Victorian Government issues funding guidelines for the combustible cladding ‘rescue package’

On 19 December 2019, Cladding Safety Victoria (CSV) issued guidelines on the Victorian Government’s cladding rectification funding program (Program) for the rectification of combustible cladding of residential apartment buildings (Guidelines).

Importantly, the Guidelines set out which owners are eligible for the funding, namely that you must be an owners corporation responsible for a residential building that has been:

1. 1. assessed as having combustible cladding through the Victorian Statewide Cladding Audit, and deemed to be of higher risk;
   2. subject to a Building Notice or Order related to combustible external wall cladding;
   3. referred to CSV by either the Victorian Building Authority (VBA) or a local council; and
   4. prioritised for rectification by CSV.

Subject to meeting the above criteria, some of an owners corporation’s costs incurred for the design, procurement and performance of cladding rectification works may be covered by the Government under a funding agreement with CSV.

Owners corporations who commence rectification works prior to being notified of their eligibility under this Program may still receive “retrospective funding” if the relevant rectification work did not commence prior to 3 July 2017 (when the Victorian Cladding Taskforce was established) and those works meet the same requirements and standards of the Program. The funding agreements in that event will be assessed on a case-by-case basis and will subject to funding availability.

Guidelines Overview

The Guidelines provide an overview of the type of costs that will be covered if an owners corporation meets the above criteria. Broadly, the funding will seek to cover the design and implementation of any cladding rectification solutions that comply with the relevant building regulations and meet the VBA’s Cladding Guidelines for Building Surveyors. The amount of any such funding will be determined by CSV on a case-by-case basis.

The funding will cover only those costs related to the cladding rectification as the Government will not cover those rectification works that are not “directly linked” to dealing with the building risk posed by combustible cladding (for example, additional defect works which are not cladding-related or those works that are not within the scope of the recommended rectification solution).

The Guidelines provide examples of the types of costs that may be covered including:

• professional project management services for the entire rectification process, from planning and design to completion of rectification works;
• design solution costs – Fire Safety Engineer (FSE) services – required to determine if a performance solution is available to achieve compliance and, if required, to attend a BAB process;
• where a solution to rectify is identified, other costs may include professional services (e.g., architectural services, façade and structural engineering, quantity surveyors, etc.) related to the cladding rectification solution design;
• Building Appeals Board application and hearing fees;
• Relevant Building Surveyor services, including building permit application fees; and
• for construction and materials for rectification that accords with the rectification solution.

The Government will also undertake an assessment of the proposed costs of work which will factor items such as the complexity of the design and construct solution, the time and skill involved in the project, and reasonable costs incurred in obtaining quotes for approved rectification work.

The funding will be typically advanced sequentially in two stages (i.e., design and rectification works stages), although a single funding agreement may be used if one building practitioner is engaged under a direct design and construct approach to fully remove and replace the combustible cladding from the building.

Recommendations

For those owners corporations that do not currently meet the above criteria, but may be seeking funding assistance from CSV in the future, it is important to follow the Guidelines to ensure that any costs incurred in relation to cladding rectification works are not excluded from the Program’s coverage.

CSV’s funding agreements also contain more prescriptive requirements than those set out in the Guidelines, which should also be complied with if retrospective funding may be sought.

Authored by:

Daniel Middleton, Partner
Sandy Jassal, Lawyer