300706 BUILDING 1

MODULE 2
Regulations, drawings and contracts
REGULATIONS

The design and construction of buildings in Australia is governed by legislation and regulation at the three levels of
government – federal, state and local. The federal level is represented by the National Construction Code (Building Code
of Australia) which sets the national standard for the technical requirements of building construction. The state
governments through their planning departments control the administrative requirements. Local government is the arena
where this regulation is implemented at an individual project level. The benefits of controlling building development
through regulation include the promotion of:
 Public health and safety
 Social equity
 Consistency
 Amenity
 Economic benefit
 Environmental protection

The regulation of development at the local level is generally controlled by Building Surveyors, Planners, Engineers and
other professionals. To be successful, these professionals need to have a detailed understanding of the regulations that
control building development. Each individual State and Territory has its own suite of development control regulations.

Administrative requirements

In NSW the Environmental Planning and Assessment Act 1979 is the main piece of legislation covering development.
Under the authority of the Act, planning instruments are produced and then regulated in the community under the
Environmental Planning and Assessment Regulations 2000. Both these pieces of legislation are dynamic in nature
and therefore it is wise to refer to current versions:

Environmental Planning and Assessment Act 1979

Environmental Planning and Assessment Regulation 2000

Under the act, environmental planning instruments are produced in two forms:

State environmental planning policies (commonly referred to as SEPPs), and

Local environmental plans (commonly referred to as LEPs)

SEPPs are prepared by the State Government through the NSW Department of Planning (NSWDP) and deal with matters
of environmental planning that are of significance to the whole State. Some SEPPs apply to all areas of the State, while
others only apply to nominated parts of the State. They are a mechanism which the NSW government uses to exercise
considerable control over development at the local level.

You can view a current list of SEPPs

LEPs are made by Local Councils but are approved by the minister representing NSWDP. In this process, the state
government can also exercise control over the environmental planning policies of the Council and will generally not
approve any LEP that contradicts a relevant SEPP or the Act itself. LEPs may apply to land located throughout a Council
area, a portion of the area or an individual site. In some cases, adjoining Councils may combine to prepare a LEP to
apply to both local areas. While the Act provides a detailed legal framework for the making of LEPs which must be
followed, LEPs broadly contain planning strategies and controls relevant to the objectives of the LEP itself. Land use
zoning and permissible uses are included, development controls relating to heritage, protection of the environment,
amenity may also be specified. In July 2009, the NSW Government changed the way that local LEPs are developed and
approved in what is called the “gateway process” to:
 assist in meeting the NSW Government’s target of a 50% overall reduction in the time taken to produce LEPs
 provide clear and publicly-available justification for each plan at an early stage
 ensure vital NSW and Commonwealth agency input is sought at an early stage, and
 replace the former “one size fits all” system with one that tailors assessment of the proposal to its complexity

View more information about local plan making and the Gateway process

Local Councils use Development Control Plans (DCPs) to expand upon the objectives and provisions of their LEPs.
DCPs are prepared and approved by the council itself. They are not statutory controls like other planning instruments.
DCPs have the legal weight of a policy document and their success in law will depend upon the soundness of the plan’s
preparation. As a result there is a certain amount of flexibility involved in the implementation of DCPs.
 As an historic note, Regional Environmental Plans (or REPs) used to also be prepared by the State Government and
dealt with a region rather than the whole of the State. As part of improvements to simplify the State’s planning system, as
of 1 July 2009, REPs are no longer part of the hierarchy of environmental planning instruments in NSW. All existing REPs
are now deemed SEPPs and you can viewed here

Regional Strategies are still considered for specific areas of NSW and have been prepared in partnership with state and
local government, communities and business. The Regional Strategies set a clear direction for eight rapidly growing
regions over the longer term. The regions are:
1. Central Coast Regional Strategy
2. Lower Hunter Regional Strategy
3. Far North Coast Regional Strategy
4. Mid North Coast Regional Strategy
5. Illawarra Regional Strategy
6. South Coast Regional Strategy
7. Sydney-Canberra Corridor Regional Strategy
8. Murray Regional Strategy

The NSWDP has also released a Regional Strategy Update Report in May 2009 that outlines progress made on the
above strategies. Every five years each strategy will be reviewed to ensure they continue to respond to new challenges in
the regions, together with other regional planning initiatives relative to Western NSW and the Alpine (Snowy Mountains)
regions.

Categories of development under LEPs and DCPs

 Exempt development Removes the need for any approval for minor development, provided that certain standards are
satisfied. Exempt development is usually listed in the applicable LEP and may vary from one area to another. Typically
it includes items such as clothes lines, pergolas and fences.

 Complying development: Complying development is routine development, which can be certified entirely as complying
with predetermined standards. An example would include a single or two-storey project home constructed in a new
housing estate and satisfying setback, enclosure and covenant restrictions. Complying development is usually listed in
the applicable LEP and may vary from one area to another.

 Local development: Local development is desired development for the location but of scale and uniqueness to require
Local Council (and by definition local community either as an individual or as a representative group) consideration
before giving consent. Examples such as shopping centres, medium and high density residential developments,
factories, warehouses and commercial development make up a significant portion of the approvals process. In most
cases, local councils are the decision makers and do so under existing LEP and applicable DCP.

A new planning system for NSW

Care must be afforded to the regions, communities and streets in which we live. The NSW Government has embarked on
a major review of the system which defines how planning decisions are made. This includes the creation of new State
planning legislation based on a review that will be divided into three stages:
 1. A listening and scoping stage, identifying the key outcomes and principles for a new system
 2. Production and exhibition of a 'green paper' outlining policy options
 3. Production of a 'white paper' setting out the government's proposed new framework, including draft legislation

View more information about the new planning initiative here

Additional NSW Planning reading

Comprehensive factsheets on SEPPs and LEPs may be accessed via the Environmental Defender's Office New South
Wales Ltd website

Certification by an accredited certifier

Most building and subdivision in NSW involves certification, whether it is the assessment of detailed construction plans for
a high rise residential building, house plans assessed as complying development or inspections undertaken during the
construction phase.

Certificates are approvals provided from either a Local Council or an Accredited Certifier to confirm that proposed and
completed development complies with relevant planning controls and national building standards.
The group of professionals who deliver this certification are accredited by the Building Professionals Board. It is up to
the person who is building or developing to decide whether to use their local council or an accredited certifier.

Certificates are issued under the

 Environmental Planning and Assessment Act 1979 (EP&A Act)
 Strata Schemes (Freehold Development) Act 1973, or
 Strata Schemes (Leasehold Development) Act 1986.

A local council or accredited certifier can:

 Issue complying development certificates
 Issue construction certificates
 Issue compliance certificates
 Issue strata certificates
 Conduct inspections of building works during construction, and
 Act as a principal certifying authority (PCA) responsible for issuing occupation certificates for building work and
subdivision certificates for subdivision work. (Usually only the council can act as PCA for subdivision work and issue
subdivision certificates (unless the local planning instrument says otherwise).

Technical requirements

National Construction Code (ex Building Code of Australia)

The NCC (BCA) has been developed to provide a uniform approach

to building regulation on a national basis. The basic objective of
NCC (BCA) is to ensure that acceptable standards of structural
sufficiency, fire safety, health and amenity are maintained for the
benefit of the community now and in the future. Its requirements are
intended to extend no further than is necessary in the public
interest, to be cost effective, not needlessly onerous in their
application and to be easily understood.
NCC (BCA) is divided into two volumes:
Volume 1 - Class 2 to 9 buildings - general
Volume 2 - Class 1 and 10 buildings – houses and outbuildings

Classification of buildings: Volume 1 of NCC (BCA) classifies buildings according to the occupancy or use. This
classification is considered important as the use of a building gives an indication as to the potential risk associated with
the building. Buildings of similar use are grouped into the same class, primarily because research has shown that
buildings of similar use tend to have the same fire loads as they usually contain the same types of materials and finishes.

A3.1 of NCC (BCA), volume 1 states that the classification of a building is determined by the purpose for which the
building is designed, constructed or adapted to be used. A3.2 of NCC (BCA) divides buildings into ten (10) main classes.
These can be summarised as follows:
Class 1 - Dwelling houses
(a) Class 1a - a single dwelling being (i).a detached house; or (ii).one or more attached dwellings, each being a
building, separated by a fire-resisting wall, including a row house, terrace house, town house or villa unit; or
(b) Class 1b - a boarding house, guest house, hostel or the like with a total floor area not exceeding 300 m² and
in which not more than 12 persons would ordinarily be resident; which is not located above or below another
dwelling or another Class of building other than a private garage
Class 2 - Town Houses, Flats and home units
Class 3 - Residential buildings accommodating a number of unrelated persons
Class 4 - Residential parts of Class 5, 6, 7, 8 or 9 buildings
Class 5 - Office buildings
Class 6 - Shops
Class 7 - Public undercover car parks and buildings for storage or display of goods
Class 8 - Factory buildings and laboratories
Class 9 - Health care buildings and assembly buildings
Class 10 - Outbuildings and other structures.
(a) Class 10a - a non-habitable building being a private garage, carport, shed, or the like; or
(b) Class 10b - a structure being a fence, mast, antenna, retaining or free-standing wall, swimming pool, or the
like.
The following notes deal with NCC (BCA) Volume 2 as it relates to dwellings and outbuildings. Volume 2 is divided into
three (3) sections:

• Section 1 General
• Section 2 Performance provisions
• Section 3 Acceptable construction

General Provisions (Section I of NCC (BCA) Volume 2)

This section defines various terms that are commonly used throughout NCC (BCA), classifies dwellings and outbuildings
depending on the intended use of the building and lists all of the Australian Standards which are referred to in NCC
(BCA). This section also contains minimum technical requirements for workmanship and materials and details on how to
determine the fire properties of materials and structures.

Performance Provisions (Section 2 of NCC (BCA) Volume 2)

NCC (BCA) includes technical requirements, with a 'performance hierarchy' built around them. This hierarchy contains 4
levels - objectives, functional statements, performance requirements and building solutions. The objectives, functional
statements, performance requirements for Class 1 and 10 buildings are contained in Section 2 of NCC (BCA), volume 2.
The building solutions are contained in Section 3.

The building solutions in Section 3 set out the means of achieving compliance with the performance requirements. These
solutions (known as deemed-to-satisfy provisions) include examples of materials, components, design factors, and
construction methods which, if used, will result in compliance with the performance requirements of NCC (BCA). The key
to NCC (BCA) is that there is no obligation to adopt any particular material, component, design factor or construction
method. An approval authority may still issue an approval if it differs in whole or in part from deemed-to-satisfy provisions
described in the NCC (BCA) if it can be demonstrated that they comply with the relevant performance requirement. The
various parts in Section 2 include structure, damp and weather proofing, fire safety, health and amenity, and safe
movement and access.

Acceptable construction (Section 3 of NCC (BCA) Volume 2)

The performance requirements in Section 2 of Volume 2 can be satisfied in four ways:
(a) construct the building using an alternative approach that demonstrates compliance with the performance requirements
of Section 2; or
(b) construct the building in accordance with the provisions contained in the Acceptable Construction described
throughout Section 3 of Volume 2; or
(c) construct the building in accordance with the acceptable construction manuals identified in Section 3 of Volume 2; or
(d) construct the building using a combination of all three methods mentioned above.
The Acceptable Construction methods in Section 3 are in effect the "deemed to satisfy" solutions for the performance
requirements contained in Section 2.

Building Regulation Professionals must have knowledge of the regulations that control building development in order to
approve applications for approval to building and to carry out inspections of buildings during construction. These notes
have introduced the legal framework that underpins the Regulations. The broad requirements in the Section 2 of NCC
(BCA) Volume 2 have been discussed, and an overview of the general requirements relating to Class 1 and 10 buildings
has been given. NCC (BCA) is written in performance terms. The performance hierarchy includes objectives, functional
statements and performance requirements. These requirements are contained in Section 2 and "deemed to satisfy"
solutions are provided in Section 3 of NCC (BCA), Volume 2. This "performance" approach represents the current trend in
liberalising the regulation of buildings. The intention is to make it easier to introduce innovations and new construction
systems.
DRAWINGS

Technical drawings are used to communicate the design of a proposed building to those who will assess, evaluate and
construct it. Such drawings are supplemented by a written specification which describes in detail the amount and nature
of the work needing to be done by the builder. Before this stage is reached design or sketch drawings are usually
produced. These are used to try out ideas and to firm up the layout and appearance of the building. Once the design has
been agreed upon, construction drawings, sometimes known as working drawings are produced. There is a series of
rules or conventions which describe the standard format and symbols for construction drawings. There is an Australian
Standard AS 1100.301-1985 Technical drawing - Architectural drawing which describes standard drawing practice in
detail.

Advertising plan for a house – not a working drawing

Generally construction drawings include floor plans, elevations and sections. Commonly these are drawn at a scale of
1:100 meaning that each millimetre on the drawing represents 100mm in the full scale building. Floor plans represent a
horizontal cut through a building at a level just above the window sills. Elevations are views of the external walls of the
building from all four directions. Sections represent vertical cuts through the building. Plans, elevations and sections are
orthographic views, that is, they are drawn eliminating the effect of perspective. They are not “artist’s impressions” but
rather an accurate representation at a predetermined scale of the actual dimensions of the proposed building. Any
unusual or complex construction features are usually represented as detail drawings at a much larger scale – typically
1:20 or 1:10.
 Excerpt from a project home working drawing

Being able to visualise a completed building from a set of working drawings is a skill those who work in any capacity in
the construction industry need to develop.
CONTRACTS, LIABILITIES & INSURANCES (NSW)

In general, any job over $200 in labour costs must have a written contract. This does not apply to a subcontract between
a builder or tradesperson and a contractor. Any required contract must meet the following requirements:
 The contract must show the foIIowing:
– the date it was signed by both the builder and the customer
– the names of the builder and the customer
– the contractors licence details
– a sufficient description of the works, including any plans and specifications
– any relevant warranties that are required by the Home Building Act
 The contract price must be prominently displayed on the first page with a warning if it is subject to change
 If the market value of the work is greater than $12,000 a certificate of insurance must be given to the customer.
 There can be no compulsory arbitration clause (any such clause is void under the law).
 The builder must provide certain warranties about the work, the materials used, compliance with the law, completion
time, and that the dwelling is fit to live in.
 The builder must give the customer a copy of the contract within 5 working days of entering the contract

Statutory warranties on residential building work

The holder of a licence, or a person required to hold a licence implies the following (paraphrased) warranties in every
contract to do residential building work in NSW:
 that the work will be performed in a proper and workman-like manner
 that all materials supplied will be good and suitable for the purpose for which they are used and that those materials
will be new (unless otherwise stated in the contract)
 that the work will be done in accordance with, and will comply with the Home Building Act, and any other law
 that the work done will he done with due diligence and within the time stipulated in the contract
 that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling, or the
repairing, renovation, decoration or protective treatment of a dwelIing, the work will result in a dwelling that is
reasonably fit for occupation as a dwelling, and
 that the work and any materials used in doing the work will be reasonably fit for the specified purpose, or specified
result that the owner desires the work to achieve.

Period for breach of statutory warranty

The period for cover for structural defects is 6 years and for all other defects is 2 years from completion of works. The
period to notify claims for breach of statutory warranty is 6 months after claimant first became aware, or ought reasonably
to be aware, of the circumstances of a claim.

Maximum deposits
You can only ask for a deposit that's within the allowable amount set down in the Home Building Act 1989: The Act
restricts deposits to the following amounts:
 Where the contract work is $20,000 or less, the maximum deposit that can be taken is 10% of the contract price.
 Where the contract work is more than $20,000, the maximum deposit that can be taken is 5% of the contract price.

Types of standard contract

 Department of Fair Trading
– Home building contract (>$25,000)
– Minor works contract (<$5,000)
– Renovations contract ($5,000-$25,000)
– Swimming pool contract
 HIA
– Edition 3 -New home construction
– Edition 4 – Cost plus agreement
– Edition 5 – Building contract cost plus
– Small building works
– Sub-contract agreement
 MBA
– Short form contract
– Plain English minor works
– BC3 Contract
– BC4 (Residential) contract
– Cost plus contract
– Trade contract
– SC2 - Sub contract
 – SBW2 Simple building works
– Pool contract
 RAIA
– ABIC MW-1 2003 Major Works
– ABIC SW-1 2002 Simple Works
– ABIC EW-1 2003 Early Works
– ABIC BW-1 2002 Basic Works

The NSW Department of Fair Trading (DFT) is responsible for setting and maintaining standards of competence for
builders and tradespeople in the NSW home building industry. DFT issues licences and certificates to over 150,000
tradespeople and builders who have met the licensing requirements of the Home Building Act 1989. The Act requires
contractors to be licenced for the work they do, to write proper contracts and to take out home warranty insurance for jobs
worth more than $12,000.

Licensing
DFT licences all building, trade and specialist contractors working in the NSW home building industry. Individual
contractors gain a Contractors Licence from DFT if they show that they are fit and proper persons, they have appropriate
technical qualifications or experience and the ability and capacity to carry out contracts for which the licence is required.
Performing residential building or specialist work without an appropriate licence is against the law and carries heavy
penalties.

The Home Building Act 1989 (NSW)

Is the law that regulates the home building industry in NSW. Some of the more important provisions of the Act are:
 all building and trade contractors doing residential building work must be licenced to practise their trade
 licensing criteria include having technical competence and being a fit and proper person or otherwise of good
character
 all residential jobs worth over $200 in labour costs must have a written contract that contains certain provisions,
including the statutory warranties
 the builder or tradesperson must take out home warranty insurance if the value of the contract is more than
$12,000. The Environmental Planning and Assessment Act has been amended to ensure that commencement
of work may be refused until the Principal Certifying Authority is satisfied that home warranty insurance has been
taken out.
 a number of private insurance companies have been approved to provide home warranty insurance, and these
companies are responsible for handling claims from consumers
 the Fair Trading Tribunal has an increased role in resolving disputes, following recent legislative amendments

Insurance
The home building industry involves relatively high levels of risk, including the risks of defective or incomplete building
work, damage to materials and property, and injury to people. One of your most important responsibilities as a building
contractor or tradesperson is to arrange appropriate and adequate insurance against the various risks, and for it to be in
place before signing any contract and before starting any building work. During the course of building, builders are usually
liable for any loss or damage to property or injury to any person if the damage or injury was caused by the negligent act
or omission of the builder, the builder's employees or sub-contractors.

Types of insurance

1. Home Warranty Insurance

The DFT no longer operates any home warranty insurance scheme. Instead, home warranty is now provided by approved
private insurance companies. All builders and tradespeople need to take out home warranty insurance from an approved
private insurer for any residential building work if:
 the work requires a licence and/or
 the work costs over $12,000

For example, if a carpenter enters into a contract with a customer to do domestic carpentry work for an amount greater
than $12,000, that carpenter must take out the necessary home warranty insurance and give a certificate of that
insurance to the customer before commencing the work.

This insurance requirement applies to all builders and tradespeople who are contracting directly with their customers
(including customers who are owner-builders) or carrying out residential 'spec' building (ie. without a contract). The
insurance requirement does not apply to builders or tradespeople working as subcontractors to a licenced head
contractor or to builders who have obtained an owner-builder permit to build their own home. (Home warranty insurance
for owner-builder work will be necessary if and when the property is to be sold prior to the period up until the cessation of
statutory warranties.)

Important points to remember

 Home warranty insurance is required to be taken out by the contractor for residential building works valued over
$12,000, before residential building work commences
 Contracts must be in writing and the home warranty insurance certificate must be given to the customer before
work commences
 Developers having work done by a licenced builder, and 'spec' builders, must attach a certificate of the builder's
home warranty insurance to the sale contract.
 Contractors will not be able to take their customer to court to enforce the contract and be paid unless home
warranty insurance has been taken out.
 When a claim is paid by an insurer to rectify defective work, the insurer has a right to seek recovery of that
payment from the builder or owner-builder.

Amount of insurance cover

Home warranty insurance protects the consumer (and subsequent purchaser) against, loss from defective building work
or incomplete building work by providing cover of at least $300,000

2. Builders all-risk insurance

This type of insurance covers the builder or tradesperson against loss of or damage to work and materials, whether on-
site or in storage. It should include:
 building tools
 amount of excess paid
 cover in case of “act of God”, such as flood and wind

3. Public liability insurance

Covers the builder or tradesperson when a member of the public (including customer and family) is injured as a result of
the building work and sues the builder or tradesperson. If this cover is not sought, the builder or tradesperson could be
personally liable for compensation for any injuries caused to others as a result of the building work

4. Workers compensation cover

In general, all employers are required to have workers compensation insurance. This includes companies who only
employ working directors. It covers work-related personal injury to employees, including the period of travelling to and
from work. Failure to take out this cover could result in fines exceeding $20,000 and/or 6 months imprisonment. In
addition, the builder or tradesperson could also be personally liable for an employee’s medical fees and any
compensation.

Dispute resolution
Things don't always go to plan when performing building or tradework. Communication is often the problem and having a
written contract will help you minimise any disputes. However, sometimes disputes still occur. It is important to try to
resolve any dispute (builder and customer) as soon as it arises. If the problem or dispute is not resolved after talking it
through, the Department of Fair Trading may assist with a range of options to help resolve the dispute. If the builder fails
to complete the work or the completed work is defective, the customer may approach the home building insurance
provider to lodge a claim. The customer may also seek a hearing at the NSW Civil Administration Tribunal or lodge a
complaint with the Department of Fair Trading

Role of the NSW Civil Administration Tribunal (ex Consumer, Trader and Tenancy Tribunal (CTTT))
Provides an informal, timely and inexpensive means of resolving disputes. The Home Building Division of the Tribunal
deals with disputes between owners and builders or trade contractors. It also handles disputes between contractors and
their suppliers or subcontractors as well as appeals in relation to home warranty insurance. The Home Building Division
of the Tribunal can now handle building disputes of any value, albeit that the application fee will increase depending on
the monetary value in dispute.
Fair Trading obligations for builders
As the holder of a DFT Contractor Licence, a builder provides services to customers within New South Wales. All traders
(businesses) operating in New South Wales come under the provisions of the NSW Fair Trading Act. So, in addition to
complying with the Home Building Act the builder must also be aware of and comply with the Fair Trading Act. An
important section of this Act allows a customer to make a claim against a contractor for any 'misleading or deceptive'
conduct, as well as unconscionable conduct and false representations. Contractors who contravene this section of the Act
may be liable for large fines and damages caused to their customer. This section applies to false advertising or untrue
statements made by the contractor to the customer. Contractors who trade as a company also come under similar
provisions of the Commonwealth Trade Practices Act. Licenced contractors who sell goods (such as kit homes, hot water
heaters and kitchens) as well as their services when visiting their customers' homes may also fall under the provisions of
the NSW Door- To -Door Sales Act. Amongst other matters, this Act provides for a 10-day cooling-off period where these
sales are made on credit, during which time the customer may cancel the agreement. If a builder provides money for
customers to purchase goods or services, they are providing credit and therefore have to comply with the Consumer
Credit Code.

Building Professionals Board of NSW

The Building Professionals Board is a new authority that was established under the Building Professionals Act 2005 (the
Act) on 25 January 2007 and commenced full operations on 1 March 2007. The role of the Board is to accredit certifiers
to issue construction, occupation, subdivision, strata, compliance and complying development certificates under the
Environmental Planning and Assessment Act 1979 (EP&A Act), Strata Schemes (Freehold Development) Act 1973 and
Strata Schemes (Leasehold Development) Act 1986. The Board also investigates complaints against accredited certifiers
and audits accredited certifiers and councils in their certification role.

Conclusion
In order to be a successful professional in the Construction and Property Industry, it is necessary to understand the
regulatory and contractual context in which the industry operates. Some of this is nationwide and some state based.
There are significant legal requirements in terms of compliance with laws and regulations, as well as commercial and
contractual obligations for the various parties involved. It is important to be aware of your own position in terms of rights,
responsibilities and options in building.