WHAT ARE THE FUTURE RISKS AND COSTS?
Remediation of existing buildings requires a specific approach, and not that of the usual design and build process applied to new buildings. Failure to take the necessary steps in diagnosing the failings and establishing correct remedial solutions increases future risk for all parties involved.
In the recent Fleetwood Apartments High Court decision, the owners have been awarded $3 million plus. Founding Director of Prendos Greg O’Sullivan said, council approving building consents without having all its questions answered was “not a clever thing to do”. “It demonstrates that people who are tempted to come up with these so called ‘cheaper solutions’ for repair are actually putting people in the direction of future and more expensive repairs.”
Investigation prior to embarking on repairs must be sufficiently extensive in order to determine the nature and extent of damage. This enables a proper evaluation of the risk of possible unidentified damage being discovered during remediation.
Surveyors, engineers and other specialists are tasked with the identification of the extent of damage to properties following events such as earthquakes, gradual deterioration or sudden change due to burst pipes. As such, we must treat a building or portion of a building as being ‘damaged’. One definition of damage is “a physical alteration or change to the building (or a portion of it), not necessarily permanent or irreparable, which impairs its value or usefulness”. For example, the impairment might be to the building’s structure, utility (use and function), amenity or architectural (cosmetic) elements.
Determining when damage has occured requires detailed forensic analysis. In the case of damage to timber framing, even the most experienced expert may only be able to conclude that, on the balance of probabilities, the damage is most likely to have commenced within a general time period of 0-5, 5-10 and over 10 years prior to the investigation date. Having determined the extent of damage, the remediation solution will, as a minimum, be required to comply with the New Zealand Building Code, even if building consent approval is not required.
Most remedial solutions are physically possible, if there is enough money in the pot. However, the economics of remediation should be seriously considered if the cost of remediation exceeds 80% of a new building cost. If the damage is so extensive that it is not economically viable to remediate a building, then the event causing damage will have destroyed the asset, deeming it a total loss.
Where damage is covered by insurance those seeking cash settlements for insurance claims are urged to obtain professional advice from qualified and experienced consultants to evaluate the damage caused, to scope the remediation and quantify the ‘true value’ of the work.
The extent of investigations required during damage assessments will vary on a case by case basis. In some instances this will include the need to complete intrusive investigations in order to fully understand the magnitude of damage and the necessary remedial design solutions required. However, as with any remediation project, unknowns such as voids under floor slabs, hidden plumbing leaks and extensive decay to timber framing, are frequently discovered. Allowances are included for such ‘unknowns’.
Evidence gathered during the damage assessment stage influences the insurance settlement proposal. Proposals are intended to form the basis of negotiations between the property owner and the insurer and are not intended to be relied on by a prospective purchaser of a damaged property as a due diligence report.
Purchasers of residential property in post-quake Christchurch and those tasked with completing pre-acquisition or pre-purchase residential surveys should be extremely wary. While building damage may have been correctly diagnosed and scoped for insurance settlement purposes, it may be the case that these remedial recommendations are being ignored by those completing the actual repair in favour of cheaper, perhaps non-compliant repairs. The result may be the discovery of future damage ultimately resulting in more expensive repairs.
BY RORY CROSBIE, DIRECTOR, REGISTERED & CHARTERED BUILDING SURVEYOR
To find out more about damage assessments or how we can assist with insurance settlements please call 0800 PRENDOS or email us below