Waterproofing price pressure – A race to the bottom line

Recently, a large national insurance builder, currently performing works for major publicly listed insurers and utility companies, approached Waterstop Solutions to perform their remedial insurance works.

At face value, this opportunity seemed like a coup for the company and Waterstop Director, Chris Anderson, welcomed further talks.  However, upon learning the details of the proposition, Chris was quick to shut down any likelihood of Waterstop entering into business with this insurance builder.

Put simply, the numbers didn’t add up.

While the opportunity promised to save costs invested in inspections and quoting, and to provide a steady stream of work – allowing us to hire more people – irretrievable problems lay with two of its provisos:  that only licenced waterproofing technicians (a 3-year trade qualification) be permitted to work; and the hourly rate to be paid.

This insurance builder offered a rate of $52.50/hour – to include all materials.

Let’s calculate the costs starting from the $22.95-an-hour base rate in the federal government’s award, rather than the higher union-specified EBA rate. That figure soon goes over $25, as it rises for certain tasks and conditions, such as working in confined spaces and sewers.

It goes right up to low-mid $30s an hour. Then on top of that, you need to pay for super, sick leave and annual leave. By normal calculations, you time that by 1.3 for other provisions. This brings us close to $40.

Now here is the real crunch time. Even if we talk low-end fiddly tasks, which may not use much materials (like whole big wet areas do), you’re at $100 in a day. That’s the absolute bottom end of the scale. That is $12.50 an hour (which can easily be doubled or trebled on many jobs). So far, we are up to a minimum of $52.50 an hour in cost.

This is without allowing other consumables and bits of things like masking tape, brushes and rollers and no provision for the odd power tool that breaks down.

Moreover, we allow one hour’s travel time at the company’s expense to allow technicians to get to and from a job site. That is not included and it is on company time too.

Adding $5 an hour for the cost of fuel and include the cost of road tolls and the technician’s car allowance. Now we are up to $57.50 – possibly closer to $60 an hour in cost.

This before including overheads such as administrative support, risk, travel, consumables, risk and compulsory insurances (WorkCover and Public Liability) and discretionary insurances.

How cost-cutting makes buildings fail. There is a strong link between waterproofing price pressure and building defects.

Unfortunately, it would seem the value of professional waterproofing is often undersold in the construction industry today, giving rise to some compelling statistics.  The Australian Institute of Waterproofing reports that waterproofing represents less than 1% of overall construction costs, but waterproofing defects account for 80% of post-construction issues.

It is deeply concerning that defective waterproofing is the cause of major problems for construction companies and developers – especially homeowners and property investors who suspect nothing at the time of purchase.

As a remedial waterproofing company, specialising in leak sealing and the repair of building defects in concrete structures, Waterstop Solutions attends many sites showing evidence of:

• no waterproofing ever being installed;
• poorly installed waterproofing;
• the use of incorrect or low-quality products; and/or
• after-trades damage to waterproofing.

It’s clear that water penetration issues in buildings is a significant problem.  As Deakin University’s Dr Nicole Johnston, Senior Lecturer (Property and Real Estate) and Director of Industry Engagement (Dept. of Finance), states: “The issue is very widespread.” Link to article in The Australian Financial Review

Why $52.50 an hour isn’t enough – Chris Anderson’s interview with The Australian Financial Review.

How cost-cutting makes buildings fail – Chris Anderson’s interview with The Australian Financial Review.

The market price of waterproofing has in effect decreased over time.

Rather than looking at one trade issue in isolation, there is a need to redirect the spotlight to the root cause of building defects. To begin with, property developers can place building designers under great pressure to reduce costs. When a builder takes over the responsibility of the design, the pressure of further cost-reduction from developers is passed on to the builder. This pressure is passed down from the builder to other trades to manage further cost-saving design alterations.

As a result, the potential for long-term problems that result from inferior builds are ignored in favour of short-term financial gain.

An example of the real price of cost-cutting that occurs:

The cost to waterproof a standard bathroom in a new-build – performed by untrained workers using basic materials – typically ranges from around $400 – $600.  Whereas, a ballpark figure for a professional waterproofing installation in a same-sized bathroom, carried out by a licenced waterproofing technician using high-quality products, is around $700+.  The cost of remediation to the same bathroom post-construction can range from $10,000 – $15,000. And who is to pay it? Is it the builder; the insurance company or the property owner?

Lowest price can sometimes equate to poor performance – false economy at whose expense?

The average wage in the last 20 years has almost doubled in Australia. Material prices have also increased and standards have since come into place for common waterproofing applications, as have safety requirements.  Conversely, the price expectation by large companies has not reflected these changes, as only marginal price increases for waterproofing installation has been seen in the market over the last 20 years.

The Waterproofing industry has, for a long time, experienced huge price pressure from the new-build market. In the pursuit of winning a tender or contract, the quality bar has been pushed low, meaning that poor quality, low-cost products are being used which may not have been designed for, or are not compatible with, the intended installation purpose.

Furthermore, to cut labour costs to a minimum, contractors are recruiting unskilled labour to carry out projects – sometimes without a licenced waterproofer present to oversee the works from start to completion. A waterproofing company is only required to employ one (1) licenced waterproofer in Queensland and that person may not even be someone who oversees the work being carried out. Oftentimes tradesmen such as tilers and builders perform their own waterproofing in lieu of a licenced waterproofing technician.

Commonly, the consequence of operating in this way is poor-quality workmanship. The risk of faults in membrane application, such as correct thickness and detailing, as well as non-adherence to specifications and standards, are high. In addition, this mode of business operation is rarely economically sustainable. Do not expect the “best-price” waterproofing companies to still exist when you need to claim on their warranty. Some have operated as “Phoenix” companies, where an insolvent business has been purchased out of administration, often by the existing directors, to resurface again as a new operation with a different company name.

In short, you get what you pay for.  What really worries us here at Waterstop Solutions is the price point demanded by this major national company who approached us, to remedy already failed waterproofing for big name insurance companies.

Of what quality do you think this work will be? Do you think any corners will be cut?

The solution to reduced waterproofing-related building defects is getting it right in the first place. This can be achieved by:

• allowing more budget for waterproofing to ensure quality products and quality workmanship
• pushing for quality improvement in installation and products. Best price may equal poor performance

• providing for effective inter-trade communication, to ensure that after-trades do not damage the waterproofing
• using licenced waterproofing technicians for advice, to execute or oversee the works carried out, as is required for other trades such as plumbers and electricians.

If you have any issues with moisture, seepage and/or high-flow active leaks in concrete structures, we would be happy to assist you. You are welcome to contact us with any questions that you may have.  

Brisbane office: (07) 3205 1899   

Email: [email protected]

Sydney office: 02 9346 8308   

Email: [email protected]

Remember that seepage/water ingress into areas such as balconies, basements, concrete roofs, car parks and retaining walls, should not be ignored – call a remedial waterproofing professional today for an assessment to provide you with the best solution for your situation.

At Waterstop Solutions, we carry out a wide range of remedial works to concrete structures post-construction stage in Brisbane, Gold Coast, Sunshine Coast, Sydney and outlying areas in Queensland and New South Wales.

Equipped with major civil works experience, we can quickly determine the best approach to rectify all seepage and concrete deterioration issues.