Identification and analysis of building consent, inspection and approval costs: Effects of the Building Act 2004
The Building Act 2004 introduced a range of reforms, to be introduced on a staged basis, designed to help improve the control of, and encourage better practice and performance in building design, regulatory building control and building construction. These reforms are the Building Consent Authority Accreditation and Registration Scheme, the Licensed Building Practitioner Scheme, the revision of the Building Code, and the Product Certification Scheme.
These requirements have had both direct and indirect impacts on the cost of building control, and consequently building consent fees. Table 15 sets out the one-off direct costs of accreditation as perceived by respondent councils.
| Table 15: Perceived one-off costs of accreditation |
| |
Accreditaion Audit Fee |
External Contractors |
Staff time |
Printing, Equipment, etc |
Staff Training |
Total for Accreditation |
| Maximum |
70,000 |
1,259,000 |
359,000 |
26,000 |
110,000 |
1,656,000 |
| Minimum |
14,000 |
4,953 |
15,000 |
2,000 |
8,000 |
20,000 |
| Average |
30,648 |
101,602 |
106,363 |
13,500 |
47,600 |
163,974 |
| Median |
29,000 |
37,250 |
60,000 |
13,000 |
25,000 |
91,678 |
In addition to the one-off costs shown in Table 15, a number of councils cite ongoing costs of up to $845,000 per annum which they attribute directly to accreditation. These costs are to cover additional staff needed to ensure councils meet accreditation requirements in accordance with the Act and Regulations.
Of the costs in Table 15, the accreditation audit fee (paid to IANZ) is clearly a cost attributable to accreditation. There is an argument for an element of each of the other costs listed to also be attributed to accreditation. As a number of councils noted in their questionnaire responses, much of the increase in staff, resources and documented systems would have happened anyway as councils moved to improve their business practices and/or limit liability from legal action arising in respect of poorly performed consent processing and inspection work. Even in the absence of the accreditation regime, this would have necessitated the implementation of competency assessment processes and higher staffing levels. The margin that is attributable to accreditation is perhaps the extra cost of more rigorous competency assessment processes and higher staffing levels than councils would otherwise have considered necessary to meet their building control obligations.
Several respondents cited only the accreditation audit fee as a direct cost of accreditation. Others claimed the costs were too diverse and difficult to quantify.
Increased processing and inspections
Responses from councils to the questionnaire, and follow-up discussions, reveal that most councils have increased the number of inspections undertaken on buildings of all types, and that the time to process consent applications has also increased. The main reasons cited for these increases are:
- weathertightness issues (23 councils)
- the Building Act 2004 (21 councils)
- accreditation requirements (12 councils).
Of the 30 councils that advised when inspection numbers increased, the majority had increased their inspections prior to the Building Act and the accreditation scheme taking effect. Specific examples of new inspections include cavity and flashings inspections. As with the costs discussion above, however, a number of councils maintain that these increases result from councils moving to improve their business practices and limit their liability in the wake of the leaky buildings issue, and that the changes made would have happened anyway.
In a number of cases, responses show that inspection numbers had increased prior to 2004.
Table 16 sets out the change in inspection numbers for houses and industrial and commercial buildings between 2000/01 and 2006/07. It shows that the average number of inspections for houses has increased by 54.9%, for industrial by 42.9%, and for commercial by 36.8%4.
| Table 16: Number of inspections carried out on a house, 2000/01 and 2006/07 |
| |
Houses |
Industrial |
Commercial |
| |
2000/01 |
2006/07 |
2000/01 |
20006/07 |
2000/01 |
2006/07 |
| Maximum |
10.1 |
20.0 |
20.0 |
25.0 |
20.0 |
30.0 |
| Minimum |
3.0 |
6.0 |
3.0 |
3.0 |
4.0 |
5.0 |
| Average |
7.1 |
11.0 |
7.0 |
10.0 |
8.7 |
11.9 |
| Median |
7.0 |
11.0 |
6.0 |
9.0 |
8.0 |
12.0 |
Table 17 shows a 110% increase in the average processing time for a building consent for a house. The range of percentage increases in processing time was 13% to 422%.
| Table 17: Time taken to process a consent application for a house |
| |
Hours to process |
| 2000/01 |
2006/07 |
Maximum |
| 4.0 |
6.5 |
Minimum |
| 0.7 |
2.0 |
Average |
| 1.9 |
4.0 |
Median |
| 1.8 |
4.0 |