EasyBuild director Mike Fox reckons the Government and officials appear in denial of the costs and delays that will be caused by rushed H1 Building Code changes due to be implemented in November this year. He follows up his Building Today March column with another look at the likely consequences.
Since writing my March article, which helped raised awareness of the impending H1 requirements, a number of things have happened.
Not surprisingly, the MBIE have come out in defence of their rushed stance where they have stated the upfront cost to the consumer of these measures to be between $8800 to $12,100 for a single-level, timber-framed, four-bedroom home, dependent on climate zone.
I consider the costs to be woefully underestimated, and no breakdown of them has been given.
When the real costs become a reality, I’m sure many disgruntled new home owners will be wanting answers — and access to the MBIE’s mythical suppliers to get the discounted rates it has used.
Overwhelming mandate
The MBIE also states they had an overwhelming mandate to go as hard and as fast as possible with the implementation of these requirements.
They base this on the number of positive submissions that think increasing insulation in new homes as much as possible and as quickly as possible is a good idea.
Most people do actually think it’s a good idea to do this, including myself — as long as it’s practical and cost-efficient.
This favourable feedback was garnered from the population at large, with a tenant from, say, Dunedin having the same say as a manufacturer or builder that may have invested millions in providing product or services, and who will have to deliver the outcome.
Another way to look at it, is it’s like asking everyone if they would like a pay rise. Of course the answer would be yes. However, if the same question was asked but in return you’d need to work seven days a week for the next 20 years to pay for it, what do you think the answer would be?
Support would plummet to the point where reality of return on investment would come into play.
That’s what’s missing from the MBIE’s argument about the increases — they haven’t countered it with the true costs, or taken enough time to consider the practical implications.
A very poignant and detailed joint letter from the RMBA, CBANZ, Offsite NZ and Business NZ unanimously calling for a longer transition period has been sent to Ministers Wood, Robertson, Williams and the MBIE. At the time of writing, a formal response is awaited.
If the Government wants another term in office, they would be smart in heeding the advice from this group who represent the vast majority of the builders and doers within the industry.
They are foretelling the Government of the impending mess if this is slammed through.
This solid group of leading builders and businesspeople are the ones charged with delivering these changes, and they are, rightfully, saying they need more time!
The rushed and ill thought-out nature of these changes will not end well, with delays and significant costs for the consumer.
Business failures
This will come on top of hyperinflation, rising interest rates, material shortages, labour shortages, housing shortages, housing affordability, Covid-19 and, now, a cooling market which, combined with the above, is already resulting in business failures.
For measures like H1 to be implemented smoothly it needs all of industry to be ready, not just parts of it. And it is plain for all to see from the collective industry response that the industry is not ready.
It is also becoming clear that some of these measures have, in fact, gone too far, and will have little payback — in particular, slab requirements which appear to be in contradiction to their own Cost Benefit Analysis recommendations.
Opposition parties are also now getting up to speed with what the changes mean, and are asking pertinent questions of the Government.
They are asking for full justification of the extent, timing and implications of the changes.
Watch this space as the pressure for proper answers mounts, and the issue becomes more political.
It is amazing how focused, fleet of foot and sensible politicians can become when there is warranted heat applied, and the poll numbers are dropping away as they currently are.
Since my earlier article, I have been supplied the Cost Benefit Analysis that the MBIE used to justify pushing ahead with the H1 requirements.
Below is an excerpt from the Cost Benefit Analysis which raises some serious questions:
Findings: Detached single-storey, double-storey and MDH typologies
“Patterns of what options returned favourable/unfavourable results are consistent across the three typologies.
• Favourable carbon results are more consistent compared to favourable economic results.
• Comfort as a metric is relatively insensitive to the various changes.
• Returns on roof insulation are the best, as it is cheap to insulate. Glazing is the next best to upgrade, although the returns here depend on what overheating/cooling setpoint and schedule assumptions are made.
• Wall upgrades are very expensive and not economical due to the cost of extra framing. However, extra timber may be a good thing from a carbon standpoint as it allows for additional sequestration.
• Edge insulation appears to have a poor return from a carbon and financial perspective, mostly due to the need for protection. Underslab insulation may be economical in the coldest parts of the country.
It should be noted that the benefit/cost ratios of most of the final construction sets were below two. Thus, reducing the benefits by a factor of three or four may result in them becoming negative, and not paying back within the 50-year lifespan examined here.
That being said, the ratios for the carbon analysis were significantly higher, and may still provide a positive return in many cases, even if the energy savings are significantly reduced.”
A concerning note is the finding about slab edge insulation and its poor return on investment, given the change in methodology now mandated by the MBIE significantly reduces the calculated R value compared to the current NZS4214 or BRANZ approach.
A RibRaft or similar slab used to have an R rating of circa R1.7. Now that same slab is rated well below the required R1.50.
Under the new formulas to achieve the required R rating of R1.50, slab edge and under footing insulation will be required from Kaitaia to Bluff if the schedule method is used.
This is what Firth now refers to as Ribraft HotEdge extra plus hot base. However, there is little detailed information currently available.
This requirement will add significant cost to the project with minimal return, along with some tricky bottom plate fixing detailing.
It will also slow the foundation contractors down, who will now need to increase staff if they want to maintain current volumes.
Below I have estimated the average real costs to the consumer for meeting the new H1 requirements on a typical single-level 200sq m, timber-framed house on a slab in zones 1 to 4.
Roof and wall insulation upgrades $5900
Window upgrades $13,800
Slab with edge and under footing insulation $10,800
Total increase to consumer $30,500 (including GST, margins and labour)
By my estimate, that’s $30,500 versus the MBIE’s estimate of $8800 to $12,100. Either the MBIE has not included slab insulation into their figures, or something is awry with their estimations.
So, what should happen from here?
• The MBIE should defer the implementation of the H1 requirements for 12 months from the original time line. This is in line with overwhelming industry requests, and gives breathing space to re-check assumptions.
• The Cost Benefit Analysis should be ethically revisited to include real world figures, implications and the inclusion of the slab edge and underfooting insulation costs.
• Once the Cost Benefit Analysis has been revisited, the MBIE should check their recommendations and then engage with the practical side of the industry to develop cost-effective solutions that can be delivered in a timely manner.
If the MBIE push on with the original time lines, then based on the costs and the MBIE’s own Cost Benefit Analysis recommendations, slab insulation requirements, at a minimum, should be made optional in all climate zones except in zones 5 and 6, or when in-slab heating is used.
• This article contains the author’s opinion only, and is not necessarily the opinion of the Registered Master Builders Association, its chief executive or staff.
