. New legislation introduced in December 2017 also bans unsafe building products and gives authorities the power to demand that buildings be rectified. Draft regulations to improve fire safety checks for buildings with combustible cladding are also being considered.
  • Victoria: The Victorian Cladding Taskforce released its interim report in November 2017. The Taskforce found about 1,400 buildings that have combustible cladding with more audits underway. New restrictions on the use of certain cladding on buildings higher than two stories have also been introduced.
  • Queensland: In November 2017, new legislation was introduced that places responsibility on designers, manufacturers, importers and suppliers to make sure that only safe building products are used.
  • Western Australia: The Building Commission extended its existing audit of ACPs to include high-rise buildings. The audit is currently underway, with over 200 at-risk buildings already found.
  • South Australia: A building audit is underway in the state and is expected to be completed soon.
  • Tasmania: An audit of all buildings was completed in January 2018, with only one building in the state found to be non-conforming. This is currently being rectified.
  • Australian Capital Territory: A taskforce has been auditing buildings and has found several buildings that have combustible cladding. They are now assessing the risks.

You can act now to protect your business

Combustible cladding poses a real risk to life and the financial viability of your business. In Melbourne, the cost of replacing cladding on the Lacrosse building was reportedly over $15 million. According to Tom Jacobs, a Partner at Jackson McDonald, there are some things that you can do to manage these risks now.

If authorities haven’t audited your building you may unknowingly be at risk. “If you’re not sure whether you’re building has combustible cladding, get on the front foot by reviewing the design, construction and purchase documents to see what materials were used in the building,” suggests Jacobs.

“If you do find any non-conforming products report this to the building owner immediately. If you are the owner, consider raising the matter with your insurance broker. Be careful though, just because these documents don’t mention combustible cladding or other non-conforming building products, doesn’t mean they weren’t actually used,” he warns. “It’s also a good idea to have a lawyer look at your circumstances and documents to determine who (including your business) may be responsible for any short-term replacement obligations if the building does have non-conforming building products and who might ultimately be responsible for paying for that.”

If your building does have combustible cladding, you may be required to remove it or even close the building. “Until it’s removed there’s a possibility that your business remains exposed to a higher degree of risk of fire, loss of life or damage and the building (and resultant damage) may not be covered by insurance. So, it’s worth reviewing your insurance policy and putting a plan in place to reduce your risk,” explains Jacobs.

“Finally, it’s good business practice to have, know and understand your crisis management plan, so that you’re prepared if a fire unfortunately does occur. Good crisis management is invaluable in terms of protecting your reputation with clients, customers, employees and industry,” says Jacobs.

By putting in place these contingencies and being proactive about assessing your risk, you can protect your building and potentially save lives and significant cost.

For more information about how to protect your business, don’t miss the discussion “How to maximise occupant safety” featuring Ben Ferguson, Global Director of Fire Engineering for Norman, Disney & Young, Matthew Wright, GM Technical Services & Deputy CEO, FPAA and Daryn Glasgow, Technical Director Fire and Beca Technical Fellow in the Total Facilities Speaker program.  Please note that the program is free to attend but you need to be registered for the event. See full program.

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