Ms Orla Hegarty:

I thank the Chairman and members for the opportunity to attend this session. I have made a submission that sets out the background and some of the context of building control in Ireland but I would like to address some of the issues, principally the features of a cost-effective and robust system that accords with international best practice.

First, I will explain why housebuilding is high risk. This sector is very vulnerable to non-compliance and needs robust controls of construction to protect life and reliable consumer protections to protect property. These issues are not unique to Ireland and are a consequence of the way that housing is procured, which is generally different to construction procured under commercial contracts between an owner and a builder. The housebuilding sector requires immediate and sustained focus, particularly the areas of spec-building and self-building. There are two separate issues but the nub of both relates to the role of the State and the responsibilities of owners. First, there is a State building control system which is to protect people. The role of the State is to ensure that all buildings are safe and sustainable. The first aspect of that is to ensure technical compliance in order to make occupation by owners safe and to make buildings sustainable. The second aspect is protection of the State to ensure technical compliance on energy efficiency, environmental protections and contamination. Aside from that, there is the issue of protection of property which involves consumer safeguards, particularly for owners and buyers who invest in housing and apartments because they are buying a product. Consumer protection is important. Building control means technical standards such as fire safety, access for the disabled, structural design, drainage, staircases, sound transmission between apartments. These are compliance issues that can be measured by a professional. They can be designed, measured, checked and tested, and a professional can stand over them. Consumer protection issues concern the property, the product delivered from the market by a developer or a construction company. This is important because problems do not appear immediately, they often take a lot of time.

In commercial and institutional buildings, such as schools, hospitals, hotels, factories, offices and shops the owner and the builder are separate entities. Contracts are generally in place to deal with issues on site and latent defects after completion. This is because commercial owners are generally more experienced, more invested in the durability and quality of building they produce and protect their capital investment through professional oversight, warranties, insurance and retention moneys. There are mechanisms in place for that. One size, however, does not fit all. In housing, the owner and developer in a spec development situation or self-build are the same entity and these protections are not in place. There is a conflict of interest. The role of the State needs to be defined. Its role is to protect consumers because they could be involved in this process without any of these safeguards and to protect people who come in at the end of the process and buy the product because the seller - the developer - may not be around by the time the problems appear.

For a home buyer, some elements of non-compliance technical issues might be evident or provable at completion but many defects take some time to appear and they can be complex and take a great deal of time, effort and legal issues to unravel. They could be due to design faults, construction errors, an issue with low-quality materials or a failure of products, components or equipment that are put into the building. Over time, all of these problems could be compounded by poor maintenance, subsequent work to the building, accidental damage or even just the environmental conditions of the material. The priority in all of this consumer protection should be about fixing the problem first and sorting out the claims later. It is more important to the consumer to get the issue dealt with.

We must ask why this is happening, where the flaws are in the system that allowed it to happen and what went wrong at Priory Hall, Longboat Quay and other developments. First, there was an absence of third-party oversight of design and construction to prevent non-compliance at the design stage and on site. Under the Building Control (Amendment) Regulations, BCAR, the legal responsibility is on the owner to appoint somebody to police the system. In the case of a self-builder or a developer, however, they are effectively appointing somebody to police themselves so there is a conflict of interest there. In addition, the appointed person does not have to be independent of the process and they have no legal powers.

The second issue is a lack of regulation of housing developers. I make a distinction here between housing developers and builders. The nature of the market is that most work is subcontracted. A housing developer is undertaking an enterprise. They may or may not have experience in the building industry and they may not be qualified or have technical expertise. That is fine as they will appoint numerous people under them. The regulation of the housing developer - the person controlling the process, controlling the supply chain and selling to the owner - is important here rather than the regulation of builders. Speculative housebuilding probably does not have the same priority of the building being durable or a long-term investment. That is another concern.

The third point is that there are inadequate consumer protections. This relates to the legal rights and remedies for these people.

Those three issues were failings in the past that have not been addressed under BCAR. The principal focus of BCAR is the availability of documentation, some improvements in the home warranty scheme and some statutory registration. However, these are very much secondary issues to the core problem that people have with defective units. BCAR has also been presented to consumers as a solution to the two problems of the protection of life and the protection of property. This is a difficulty for a number of reasons. First, the scope of building control regulations is not to protect property but to protect life. Building control was never intended to be used as a 100% asset guarantee on a commercial property transaction. That is a problem for the State because the scope of the State involvement has been stretched.

The second issue is what constitutes this rolling set of guarantees that has been promised and what it means. Nobody is quite clear what it means. Is it a single point liability on one person? In that case, is it insurable? Is the owner of a defective property expected to sue one person, and that person sues down the line, or is the owner of the defective property expected to sue everybody and hope something might stick? There is no clarity on that. There is also the problem that if the courts decide in the coming years that a compliance certificate is a property guarantee - and the courts will have to decide that - there might not be any insurance available to meet that award. Even if an owner gets an award in court, professional insurance might not step in to deal with that. The professional has no control over whether his or her insurance meets that claim. That is a decision for the insurance companies.

It is clear that home buyers with problems will have to litigate or enter into arbitration or both. There is no mechanism for them. The new home warranties available in the market are limited in time and cover. They do not include pyrite and there are other exclusions. The expectation that professional insurance will stretch to cover these claims is doubtful. In any event, it will be the professional insurance company which will decide if that is the case. There is no guarantee that the professional insurance will be available or affordable for these claims in the future. There is a great deal of doubt regarding this. There are justified fears among professionals about entering into open-ended liability for the work of others on this and not just on their own work. Under our legal system, if one is found 1% responsible, one can be 100% liable for the cost. There are genuine fears among people that they could have a very small input into a problem yet they could carry the risk of all of it and their insurance might not be available to them.

The other difficulty is that all of the paperwork - the micromanagement of certificates, sub-certificates and sub-sub-certificates - is a barrier to collaboration. It is a waste of resources and a barrier to the use of shared technologies. Owners in this system have the cost of managing and paying for the system but they do not have any certainty about benefits. There is a question over cost and benefit in the system.

To summarise on the costs, BCAR was designed to be forensic. It was designed to document and record every process and every component. That is very expensive. The question is whether the market can bear this level of cost. Increasingly, there is an administrative drain in this regard. There is also a drain on people with the expertise to do the work properly to this level. As a result, there are wide variations in how it is being interpreted on the ground. At one end, commercial owners in many cases are paying very high costs for a quality assurance, QA, that is gold-plated. If owners feel that is justified with their investment, they should be allowed to do it. However, I am not sure that the State should regulate for it. At the other end of the market, it has reverted to business as usual. Certificates and inspections are available at low cost and there is a significant risk of repetition of past failings.

In terms of resources, the issue is that BCAR was rolled out at a time of very low levels of construction activity. We already have a skills shortage. There is an anticipation that there will be full employment next year, but there are 80,000 new jobs anticipated in construction. Will the system be fit for purpose if we double the output in the coming years? If there is a substantial change in construction technical methods which we have to achieve by 2020 and there is an influx of tens of thousands of workers, is the system robust enough to deal with that?

I will conclude with some suggestions and recommendations on what is needed for an effective system. On the building control side, which is to do with the protection of life and the element the State would regulate for all buildings, first, the inspection of design and construction should be independent of the owner and under State control. Whether that is through the local authority, panels of inspectors or by some other means is something that could be considered but it should be independent of the process. Second, it should be a national standard for substantial compliance, so everybody knows exactly what they are standing over and what they are doing. Issues of compliance should be clear and measurable. This will also help owners, because if something is measurable it is easy to prove that it is wrong. Third, there should be supports for designers and builders through producing approved construction details that everybody can use and which everybody knows are compliant. We do not have that at present. Fourth, the Building Regulations Advisory Body, BRAB, should be re-established. It should have a technical support function and be a driver of innovation. Last, there should be a standard system of registration for key professions and critical trades which would be a single point of contact for consumers and is clear and working to the same standard.

With regard to consumer protections, the commercial and institutional construction industry probably can look after most of its own arrangements. There should be flexibility in the market for the market to decide and for owners to decide what is appropriate for their situation. In the housing sector, there should be licensing of speculative housing developers and some mechanism of redress, perhaps through bonding, so that if they cease trading, there would still be an entity in place to protect buyers. Second, there should be a robust system of mandatory warranty. That could be tied to either an insurance product or possibly a national fund for defects that would go beyond the scope of the current warranties that are available. Third, there should be a strategy to look at the construction industry insurance generally and to review the regulatory environment in that regard to find where the weaknesses lie. There is a great deal of reliance and talk about the insurance that is available but there is no certainty that any of the insurance products will meet the need in any of this.

Fourth, there should be market surveillance of construction products, which is envisaged under the construction products regulations from Europe. That has numerous advantages. First, it will help the builders to know that their supply chain is compliant and that the materials are not dangerous and fraudulent. It will help owners because they will have the benefit of this support. It will also help the State.

If Ireland is the only country in Europe not actively implementing market surveillance, there is a risk it will become the dumping ground in Europe because there is no policing of the construction product sector.

A consumer support should be put in through a portal for information which gives them clear advice about how all of this works, what to expect and their entitlements.

We need to examine cutting administration costs, to deploy resources more strategically and to focus on a consistency of standards for owners, consumers, designers, builders and the trades.