The Cost Impact of Building Control (Amendment) Regulation (SI.9 of 2014)
by Bregs Blog admin team
In his response to Kevin Humphreys TD, Minister Richard Bruton TD admitted he did not know what cost increases would occur on various capital projects arising from the introduction on March 1st of the amended building regulations SI.9 of 2014. He did note however that where central government has made an allocation, this will not be changed. Such increases as may arise therefore are a matter for the individual commissioning organization and there will be no further allocation from central government. Such increases as will inevitably occur will still be picked up by the taxpayer either way.
The government is required to carry out a detailed impact assessment on the community of all legislation, before it is implemented. A preliminary assessment was carried out at the very early stages of this legislation but was not updated before the final version of the legislation was enacted. Had this process been followed by the government, many of the problems of cost increases, delays, litigation and difficulties caused for groups such as the self-builders would have been identified.
The following table is based on housing output 10,500 units completed in 2012*
Out of 10,500 house completions approximately 60% are self-builds. According to industry estimates a typical house may incur €5,000 extra in professional fees with self-builds incurring an additional €18,000 on top of this for contractors fees and costs.
Residential Sector- additional cost of SI.9
6,300 self builds x €23k extra = €144.9m (18k each to contractors, €5k to professionals)
4200 normal houses x €5k each = €21m (€5k to professionals)
Total residential new build direct cost €165.9m**
**This excludes qualifying residential refurbishments and extensions over 40sqm.
This cost excludes the cost of SI.9 on capital and social projects that, depending on who you consult, could add up to 5% or more depending on type of project, level of complexity etc. That is an average of 5% on the cost of every school, hospital ward, social housing unit built from March 1st onwards. We have a capital project allocation of approximately €3.2bn for this year and if we discount half for non-qualifying projects (roads, transport, power etc) then various government departments could be looking at direct and indirect costs of up to €80m annually (based on 3% mid-range extra cost)
Potentially SI.9 of 2014 could cost the industry, taxpayer and consumer €250m annually. The projected €2bn saving in irish water will be squandered in 8 years. With no benefit to the consumer.
The residents of Priory Hall, the authors of the Pyrite Report, The National Consumer Agency and the IPFMA and other consumer groups all concur in previous statements and submissions that BCAR SI.9 will do little to improve the rights of the consumer. The RIAI, the registration body for architects, have called on this legislation to be deferred as recently as 15th January 2014 citing that the industry is not ready and the regulation is not in the best interest of the consumer.
* (Source: Forfas report: Table 2.12 Value and volume of construction output, 2010-2012E (page 16); Source: DKM Economic Consultants analysis for Forfás, 2012)
Link to Forfas Report “Ireland’s Construction Sector: Outlook and Strategic Plan to 2015”
The above opinion piece was submitted by Maoilíosa Mel Reynolds on 3rd February 2014.