Insurance cash-outs could compromise quality of Canterbury's built environment

Christchurch-based construction company Corbel Construction (Corbel) today sounded a warning that the quality of many residential buildings might be adversely effected as a result of most insurance companies increasingly seeking to cash settle claims rather than oversee repairs and rebuilds through their Project Management Offices (PMOs).

Corbel’s Managing Director Craig Jones says, “Before the Canterbury earthquakes, most homeowners have never had to engage a builder and the involvement of the PMOs meant they didn’t have to. Now, without the oversight of a PMO, homeowners increasingly run the risk of being taken advantage of and not getting a quality job for a fair price.

PMOs have provided a degree of protection to Canterbury homeowners through their focus on quality, pricing, health and safety, and certainty regarding timing from the building industry. While owner-managed repairs might be a good option for some homeowners, others will struggle with having to manage the builder they engage directly without assistance from a professional intermediary, such as a reputable architect.

They say that this situation is exacerbated by an unprecedented level of construction activity in Christchurch which is expected to peak later this year at around $7.4b before dropping away by some 54% from this peak to $3.4b in 2019. Residential building has a greater impact on building and construction in Canterbury than non-residential work.

“We’ve never seen greater demand for builders. While there are many knowledgeable homeowners who are able to look after themselves and most builders do a good job, there’ll inevitably be problems with cowboys and unskilled workers operating without sufficient supervision.”

Craig Jones says that this has longer term implications in that a poorer quality of workmanship results in buildings that may not be fit-for-purpose, require rework, leak and have significantly higher whole-life or life-cycle costs. The other risk is that homeowners may opt for lower cost repairs to reap some financial benefit but that quality may suffer

“As a result, the built environment could be compromised and potential gains from better insulation, lower energy costs, better space utilization and the like not realized.”

ENDS

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