Risk aversion is killing the construction sector
and proportionate liability is not the answer
Imagine if we applied the same principles to crossing the road as we do to construction. We‘d never take the first step - there might be a bus coming.
A surgeon adopting a risk averse attitude, would never operate because every surgery has a degree of risk. That perforated appendix ….. you’d be toast.
It’s absurd that we confidently manage the risk associated with crossing the road where the consequences of failure could be fatal, how we trust and insist that surgeons take on risk and operate on us, yet the construction sector is about avoiding risk altogether.
I would be very rich if I had a dollar for every time I heard
How can I limit my liability?
I need to think of the ratepayer risk.
Liability exclusions in relation to the use of a document.
These are the facts
Most buildings perform; they don’t fail.
Most building products are fit for purpose but many come without instructions.
Most people want to do a good job, they do not want to be part of a failed project.
The issue is that risk aversion kills innovation. It kills excellence. It ensures high cost, mediocrity and, perversely, more frequent ‘failures’.
The prospect of even a single ‘failure’ is unacceptable. So we accept mediocrity and high construction costs.
In real life we do sometimes ‘fail’; we mistime the speed of a car and get hit while crossing the road; sometimes a person does die on the operating table. But we deal with it and we don’t stop crossing the road or consider surgery.
Risk management is the key. The construction sector must move away from risk aversion to risk management.
Proportionate liability is not the answer. The answer lies in focusing on doing the best possible job and then managing the inherent risk.
What is holding the sector from making this move to risk management? My view is that the reasons include a:
Lack of understanding of what the risk is and how it arises.
A very persuasive group whose continuing business relies on ‘stuff ups’.
Lack of understanding of the regulatory framework and how to apply it.
Lack of consistency in the what and how it is done.
It won’t be that hard to achieve this change. The Building Act already has the framework that would break the current impasse if only it were applied.
A move to a risk managed approach will deliver better outcomes to all of us, as building owners, as business owners and as ratepayers.
The ‘risk averse’ costs will disappear - death by 1000 producer statements will be a thing of the past.
Innovative products and more options of commodity products will be available. Suppliers will know the ‘devil in the detail’ in terms of what is expected of them.
The time it takes for consents to be issued will be reduced as designers will know what is expected of them.
Ratepayers will be able to breathe a little more easily, safe in the knowledge that their risk is being managed through the consistent and objective application of regulatory functions.
Pie in the sky thinking?
Not at all – back to the Building Act. Several years ago I created from Subpart 4, section 14A – 14G the Reliance Model. It is simple, it is logical and relies on due diligence and assurance – a bit like crossing the road.
I’m signing off for now, but I do hope you will check into my next blog the Reliance Model.
Until then,
Louise Swann
The Good Building Consultant