Repairing Construction Defects

Engineers and building scientists accept that the performance of modern buildings is a very technically complex topic from virtually every perspective. Even relatively small buildings contain more components than a jet aircraft. And because they are essentially “one-off prototypes,” it should not come as a surprise that there might be defects in the finished product. However, buildings are also extremely expensive. When they fail to function as intended, the legal and financial implications are often greatly underestimated.

We are spending well over $1 billion a year to repair defective construction in Canada. We can expect the cost of construction, operation and maintenance of buildings to increase over the next decade and beyond. Predictably, therefore, we can also expect to see an increasing trend towards seeking legal recourse related to building defects.

The issue is a serious concern for both the insurance industry and the construction sector as a whole. The loss costs required to repair defects in new and existing construction engage the interests of insurance companies, brokers, risk managers and claims adjusters alike.

Expectations of the Indoor Environment

In addition to becoming more complex and intricate, buildings are also tremendously important to Canadians. As a nation, we are 80% “urbanized” and spend 90% of our time indoors. The building industry is Canada’s largest industry. Canada invests more in per capita construction than virtually any other country in the world, with the exception of Scandinavia and Iceland. Our expectations of the indoor environment are also extremely high.

As a result, the expectations of building owners regarding the quality of construction have elevated considerably over the past 20 years. Owners have gradually come to expect high-quality, problem-free buildings that do not demonstrate any apparent defects. It is apparent that owners are much more inclined to submit claims to recover costs for perceived or actual deficiencies. And when defects are identified, lawyers will, as a matter of course, advise their clients to take action accordingly.

Typically, certain projects experiencing catastrophic failure – the Hyatt Regency Hotel walkway collapse in Kansas City, Missouri, for example, or the Concorde overpass collapse in Montreal – receive much greater forensic attention than projects experiencing what might be described as “routine” failures such as cost overruns and/or contractual claims for defective construction.

Even though we are able to learn specific lessons about how and why failures occur, and what could have been done to prevent them, the construction industry is still plagued by significant quality control problems. Currently, countries such as the United Kingdom, Norway, Australia and Canada are actively investigating ways to improve the overall performance of their construction industries on an ongoing basis.

Research shows a major factor contributing to cost and time overruns on projects is related to repair of construction defects (rework). In some situations, cost overruns or defects can be traced to lack of communication between the client, designer and the end-user, as well as a number of other factors described in greater detail elsewhere.

Cause and Effect

Research shows unintended deviations from standardized building practice have a significant impact on quality control. And they are often not identified until the project is underway – or completed. In addition, many buildings have defects that may not be immediately apparent when they are put into service.

Other problems include inadequate understanding of the building code, lack of knowledge and experience regarding good building practice(s) for both construction and design. The failure to properly commission the building is also a common omission. Building commissioning is the process of verifying that all of the subsystems such as HVAC, plumbing, electrical, fire/life, lighting, wastewater and security systems, meet the owner’s project requirements.

In the construction sector, the doctrine “time means money” is deeply entrenched. As a result, over the past 60 years we have seen a significant compression of design and construction schedules.

This compression results in “overlap” of activities, thus increasing the likelihood of time and cost overruns. This, in turn, magnifies the potential for the occurrence of defective or non-conforming construction.

Regarding the design and construction of the building envelope, the authors are acutely aware of certain issues that have not received adequate attention.

For example, over the past 20 years, claims for construction or operational deficiencies of the building envelope – walls, windows, roofing and foundation – have increased dramatically. It is now to the point where these deficiencies make up about 70% of all identified defects. Most of the defects are related to moisture penetration or accumulation within the building envelope systems.

Damage incurred within the building envelope is considered to be one of the most problematic issues in the industry. However, despite the fact we know how to prevent these moisture problems, measures to prevent moisture damage have not been widely adopted, primarily due to cost-cutting.

Also, the tendency to adopt the collective mindset of “next bid, next project” often results in a failure to undertake design reviews, mock-up testing and adequate onsite quality control.

It should be pointed out that a very large percentage of defects are either not detected or overlooked, leaving underwriters at risk for claims for repairs that become apparent at some point in the future.

Design Teams Should Include Building Scientists

We would not consider constructing a building without the participation of engineers and/or architects. However, in most cases we continue to construct buildings without the input of professionals specializing in building science. Building scientists concentrate on examining all of the building systems throughout its service life. They work to ensure maximum compatibility between sub-systems in the Canadian climate. They also possess the expertise to eliminate or substantially reduce moisture-related problems from occurring.

Lightweight Building Envelopes

Unlike the robust solid masonry walls used in past construction, modern building enclosures now often consist of multiple layers of “lightweight” construction materials, each serving a very specific function. As a result, in order to resist penetration and/or absorption of moisture, careful detailing and construction is essential to ensure adequate performance.

Unfortunately most of the designs we see do not take into account the complexity of using these systems for the wide range of climate conditions in Canada. In many cases, a lack of continuity results from using four different layers and because there are literally thousands of transitions, interruptions, penetrations and wall/window intersections. Many modern buildings use sealants around such penetrations (face seal construction) and sealants do not reliably or adequately accommodate differential movement over the required service life of the assemblies.

Reducing Exposure

In a paper published in the Journal of Construction Engineering and Management, Professor Peter Love of the Edith Cowan University in Perth, Australia – a country with a construction industry and a building science background very similar to Canada – determined the total cost of “rework” or repair of defective construction was 12%.

Statistics Canada reported that capital expenditures for all construction sectors including residential housing in Canada totaled $21.1 billion in 2009. If we apply 12% to this total construction cost, the cost of repairing defective construction in Canada covering a 12-month period would be well over $1 billion.

This total potential exposure (if claimed) could be greatly reduced by applying accepted building science principles (including adequate onsite quality control measures), enforcing existing building code regulations and demonstrating a degree of discipline with regard to issuance of building permits.

It’s worth noting that contemporary consumers insist on quality. In other sectors of our economy, if the manufacturer or service provider fails to deliver quality, they will quickly lose their market share.

In our experience, the insurance industry can guard against losses due to repairing defects in new and existing construction by anticipating the pattern of defects, adequately managing their risk and by thoroughly evaluating claims for defects to let the fault lie where it may.