Understanding commissioning and defects liability

A proper understanding of the terms Commissioning and also Defects Liability Period (DLP) are the foundations on which a development is successfully brought online. While these lifecycle phases are not unique to office assets, some specific considerations are. 

A quick google of Commissioning and DLP informs, ‘to bring (something newly produced) into working condition’ and ‘the period in which warranties are valid and liability remains with the builder developer to rectify and identify defects’. 

Typically, these two lifecycle phases are tied together and are equally important. In office assets the DLP period often represents a 12-month period and the commissioning process- the last couple of months of construction and the first few months post-construction of a new development. However, in most cases development warranties extend beyond 12 months from the practical completion milestone. 

Commissioning

Commissioning is significant as it’s the first opportunity to get the property operationally in sync with the owner’s, manager’s and occupier’s needs before construction is completed and while the building is being onboarded. For larger builds, Real Estate Management engagement could be as much as 6 months prior to practical completion and is a critical period in starting the transition from construction to a living and fully functional building. 

Engaging property and facilities management experts early can help substantially reduce down time for new tenants coming in to the building and avoid potential costly re-engineering for owners.

Defects liability

The process of defect identification, management and tracking further adds to the complexity of the occupied space. A dedicated property and facilities management team facilitates early detection of defects, within the Defects Liability Period, and enables the defects to be resolved without additional cost to the landlord.

Case study one: re-alignment of power supply – during defects liability period

combined heat power cogeneration

During the design phase, the property cogeneration specified was also to be integrated into the building’s back up power generation system. The cogeneration was part of the property’s green design targets.

Through complex switching and staging the cogenerator was designed to be reducing the supply authority feed to the building. However, in the event of an emergency or power failure the backup generation system would take over, shutting down the cogeneration system.

Each system was installed by a different contractor. During commissioning each system performed its designed function and was duly signed off by an independent commission agent.

The property was handed to the REM team to manage after commissioning. It operated satisfactorily until a major power failure called the system into operation which did not run as intended, leaving the property without power for a number of hours until the issue could be found.

Post incident review found that the switching had not been tested as a complete system and was missing a critical interface between the co-gen and backup generation systems despite being specified in construction.

The oversight was then raised within the DLP period and the REM team assisted in enabling the system defects to be resolved and full interface testing competed. Saving the landlord a potential $500,000 thanks to the defects being picked up within the DLP.

Case study two: waste stream design changes - during commissioning

Waste compactor

Through a number of lease variations and a need for tenant storage space, a room adjacent to the loading dock had been re-assigned. In doing so the bin room was changed to a tenant storage space. No consideration was made for the re-allocation of space to manage waste and accordingly the waste streams were pushed to the loading dock.

At the point of engagement for REM, the commissioning team looked at Waste Management and Traffic Management Plans and discovered the change and omission of an appropriate waste management space.

Identified challenges to be overcome:
1. Restricted access for garbage trucks to the dock,
2. No space to sort and administer waste streams, 
3. No storage points

Our REM strategy was devised to manage the reduction of allocated space and change the equipment specification so that all waste streams could be managed in the building.

In this instance we implemented a waste management strategy through on floor organic, co-mingled and recycling waste streams, managed to three streams in the loading dock. Following a change in specification of the compaction system, we were able to additionally allocate for co-mingled compaction along with defined areas for organic and recycling waste streams.

This allowed for the garbage collection to still occur (on a more frequent basis) with enough room to manage compaction and sorting onsite. It was implemented before tenant occupation and avoided costly changes post equipment purchase under the old specification.

Early engagement of property and facilities management

To ease the transition of a building coming online for all stakeholders, be it tenants, owners or landlords, early engagement of property and facilities management experts is vital. Proactive and strategic plans can be put in place to avoid costly and reactive fixes to address problems identified during commissioning and also within the defect liability period.

For more information regarding the above topic please contact:
Brad Harding, Director, Facilities Management, Melbourne | Real Estate Management
Email: Brad.Harding@colliers.com
Mobile: +61 3 9612 8849

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Brad Harding

Director, Facilities Management

Melbourne CBD

Brad is an experienced operator in Facilities Management having been in the industry since 2001. His inception to the FM industry began with a foundation built in systems and fault finding under high pressure situations while serving in the Royal Australian Navy Marine Engineering faculty. Following 8 years in defence Brad relocated to Melbourne and spent the following 8 years in the HVAC industry cementing building knowledge and facilities services while integrating with many of the top tier agencies including Colliers International.

Nearly 10 years at Knight Frank saw Brad continue to evolve and grow his skills with promotions along the way to become State Head of facilities management in 2013 serving 5 years in this role.

This period saw growth of the team and most notably commissioning of some of Melbourne’s land mark buildings such as 171 Collins Street- the first premium building constructed in Melbourne for 20 years at the time, 313 Spencer Street- the relocation of Victoria Police and managing building such as World Trade Centre and Manchester Unity.

This career path has led Brad to be a vibrant and effective leader in the property industry with a strong commitment to development and training of the new generation of facilities manager.

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Denis Coupland

Managing Director

Sydney CBD

I have more than 30 years experience in the property industry with extensive relationships across institutional and major private owners throughout Australia. My experience includes the management of major assets and portfolios across Australia, across all asset classes and all categories of ownership, working for clients such as Challenger, Charter Hall, Grosvenor, ISPT, Macquarie University, QIC, IOOF, Mulpha, Mirvac, Dexus, Perron Group, REST, Glebe Administration Board, KAH Australia, Valad, Australian Unity, Far East Organization, Bunnings, EG Funds Management, Eureka Funds Management, Heathley Limited, Real I.S., Roxy-Pacific and Altis Property Partners.

In my current role as Managing Director, Real Estate Management, I am responsible for driving operational excellence and leading business growth for Colliers International Real Estate Management service.

Colliers International Real Estate Management team offer specialised property management services to optimise the performance of our clients' assets. We partner with our clients to develop and execute asset strategies to achieve their investment goals. We provide property management, facilities management, financial management and sustainability services across all property classes and client categories.

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