Opportunities for managing contractors, sub-contractors, suppliers of replacement cladding and consultants, and clarity for insurers and banks.
Owners Corporations of an estimated 225 NSW buildings with combustible cladding can now register their interest in Project Remediate, a voluntary program intended to remove high-risk combustible cladding from Class 2 residential apartment buildings (including multi-use buildings, i.e. part commercial/part residential). If uncertain as to the status of their building, Owners Corporations can check whether their building is one of the 225 buildings identified by contacting the Cladding Taskforce.
Project Remediate offers opportunities not only for Owners Corporations to fund and implement removal of flammable cladding, but also to contractors with skills in management of complex projects to take roles as managing contractors, and to materials suppliers and consultants.
- Key takeaways
- Project Remediate
In addition to the obvious funding benefits to Owners Corporations, Project Remediate has potential benefits for other stakeholders. The bulk of the work to be delivered under Project Remediate will be completed by small to medium-sized businesses. This creates business opportunities for managing contractors, sub-contractors, suppliers of replacement cladding and consultants. Insurers and banks will also benefit as remedial works will increase asset values and decrease risk for insurers.
The tender process for managing contractors and financial providers is open from now until June 2021.
To benefit from this opportunity:
- Owners Corporations should act quickly to register their interest and follow the developments and key dates for Project Remediate (to register your interest, click here)
- managing contractors, sub-contractors, suppliers and consultants with relevant skills and expertise should identify opportunities to enter this sector
Strata managers and committee members of affected buildings can also access a free 2-hour course on Project Remediate designed to help them explain Project Remediate to lot owners, to enable owners to make an informed decision about joining. The course is free until 30 September 2021, after which a course fee of AUD 140 will apply. The link to enroll in the course can be found here.
Since the 2014 Lacrosse Tower fire in Melbourne and the 2017 Grenfell Tower fire in London, there has been a sustained focus on addressing the issue of flammable cladding, particularly in relation to high rise residential buildings where the risk to occupants in the event of a fire is greater than with commercial buildings. Owners Corporations of affected buildings face the problem of dealing with disparate owner cohorts with varying interests and varying abilities to raise the necessary funds for remedial works.
Project Remediate is the New South Wales government's attempt at facilitating cladding remediation for an identified group of 225 residential buildings.
Learning from criticisms of the Victorian Cladding Rectification Program, Project Remediate aims to avoid problems which made the Victorian scheme ineffective by early identification of relevant buildings and simpler procedures for determining entitlement and applying for funding.
Project Remediate is a three-year program designed to help remove combustible cladding from an estimated 225 buildings already identified by the Cladding Taskforce. Most of the eligible buildings are located in business districts such as the City of Sydney and Parramatta.
Eligible building owners:
- are entitled to interest free loans over a 10 year period, with repayments not to commence until completion of the work; and
- are provided with assurance and project management services offering technical and practical support to Owners Corporations and strata managing agents.
Project Remediate aims to provide:
- an enduring and safe solution for affected buildings
- the best value for money for rectification works
- a timely response to community safety
It is anticipated that the remediation works will be undertaken in tranches of 30-40 buildings at a time.
To be eligible for Project Remediate support, a building must be:
- a residential apartment building (Class 2) in NSW. This includes multi-use buildings which are part-commercial/part-residential; and
- confirmed by the Cladding Taskforce to have a high-risk combustible cladding façade which requires remediation.
Interest-free loan scheme
Under the interest-free loan scheme, the NSW government will cover the interest bill on loans on behalf of building owners, capped at AUD 930 million across the life of the scheme.
Repayments are to be made quarterly to align with the schedule of strata levies.
Each loan will be designed with the building owners' interests in mind and will incorporate provisions to accommodate and support owners experiencing financial hardship.
Assurance and project management services
As cladding replacement is complex, the NSW government will appoint, and pay for, a managing contractor to implement the remedial works on behalf of the Owners Corporation. The managing contractor will coordinate all activities necessary to successfully complete the remediation works for each building in conjunction with the Office of the NSW Building Commissioner.
Services to be provided by the managing contractor include:
- program and quality assurance
- controlling risks, costs and the quality of cladding rectification.
This alert was prepared with the assistance of Andrew Chih.