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Kyle Jacob Austin here,
owner of Q zone.
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And welcome to episode 25 of The
Subcontractors Blueprint, the show
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where subcontractors will learn how
to ensure profitability, improve
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cashflow and grow their business.
Today's episode, number 25 is
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going to be about defects.
And this is another one of those
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things where in construction we
don't have a proper definition
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of the word defect.
The NHC contract has a definition
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which says something like a part
of the works, which is not in
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accordance with the scope or part of
the designed work, which is not in
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accordance with either applicable
law or the accepted design, whereas
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the JCT is completely silent on it,
and all it says somewhere is that the
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contractor must go and make good
defects, shrinkage or other faults.
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Some people take a fairly
simplistic definition of the word,
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and take it to mean something
that doesn't do what it should,
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or perform how it should.
And I would say in broader terms
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that it is work that doesn't meet
either the specification or the
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standard that was required by the
contract due to faults in the work,
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faults in the materials or design,
and deficiencies in quality.
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And there are two types of defects
that get spoken about in the
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construction industry, which are
latent defects and patent defects.
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So let's first talk about what
the difference is between those
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two things.
So patent in this sense is
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meaning easily recognizable
obvious think patently clear.
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You don't have to go looking for it.
It just is not right.
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So let's discuss an example on that.
And we'll use the same example
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in latent and patent defect form
of a crack on a wall.
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So I had a patent defect on a
project we were constructing.
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The external wall is supported by
a steel frame and one section of
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the building cantilevered out so
that you could walk underneath it.
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And it was actually designed like
that, so that cars that were exiting
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the car park of the building didn't
have a corner of the building in
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their way, as they're looking
around to make sure there's no
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pedestrians or vehicles coming.
But that corner had another five
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stories of building above it.
And as the masonry continued to be
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built all the way up to the top
course, the extra weight and the
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load on that corner was causing
some deflection in the steel,
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and a crack appeared at the junction
between the last vertical column that
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went all the way down to the ground,
and the large steel which was
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projecting horizontally,
which was then carrying the five
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stories of building above it.
And we had the clients car of
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works coming around,
taking great delight in telling
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us that we've got a problem.
Oh no,
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the building is going to fall down.
And whilst no such thing actually did
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happen, it was cause for concern.
And what you could see was this
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large crack appearing at the
junction between the connection.
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The lintel that was there, taking
the load was all still in place.
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No problems with that,
but there was this crack that
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had gone straight through the
bricks in a pretty much straight
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line through about ten courses,
and that was a patent defect.
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You could clearly see it.
There was no need to break any
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surface finishing to expose the
defect.
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It was there in plain sight, obvious,
clear as day and what we had to do.
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We invited the structural
engineer out.
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We broke away the brickwork where the
cracks had formed and exposed the
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steel connection, and we just let it
stand for a matter of a few weeks.
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The structural engineer was satisfied
when he had his second visit that
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there was nothing happening to that
joint, and all it was was a defect
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that was caused by the weight of
the masonry above loading down and
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bearing down on the supporting steel.
Now that happened whilst we were
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on site,
you could say that we're actually
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lucky that we were still there.
We still had scaffolds on site,
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we still had bricklayers there
doing something else.
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So we had all of the means to
correct the defect at our disposal.
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And that is where latent defects
become a bit more of an issue,
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because once the building is handed
over, retentions are released,
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everybody's contracts are finished.
Your site team moves on to
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something completely different.
It becomes an altogether bigger
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problem to start investigating it
in the first part and then putting
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it right. So a latent defect.
Then let's look at the same defect
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and pretend that was a latent defect.
If we'd have handed that building
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over and there hadn't been that
problem, that natural settlement,
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that deflection has yet to really
occur, then perhaps 6 or 8 years
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down the line, a new occupier of
the building decides to bring his
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book collection to his new office
and lines the room with a small
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library of biology textbooks and
his 20 years of research.
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And this creates this massive
load that wasn't there before.
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All of a sudden,
the building is deflecting and
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this crack appears all right.
A lot of weight has been added.
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But let's say that that's within the
performance parameters of the floor.
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So the contractor now has to re
mobilize the site, bring his
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structural engineer, pay his.
Tried to provide the access to
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break open the wall,
exposing that steel connection.
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And this time, let's say one of the
bolts is sheared off and it must
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have had a manufacturing defect.
But that defect got built in.
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It wasn't clear and obvious.
It didn't manifest until years later.
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You couldn't have possibly known
about it and corrected for it whilst
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the construction was still happening,
and thereby a reasonable inspection
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that had taken place at handover
could never have spotted that.
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And it's a hidden or dormant problem.
There's often not a lot that the
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client can do about a latent defect.
They obviously have that contractual
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link back to the contractor,
and perhaps if the contractor is
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gone insolvent, they've asked for
collateral warranty, which provides
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a third party link back to, say,
the designing steelwork contractor,
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the structural engineer,
the architect involved in the scheme.
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By a period of years later,
any retention has been held on.
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The project has long since been
paid out and unless there is a
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latent defect insurance,
which there often is in the case of,
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say, housing projects,
your premier guarantee, or NBC,
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those types of cover there
exactly that they are there to
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provide for latent defects,
common types and causes of latent
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defects, and most often out of
design and manufacturing faults.
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Issues with the structure that are
hidden behind plasterboard finishes,
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leaking plumbing joints,
small perforations in a roof
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that then get bigger over time,
faulty electric systems,
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ventilation that doesn't perform
as it's designed, which might
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then lead to damp problems.
Drainage that isn't sufficient
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when you get to heavy rain,
whether as a subcontractor.
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These might sound like things
that you can't do anything about,
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but there are some factors that
can contribute.
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You've got poor workmanship, either
by using poorly qualified staff or
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staff that are on too keen a price,
so they're cutting corners and
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leaving things not properly finished.
You've got poor quality products and
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you've got potentially poor design,
and the limited things that you
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can do to prevent these kind of
issues is just making sure that
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you're buying quality products.
You're checking that your staff
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that you're employing are
suitably qualified.
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And if you are responsible for
design, that you're using a
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responsible and reputable designer.
If you are called back to some kind
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of investigation, then you might
be presented with reports such as
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moisture assessments or thermal
imaging, photographs and videos
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or photos taken via a bore scope.
Or even these might be things
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that you think are sensible to
do to investigate a defect,
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and you might be called in at
the sign of an uneven floor,
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the presence of moisture or mold
or cracks in walls and ceilings.
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Any one of these things can
present itself.
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And then it's a reason to probe
further and try and seek out
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what the problem is.
Now, if you get called back to look
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at a defect, the best thing that
you can do is to crack on with it.
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Acting quickly is an essential
preventative measure.
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You won't see this as a problem
that you nip in the bud before it
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turns into a much larger issue,
and as well as doing the obvious in
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repairing damaged furnishings and
repairing and reinforcing pieces that
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have broken, you want to consider
whether what you're doing is going
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to fix the problem long term,
and that might mean throwing
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some money at the problem.
But on the flip side of that,
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if it prevents it from turning
into a larger problem or prevents
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it from reoccurring and you
revisiting and putting it right
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again in the future, then that is
potentially the best thing to do.
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And what you don't want is something
that is now a small issue,
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developing and turning into
something much larger,
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and also growing into a health and
safety problem and potentially
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injuring somebody down the line.
And a further point on this,
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it's much better for you to get
involved in rectify the issue
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than let the employer refer the
matter to their insurer.
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Their insurer will probably
correct the issue themselves.
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They won't use a particularly
competitive contractor to put
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the work right.
They will use somebody that they
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know and trust, probably on some
kind of schedule of rates,
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that they can quickly mobilize and
get on site to sort the problem out,
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and then they'll add to that all
of their administration fees and
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whatever payout they agree with
the building user.
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And much of that might be
avoided by some proactive effort
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on your part to get back to site
and sort the issue out yourself.
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Now, going back to patent defects,
these can be defects that are
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clear and obvious, either during
the construction of the building
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itself or that crop up within
the defects liability period.
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And the whole point of that period
is that it's reasonably common for
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the majority of issues within a
building to rear their heads within
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the first year of it being finished,
and defects that are found during
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the defects liability period are
dealt with largely the same as
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we've just discussed.
For latent defects,
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the best thing that you can do
is be proactive about attending.
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Sight identifying what the problem
is discussing with the contractor,
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whether it's your fault or whether
it's the fault of some materials
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that somebody else's provided,
or it's somebody else's work
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that's caused the problem.
All of these things are best off
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done up front, and then the
sooner that is rectified,
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the better it is for everybody.
During the course of the job.
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It's a bit of a different situation.
You obviously have got your lads
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there, you've got materials,
the site managers there to see
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things and to check on the
quality of this and that.
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And at various points you might
be pulled up and asked to correct
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something in the majority of cases
because you know what you're doing,
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you're constructing to design
drawings.
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Usually these are little bits of
workmanship or something that didn't
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quite get finished on one shift.
Somebody come in the following day
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and started on something else and
left a little bit of work behind.
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And those little bits of odds
and ends that need to be picked
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up and completed.
Quite often these things can
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seem insignificant.
But from the contractor's point of
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view, there's often an issue where
you can't then get the follow on
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trade to start because he hasn't got
a full run at the work until you
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fully finished all of your work and
these little bits of small scale
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issues, minute defects, this is what
your attention is really there for,
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is to keep some skin in the game for
each of the supply chain, to make
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sure they come back and do the right
thing and finish off their work.
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But you occasionally get something
really quite significant.
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Let's say there's a retaining wall,
and rather than following the design
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details for it, which showed an
English bund brickwork wall out
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of class B engineering bricks,
the contractor has gone rogue and
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built one skin out of seven and
a half Newton block work and one
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skin out of engineering bricks.
And once the wall is finished
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and they've backfilled behind
the block work, you probably
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wouldn't know anything was wrong.
But the issue with that is when
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you're building out of English bond,
the two skins of brickwork are
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naturally tied together by the bond,
and also a seven and a half Newton
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block is one tenth of the strength
of a class B engineering brick.
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So a couple together, you've got a
far, far weaker structure and it's
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not likely to perform to the same
standards as the original design.
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Now, in spite of that work being
finished, it's a clear defect.
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It falls short of the standard
required by the contract,
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and the finished wall is of
lesser specification than what
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has been bought.
So in this instance, the contractor
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is able to make an adjustment pending
that piece of work being put right.
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And that adjustment is likely
going to be more than the cost of
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building the wall in the first place,
because they're now in a
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situation where not only have
they got to build the wall again,
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they've got to demolish what's
there and dispose of it all.
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So a word of warning if you're
thinking of deviating from the
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specification,
because when that comes back to bite,
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it will hurt and you'll be
expected to put it right now in
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a slightly different situation.
Let's say there's been a cavity wall
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constructed, and for some reason,
the clerk of work suspects that
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the fire barriers have not been
fully fitted in all places shown
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on the fire strategy drawing.
Now, what the Clerk of Works can
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do and what will happen is the
contractor will issue the same
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instruction downstream to you as
they can issue a direction or an
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instruction to open up the work.
And what the proviso is in this
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instance is that the clock of
work isn't fully certain that
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there is a defect.
So this instruction to open up the
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works is a test to check whether
you're meeting the specification
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or not, and whoever is found to
be wrong in this situation is
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the person who bears the cost.
So for this particular example,
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we're going to have to break into the
facing brickwork and expose some
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areas where we would expect there
to be a cavity barrier installed.
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Take a photographic record to
demonstrate whether it's there or
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00:13:52,460 --> 00:13:56,750
not, and close up the work again,
reinstating the facing brickwork.
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Now, if the clock of works is wrong
and the proved to not be a defect,
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then the cost of that testing
can be added to the final
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00:14:03,080 --> 00:14:06,380
account as a variation.
Now, under a JCT contract,
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there's no obligation for these
kind of defects to be notified
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at any particular time,
and sometimes it can seem like the
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00:14:12,980 --> 00:14:16,790
clerk of works will store up these
issues and then drop them all out
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00:14:16,790 --> 00:14:19,820
at a critical point in the job.
And this position does seem a
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00:14:19,820 --> 00:14:23,330
little bit unfair, because the
contractor is obliged to notify
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00:14:23,330 --> 00:14:26,450
issues once they've occurred,
and even more proactively under
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00:14:26,450 --> 00:14:29,990
the NEC form of contract, they're
required to give an early warning
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00:14:29,990 --> 00:14:35,030
notice if they foresee that anything
could affect time, cost or quality.
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00:14:35,030 --> 00:14:38,510
So why shouldn't the same apply
to the employer and their clerk
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00:14:38,510 --> 00:14:42,410
of works or supervisor?
Finally, then there is a possibility
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00:14:42,410 --> 00:14:46,190
of damages being awarded or
becoming liable for damages as a
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00:14:46,190 --> 00:14:49,490
result of there being a defect.
And firstly with this,
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00:14:49,490 --> 00:14:53,840
damages can only be deducted from
you as a subcontractor if the same
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00:14:53,840 --> 00:14:57,770
damages have been deducted from
the contractor by their client,
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00:14:57,770 --> 00:15:01,940
or alternatively, if there are some
costs incurred by the contractor
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00:15:01,940 --> 00:15:05,690
as a result of your defect that
are perhaps incurred by another
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00:15:05,690 --> 00:15:10,130
contractor, there would be able to
contra charge you for that cost.
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00:15:10,130 --> 00:15:13,430
However, on occasion the client
may decide that okay,
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00:15:13,430 --> 00:15:16,880
this defect has happened.
Whilst we go back to that, we don't
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00:15:16,880 --> 00:15:20,420
just want to put the defect right,
we want to improve the situation.
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00:15:20,420 --> 00:15:22,520
Let's say there's been a fault
with the roofing.
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00:15:22,520 --> 00:15:25,550
The flat roof membrane gets
ripped out and replaced,
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00:15:25,550 --> 00:15:28,640
but the employer decides that
they also want to operate the
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00:15:28,640 --> 00:15:31,910
insulation whilst they're there.
The principle is that where
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00:15:31,910 --> 00:15:35,270
corrective action is taken, it
should put the employer back in the.
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00:15:35,380 --> 00:15:38,800
Position that they started in,
i.e. as if there hadn't been a
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00:15:38,800 --> 00:15:41,500
defect in the first place.
So in that instance,
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00:15:41,500 --> 00:15:45,190
the employer should be paying for
that increased spec of insulation
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00:15:45,190 --> 00:15:48,370
and they should be contributing
towards your cost of being there.
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00:15:48,670 --> 00:15:50,320
I hope you've enjoyed today's
episode.
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00:15:50,350 --> 00:15:54,070
My mission is to help the
million SME subcontractors
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00:15:54,070 --> 00:15:57,190
working within our industry.
If you've taken some value away
263
00:15:57,190 --> 00:16:00,250
from today's episode,
I'd love it if you share the show and
264
00:16:00,250 --> 00:16:03,820
pass that value on to somebody else
who would benefit from hearing it.
265
00:16:03,820 --> 00:16:06,430
And thanks for tuning in.
If you like what you've heard
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00:16:06,430 --> 00:16:11,530
and you want to learn more,
please do find us at WCW's zone.
267
00:16:11,530 --> 00:16:17,080
That's the letters QRS dot zone zone,
where you can subscribe to our
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00:16:17,080 --> 00:16:20,170
training and support system for
like minded subcontractors.
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00:16:20,170 --> 00:16:24,040
In there you'll find templates,
how to videos, interviews, and more.
270
00:16:24,070 --> 00:16:26,470
It's less than the price of a
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00:16:26,470 --> 00:16:30,130
and you can cancel any time or
also on all of your favourite
272
00:16:30,130 --> 00:16:35,140
socials at Qe7. Thanks again!
I've been Jacob Austin and
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00:16:35,140 --> 00:16:36,040
you've been awesome!
