Articles

By Honorary Consul Kim Lovegrove MSE RML FAIB, Chairman of the IBQC, Senior Lawyer and Law Reformer, Lovegrove & Cotton – Construction and Planning Lawyers

The term ‘peer review’ is frequently banded around as being an important element of sophisticated approval systems particularly within the context of the building permit & approval process. The key consideration in terms of the effectiveness of peer review is whether it is indeed robust. That which is considered robust involves a number of key elements:-

• Total independence
• Peer reviewers that are of very good repute
• Mandatory peer review rather than an optional system
• Peer review that is correlated with risk classifications of buildings
  • Differentiation between circumstances where peer reviewers are of private sector derivation versus public sector derivation

Total Independence

For any peer review system to be truly effective, the peer reviewers (be they electrical, civil or fire engineers, or building inspectors) must be able to review designs and construction inputs in a paradigm where they cannot be influenced either consciously or subconsciously by the commercial appetites of those who require their review. This does not necessarily mean that a peer reviewer is embargoed from being paid by a client such as a builder, developer or fellow professional, but it does mean that if they are remunerated by the above that such remuneration or direct briefing must not compromise their objectivity.

Cynics will opine that if the free market is left to its own devices, there will be a sufficient body of peer reviewers that will find themselves susceptible to less than constructive influences. This means that the legislation that establishes the peer review mechanism must have strong probity controls to ensure that this type of actor is dissuaded from making the wrong decision. The writer’s view is that the only way to ‘failsafe’ a peer review regime is to impose mandatory auditing upon peer reviewing professionals. Furthermore, it is a given that they would be licensed building practitioners that come within the jurisdiction of robust licensing and accreditation bodies.

Reviewers will be peers of good repute

If a peer review regime is not heavily populated by peers of good repute, then the peer review regime will of course be compromised. Even though it is axiomatic, it still needs to be stated that implicit within the concept of peer review is recognition that the reviewers will be as competent as the person who is seeking the review or more competent. By competent, it is meant:-

• Well qualified;
• Very experienced;
• Licensed; and
• insured.

Furthermore, the concept of peer reviewers of good repute also requires the reviewer to be of sound ethical disposition, possessing the qualities of independence, impartiality and incorruptibility. One would have confidence in reviewers that have an impeccable disciplinary record.

The Peer Review System must be Mandatory

More than ever, robust peer review mechanisms need to be incorporated into good practice legislation. This is particularly the case in countries that are witnessing a migration of insurers from the underwriting of building professional indemnity cover. Absent the availability of insurance cover, the ability for a practitioner to account for compromised construction outcomes disappears. That which is particularly problematic about that lack of ability to account is that the consumer of built product will be bereft of insurance cover and financial redress.

In some jurisdictions, the safety net of insurance is rapidly disappearing and that which is particularly alarming about this is that a number of jurisdictions have promulgated building regulatory regimes that assumed that insurance would exist in perpetuity. The removal of the safety net demands that many building regulatory ecologies need to be redesigned to ensure that alternative regulatory mechanisms can be brought to bear to protect the public. To put it simply, absent the availability of an insurance safety net, there is a high level imperative that buildings must be built well, and the incorporation of robust peer review systems will increase the likelihood of that imperative gaining expression.

Peer Review Mechanisms must correlate with the risk classifications of buildings

Best practice recognises that peer review should be brought to bear to minimise risk and compromised outcomes. If one utilises the European EN 1990 Standard of Low Consequence, Medium Consequence and High Consequence building classifications, there would be an upwards graduation of peer review resourcing as building risk increases, as it were. The peer review system must be proportionate to risk.

When asked to comment on the idea of a peer review system in the Australian context, John Kostopoulos, former Registrar of the former Building Referees Board, noted that:-

 “When raising the option of peer review I think it is necessary to recall and recognise why the National Model Building Act was brought in and why the 1990s building reforms took place – it was to remove the reliance on the deep pockets of the public-sector. If every building project and its building components is peer reviewed, it will bottleneck the system. However, it must also be remembered that where we do not have insurance or deep pockets, consumers are left exposed. This means peer review must be targeted.”

Again, this underscores the importance of risk-based building classifications and calibrating the peer review regime to that risk.

Low Consequence

It follows that low-consequence buildings, such as ‘garden-variety’ warehouses, that are used for non-controversial purposes would not ordinarily require a peer review mechanism in the mandated inspection regime. To compel the deployment of an independent peer reviewer to review designs and construction inputs into simple building works would be tantamount to an overkill and would have little to commend it either economically or from a public safety perspective.

Medium Consequence

The peer review mechanism for Medium consequence buildings may differ to that of high consequence buildings. Depending on the type of building classification, it will be a given that the peer review mechanism for medium consequence buildings would be far more rigorous and intrusive than low consequence buildings.

At the very least, components of buildings that pose the potential for high risk outcomes, such as fire suppression systems, and electrical and structural engineered solutions, will require peer review. The challenge that is confronting many countries in the West at the moment is the fact that insurers, to reiterate, are increasingly refusing to underwrite traditional risks. It therefore follows that if peer reviewers cannot obtain insurance cover that underwrites the risk that is bespoke to their skillsets, there is a deficiency in the permit/approval ecology. This may necessitate the intervention of legislative mechanisms that establish peer review mechanisms along the lines of that which is enunciated below. So much depends upon the availability of insurance and, if insurance is not available, then even with respect to medium consequence buildings, the peer review mechanism that is outlined in the High Consequence section of this article would be the most responsible regime if one is looking at the issue holistically.

High Consequence

Conversely, in the case of high consequence buildings, that is buildings that by nature would harbour the potential to generate loss of life or injury to limb or very severe deleterious economic impacts, would, in the writers view, require a robust peer review regime. It is absolutely critical that peer reviewers would have no relationship, whatsoever, with the actors involved in the subject project. The model of the late Building Referees Board of the Australian state of Victoria would be an exemplar in this space.

The relevant legislation was the Building Control Act 1981 (VIC) and this legislation operated well before the introduction of the performance based building code that was introduced in the mid-nineties. One functions of the Building Referees Board, prior to the introduction of a performance based building code, was to provide statutory approval or reject building designs that did not comply with the prescriptive building code of the time, in the event of an application for statutory permission. The applicants had to apply for the approval of novel and innovative designs from the independent statutory peer review body, namely the Building Referees Board.

All of the referees were ministerial nominees, most of whom were peers that were chosen on account of their preeminent technical expertise in the building industry.

Applicants were able to retain the deployment by way of paying a prescribed fee to the ministry and the registrar of the Building Referees Board then appointed an independent panel that typically comprised three experts and a blending of architects, engineers, building surveyors, and sometimes lawyers, depending upon the type of design proposal they were required to deliberate on.

The system was best practice in that it was:-

• Totally independent;
• Was able to deliver a conclave of highly regarded experts;
• generated a sound and very well considered decision through caucus and analysis and consultative peer review

Once the referees concluded their deliberations, a written determination was forthcoming that provided the basis of either approval or rejection of the application.

It is considered that this peer review system is an exemplar and is worthy of consideration with respect to law reform that is intent on establishing a legislated peer review mechanism that will deliver a strong probity outcome. In the writer’s view, referees that operate in this type of peer review paradigm should be the beneficiaries of statutory immunities, mindful of the fact that it would be very difficult to insure against any outcomes that were less than optimum.

Sceptics may take issue with this recommendation, but the fact of the matter is that a mechanism that delivers the bringing to bear of the best brains in the business to assess, deliberate, and conclude in a context that is totally arm’s length and distance from the subject project is as good as it gets.

Differentiation between circumstances where peer reviewers are of private sector derivation versus public sector derivation

The codified risk classification of the building will determine whether the resources of the public sector will be required or whether review will be left to the private sector. It is considered that in high consequence codified building classifications, there would be a much greater reliance upon public-sector peer review mechanisms. By that it is meant mechanisms like that of the Building Referees Board, where the peer reviewers (or ‘referees’) are ministerial appointees. Furthermore, it follows that there be a higher concentration of peer reviewers of the private sector derivative operating in the medium consequence paradigm, but there would still, nevertheless need to be robust probity controls to guarantee impartiality and objectivity. Moreover, the issue of insurability will be a relevant consideration.

Peer Review & Performance Based Building Codes

Many jurisdictions have highly prescriptive building codes. A number of jurisdictions however introduced performance based building codes in the 1990s. The performance based code jurisdictions empowered building officials (building surveyors, building certifiers etc.) to sanction and approve alternative solutions that do not comply with the prescriptive codified regulations through the codified performance pathway. The net effect was that an extraordinary amount of power and project-specific discretion, if you will, was vested in the building official that was appointed to issue the building approval or building permit.

It is the writer’s strongest contention that legislation needs to be amended to bring to bear some tempering of that power and discretion, and this can be engineered by the promulgation of regulations that demand robust peer review of performance based design scenarios.

Conclusion

Robust peer review is an ever increasingly important element of building approval methodology.

To properly protect consumers, peer review must be mandatory for certain higher risk classes of building. Proportionality with building risk profile is essential to ensure that resources are appropriately targeted in a manner that facilitates rigorous review for high risk buildings and does not over-resource simple and low-risk buildings. Similarly, it is important to delineate the role of the private sector and public sector in peer review to ensure that public resources can be directed to those projects most in need, namely high risk structures; the private sector, in a building paradigm where insurance is plentiful, can and should have jurisdiction to review medium risk buildings.

Ideally, regulation will ensure that peer reviewers are skilled leaders in their fields and independent from principal actors involved in the design or construction of projects and those who own or fund developments.

When these elements are combined to facilitate a robust peer review process, there is every chance that consumers will reap the benefits and their confidence in as-built product will be improved.

 

Honorary Consul Kim Lovegrove MSE RML FAIB – Law Reform Consultant

Honorary Consul Kim Lovegrove MSE RML FAIB has 30 years’ experience in law reform, strategic advice, the design of building regulation and best practice building dispute resolution, overhauling and re-engineering liability and probity insurance regimes, the design of licensing and registration regimes and the design of regulatory risk management systems.

If you wish to engage Kim Lovegrove or the firm, feel free to contact us via +61 3 9600 4077, our website or by emailing enquiries@lclawyers.com.au.