Tackling non-conforming products

By Innes Willox,

The chorus of complaints about non-conforming products (NCPs) infiltrating the building and construction sector raises important questions about quality and safety.  It also poses serious commercial challenges for the businesses that do play by the rules. The safety risks to employees and the public as well as the risks to business sustainability and long term asset values are serious.   The evidence of non-conformance now in the Australian building market including structural collapses, understrength materials, shoddy and fraudulent practices, inadequate compliance frameworks, glass falling from high rise buildings and electrical equipment posing fire and electric shock risk indicate there is a threat to employee and public safety.

Australian-based businesses conforming to relevant standards and regulations can be at a competitive disadvantage when the price at which a competing product is sold reflects lower levels of attention to the quality that is required under Australia’s conformance framework.  Without serious enforcement of rules and adequate deterrents, non-conforming products will remain in the market.
To help get a better picture of the current situation, Ai Group has recently conducted extensive research and interviews with more than 400 businesses across steel, electrical, glass and aluminium, engineered wood products, paint and plastic pipes industry sub-sectors.
The report “The quest for a level playing field: The non-conforming building products dilemma” is the first step in this process.  Of great concern was the finding that 92% of respondents reported NCPs in their supply chain.  This was even higher in the steel product sector with 95% of respondents in this sub- sector acknowledging NPCs.  Steel fabricators as well as steel building products manufacturers are the hardest hit by non-conforming product due a conformance framework that is overly reliant on first party certification and an increasing exposure to non-conforming structures and products.
According to this survey, 45% of companies are experiencing eroded margins and reduced revenues due to the presence on non-conforming products.   In addition to the impact on individual business’s finances, the report indicates NCPs can pose safety risks, escalate deterioration rates in buildings, reduce asset values, increase maintenance costs and have the potential to  impact on the Australian economy and our general competitiveness overall.
The efficiency of the current regulatory system and conformance framework –the system we rely on to ensure that products are fit for purpose – was also examined in this research. Despite convincing evidence of NCPs in the market, 43% of respondents reported they had not lodged a complaint when encountering NCP. Of these, close to half indicated that: they did not know who to complain to; or how to lodge a complaint; or reported that complaints previously lodged did not achieve a result.
There appears to be confusion among stakeholders about who has responsibility and the arrangements for reporting and recourse when non-conforming product is found. In some cases the gaps and weaknesses in the building products conformance framework are giving rise to voluntary, industry led, third party product certification schemes and such arrangements can be effective.
The report suggests that building certifiers bear a disproportionate share of the burden for ensuring product conformance and that greater emphasis on conformance at point of sale and increased responsibility on product suppliers and builders may be required.
Clearly this is an area which requires action. Ai Group believes that to solve the problem of non-conforming product, stakeholders, in consultation with all tiers of Government, need to work together to examine how to best address the gaps and weaknesses in the building and construction sector conformance framework. As well, the building certification arrangements should be reviewed with a focus on clarifying the role of building certifiers and assessing the adequacy of existing arrangements in preventing the installation of non-conforming product. Clarity should be provided on how to report non-conforming product as well as promoting the role of regulatory bodies in the building and construction sector.
Additionally, further research would be beneficial to identify leading conformance models that are effective whilst keeping compliance costs to a minimum as well as give an indication of other industry sectors with similar problems.
The impact on product and building safety is too great not to take action.  The uneven market created by non-conforming products risks a downward spiral of product standards, quality and safety with the potential for significant harm to Australian manufacturers, employees and the public.