In our update published in June 2020, we discussed the key provisions of the Design and Building Practitioners Act 2020 (NSW) (the Act). Apart from the statutory duty of care that came into force on 11 June 2020, the remaining provisions are set to begin on 1 July 2021.
Regarding these provisions, the Act left most of the detail up to the regulation. After a lengthy consultation period, the heavily awaited Design and Building Practitioners Regulation 2021 (NSW) (Regulation) has been released. The Regulation contains the detail for the new registration and declaration regime for design and building practitioners and engineers.
Here we summarise the key takeaways and step through precisely what engineers, architects and builders will need to do to prepare for the 1 July 2021 commencement.
What is the Act all about?
The aim of the Act and Regulation is to raise industry standards and restore community confidence by eradicating ‘designs on the run’ and ensure that buildings being constructed are designed and constructed in accordance with the Building Code of Australia (BCA).
In a nutshell, the Act:
- creates a statutory duty of care on anyone who carries out construction work to exercise ‘reasonable care’ to avoid economic loss caused by defects in or related to a building;
- requires designers, builders and engineers to be registered under a new statutory registration scheme;
- establishes a scheme for the provision of compliance declarations to be made by designers and builders in respect of their work;
- creates a mandatory obligation for registered practitioners in respect of insurance coverage for their work. The Regulation has deferred the commencement of the insurance requirements until 1 July 2023 to allow more time for insurance products to be developed and ensure that practitioners have time to prepare.What building work is covered by the Act and Regulations?The Act and Regulation will apply to all building work on NCC Class 2 (residential apartment) buildings or buildings containing a Class 2 element (mixed-used buildings), including alterations or renovations to same.
Compliance declaration scheme
Design compliance declaration: A registered design practitioner (i.e. architects or engineers) must provide a design compliance declaration for regulated designs before work commences, during the works (for variations) and before the issue of an occupation certificate.
Regulated designs are designs prepared for a building element, or a performance solution, for building work. Building element means any of the following: fire safety systems, waterproofing, building structure, building enclosure and building services. A performance solution is an alternative assessment method of achieving compliance with the BCA to the straight BCA Deemed-to-Satisfy (DTS).
A design compliance declaration must certify that:
- regulated designs comply with the BCA; and
- the registered design practitioner is authorised to prepare the design class for which the declaration is being made.
The principal design practitioner is an optional role. Where one is appointed, they are responsible for making principal compliance declarations. The role was designed with the bigger, more complex projects in mind. The principal design practitioner coordinates and collects designs and declarations from other practitioners and can lodge on the building practitioners behalf.
Building compliance declaration: A registered building practitioner (i.e. principal contractor) must lodge a building compliance declaration, contractor documents and other required documents (i.e. variation statements, regulated designs, principal compliance declaration) on the NSW Planning Portal before an application is made for an occupation certificate (OC).
The declaration must certify that the building work, including any variation:
- complies with the BCA and other regulations (where a building does not comply with the BCA, any such non-compliance must be identified, and the steps required to ensure compliance must be outlined);
- was built in accordance with the regulated designs; and
- that a design compliance declaration and principal design declaration (if applicable) have been obtained.Below is a breakdown of exactly when these declarations must be lodged during the life of a project.Stage 1: Before building work commences
Design: Design is developed (only the supervising designer signing off on the design compliance declaration must be registered).
Declare: Registered design practitioners must declare compliance with BCA by providing a design compliance declaration. This declaration must be made using a form that will be made available on the NSW Planning Portal.
Lodge: Building practitioners must lodge construction-issued regulated designs and copies of design compliance declarations for each design on the NSW Planning Portal. Where a principal design practitioner is appointed, the building practitioner must also lodge a principal compliance declaration for the design. These documents must also be provided to the certifier at this point.
Stage 2: Variations during construction
Declare variations: Variations to regulated designs must be declared for compliance. Variations can be declared using the same form to make a design compliance declaration.
Lodge: Registered building practitioners must lodge each varied design and declaration within 1 day of carrying out the variation work.
The above process only applies to variations requiring work to a building element and to performance solution variations. Other variations to building work, which do not relate to a building element or performance solution, only require the building practitioner to record the variation in a document known as a variation statement submitted at Stage 3.
Stage 3: Before applying for an Occupation Certificate (OC)
Lodge: Registered building practitioners must complete a building compliance declaration online and lodge:
- a contractor document (includes a range of documentation such as the construction contract);
- copies of each variation statement required for the building work;
- copies of each regulated design that contains additional details not reflected in the construction issued regulated designs (only if the details do not cause the building work to which the design relates to be varied).
Apply for OC: Before or when the developer applies for an OC, the certifier can access the completed building compliance declaration and declared designs on the NSW Planning Portal.
Certify: An OC will only be issued by a certifier if they have all compliance declarations.
Stage 4: 90 days after the OC is issued
Declare variations: Any variations after OC must be declared.
Lodge: Registered building practitioners must lodge regulated designs showing any variations to building work within 90 days of the OC being issued or confirm that no variations have been made.
Penalties: Any practitioner failing to make a declaration or who makes a declaration when unregistered will face a maximum penalty of $165,000 as a body corporate or $55,000 in any other case. Any practitioner that makes a knowingly false or misleading declaration will face a maximum penalty of $220,000 and/or two years imprisonment.
Transitional arrangements for lodgement of declarations
The following arrangements have been implemented to facilitate a smooth transition of the new reforms.
- If the regulated building work is authorised to be carried out by a construction certificate or complying development certificate and some of the work commences before 1 July 2021:
- the design practitioners are not required to give a design compliance declaration with respect to the designs;
- no one is required to be registered under the Act before carrying out the regulated building work; and
- there is no need for a building compliance declaration to be prepared for the regulated building work.
- However, the building practitioner on such a project must still provide the Secretary (Secretary), through lodgement on the NSW Planning Portal, with a copy of all designs relied on to carry out the regulated building work before applying for an OC. A certifier must not issue an OC unless this has been done.
- Where a design is prepared before 1 July 2021 and regulated building work commences between 1 July 2021 and 30 June 2022, the design will be taken to be a validly declared design if it is assessed and certified as compliant with the BCA by a registered design practitioner.
- The registered building practitioner must not commence building work in reliance on the design until copies of the design and the accompanying certificate have been provided to the Secretary. If a design prepared before 1 July 2021 is varied on or after 1 July 2021, then it is no longer taken to be a valid design by reason of this transitional arrangement and a registered design practitioner will need to prepare the varied design.
- From 1 July 2022, the transitional period ends. For projects where the first building work was carried out after 1 July 2022, all regulated designs will need to be declared before any building work can start at all, including where the designs were prepared before 1 July 2021.
Mandatory registration scheme
If you intend on making a compliance declaration, you must be a registered practitioner under the Act. The NSW Fair Trading website provides a comprehensive guide for becoming registered and the relevant forms you need to complete and submit.
Schedule 1 of the Regulation sets out the specific classes of registration within the high-level categories of practitioner. Each class of registration contains eligibility requirements, qualification, knowledge, skills and experience requirements, as well as specific parameters on the “type of work” that class of registration is authorised to carry out.Registration of building practitioners
There are 3 classes for Building Practitioner: (1) body corporate; (2) body corporate nominee, and (3) general. Only the head contractor needs to register to make a building compliance declaration, not every subcontractor. In some cases, developers will need to be registered if they are principally contracted to do or coordinate the building work.
Registration of design practitioners
There are 18 classes of registration for Design Practitioner, including architectural, civil, structural and mechanical engineering. Practitioners can register as design practitioners if they have at least 5 years’ recent relevant practical experience in the last 10 years in their area of practice. If at least 2 years’ recent relevant experience has not been completed in Australia, a minimum of 10 years’ recent relevant practical experience must be demonstrated as well as completion of a competency assessment documented by the Secretary or a person approved by the Secretary.
Registration for professional engineers
From 1 July 2021, only registered professional engineers (or those working under the direct supervision of a registered professional engineer) will be permitted to carry out professional engineering work in a prescribed area. The prescribed areas of engineering are civil, electrical, fire safety, geotechnical, mechanical or structural.
Under the Act, “professional engineering work” means “engineering work that requires, or is based on, the application of engineering principles and data to (a) a design, or (b) a construction, production, operation or maintenance activity, relating to engineering”. A person who carries out such work while unregistered is not entitled to be paid, and any payment they have already received is recoverable as a debt. Work is not “professional engineering work” if it is only provided in accordance with a document that states the procedure or criteria for carrying out the work and the work does not require the application of advanced scientifically based calculations.
The Regulation prescribes three possible pathways for registration (Pathways to Registration), with minimum requirements for education, skills, expertise and experience set out in the Regulation. Each Pathway to Registration also has its own requirements for ongoing regulation, insurances and continuing professional development.
An alternative pathway is available to enable engineers with extensive experience in their field, who do not meet all the required requirements for registration under the Pathways to Registration, to continue working. The Regulation outlines two options for registering under this “competency pathway”. If an engineer also intends to lodge design compliance declarations, then they must separately register as a design practitioner in addition to registering as a professional engineer.
Transitional arrangements for registration
The Regulation provides for a transitional registration period between 1 July 2021 and 31 December 2021 in which practitioners who apply (within time) to be registered in a particular class of registration will enjoy the protection and entitlements of “deemed registration” in their applicable class. Practitioners who are deemed to be registered can legally perform work regulated by the Act and make prescribed declarations as if they were registered.Practitioners do not enjoy the protection of “deemed registration” unless, in making their application, they have a reasonably based view that they are an eligible person to be registered in a particular class. Practitioners who apply after 31 December 2021 cannot rely on deemed registration and will have to wait until the Secretary (i.e. the Department of Customer Service) approves their application before doing any action for which registration is required under the Act.
Enforcement
The Act permits the Secretary to issue stop-work orders for up to 12 months and seek relief from the Land and Environment Court to remedy or restrain a breach of the Act. The Secretary also has broad powers to investigate practitioners and former practitioners and may audit a registered practitioner at any time.
An appeal against a stop-work order may be commenced in the Land and Environment Court, but only if the appeal is brought within 30 days of service of the notice. An appeal does not stay the order, meaning that the order must be complied with while the proceedings are on foot. Given the serious consequences of making a stop-work order, 30 days is a short window. It means that urgent legal advice should be sought if a stop-work order is issued.
Practical Checklist to help you prepare for the new regime
Below is a checklist of ideas on how you might upskill your organisation in preparation for what lies ahead.
Designers, builders and engineers
- Train teams to understand the new regime, especially the variations regime and the process when applying for an occupation certificate.
- Make it mandatory for staff to view the various videos produced by the NSW Government, providing an overview of the Act and Regulation.
- Ensure staff familiarise themselves with the code of practice and continuous professional development requirements.
- Identify the classes of registration and requirements for same to be ready for registration by 1 July 2021.
- Work with staff that will need to upskill to comply with qualification and registration requirements and develop a plan to support the necessary training.
- Incorporate into your construction programme, the milestones for lodgement of required documentation and factor in an allowance of time for these new processes.
- Coordination is critical. Ensure Regulated Designs are integrated with other designs, including designs prepared by others.
- Ensure Regulated Designs are complete to the extent necessary for the issue of a construction certificate or a complying development certificate.
- Appoint a specific role to manage the Declaration Scheme requirements.
- Ensure all Regulated Designs required to be lodged before commencing construction work on site have been lodged.
- Adjust procurement and contract administration to contemplate the new regime.
- Amend your subcontracts and consultancy agreements to align with the new regime and include contractual obligations and warranties from your downstream counterparty that mirror their requirements under the Act and Regulation.
- Developers
- Ensure that projects comply with the regime to secure an OC. Know what notices must be given before applying for an OC, and when those notices must be given.
- Implement processes to monitor compliance of the Act by designers, builders and engineers.
- Include in your invitation to tender documentation, or tender return schedules, the requirement on contractors and designers to provide sufficient evidence of compliance with the new regime and evidence of registration for declaring design and building work.
- Amend your construction contracts as follows:
- Include notice provisions in relation to the lodgement of regulated designs and variations at the relevant stages of the project.
- Requirements on the contractor or consultant to provide evidence of compliance with the Act.
- As a precondition to entitlement to payment for a variation, the contractor must ensure that each variation is declared and lodged within 1 day after commencing the variation work. Evidence of compliance with the Act and Regulation must be included in any variation claim. The contractor must keep a register of all variations throughout the project and the dates each variation was declared and lodged on the portal.
- Insert as a precondition to practical completion, a requirement on the contractor to do all things necessary under the Act and Regulation to enable the issuance of an OC.
- Ensure your Superintendent knows how to administer variations and ensure notices are given before applying for an OC.
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