Job creation slowdown due to Building Control (Amendment) Regulation (SI.9 of 2014)

by Bregs Blog admin team

canceled man 300

As noted in previous posts there is widespread concern regarding the upcoming introduction of SI.9 in just two working weeks on 1st March. Many influential stakeholders, consumer groups and government departments believe a significant hiatus will be created in both capital projects and also the construction industry in general. The RIAI, the architect’s representative body and an influential stakeholder involved in the design of SI.9, has recently called for deferral due to lack of industry readiness.

While delays in capital projects may ironically improve various departments spending year on year, delays in this critical area may affect the tentative signs of recovery recently noted by the Construction Industry Federation (CIF). Industry sources suggest the cost to the taxpayer, industry and consumer of SI.9 at €500m per annum, with little benefit to the consumer. What we have not discussed is the significant possibility of destruction of jobs and employment by this legislative instrument. We will attempt to quantify this over the next few posts.

For the self-builder we have previously discussed the extraordinary cost of SI.9 to individual builds. Despite statements to the contrary by the Minister, self-builders would appear to be restricted from the role of builder from 1st March 2014. Consequently the increase costs for a typical house could increase by €23,000 (contractor costs for a typical €180,000 self-build, excluding additional professional fees for new certifier roles). Including additional professional fees this figure could be as high as €40,000.

Some self-builders can absorb additional costs of SI.9, some will reduce the scope of their build to accommodate these additional costs (i.e. build smaller or part- complete areas etc). The reality is that others, presumably at lower cost end, will simply not be able to afford to construct their own houses.

The following is a break-down of the total of 6,300 new-build houses in a typical year: the new house completion table (for self-builders) under SI.9. The following table excludes any qualifying extensions to existing houses:

Self-Build completions table 2014 (source IASOB)

House completions that will absorb costs directly with no scope change: 2,500

House completions that will reduce build and absorb costs:  2,000

House completions cancelled but to extra costs of SI.9 : 1,800

Total number of self-builds to be completed :  4,500  (1,800 cancelled)

A significant portion of these self-builders will, as a result of increased costs of employing a main contractor, be unable to build their own houses. By industry estimates up to almost one-third of self-builders will not construct their own houses due to the imposition of SI.9. This may cost the construction industry and economy €324m in 2014. In a recent radio interview Tom Parlon of the CIF  suggested that there were 10,000 new jobs for every €1Bn of additional construction spend. If this is correct then SI.9 could cost 3,200 jobs per annum. By 2020 SI.9, in the self-build domestic sector, 6 years of SI.9 may remove almost 20,000 construction jobs with a loss to the domestic economy of €1.94Bn. That’s a big number for little or no consumer protection added by SI.9.

* (Source: Forfas report: Table 2.12 Value and volume of construction output, 2010-2012E (page 16); Source: DKM Economic Consultants analysis for Forfás, 2012)

The above opinion piece was submitted by Maoilíosa Mel Reynolds on 11th February 2014 (edited August 2014).