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The definition of a construction project

Technical Report · August 2017

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Final Report
Give

The definition of a construction project

August 2017
Published by the
Centre for Construction Work Health and Safety Research

Copyright © 2017 RMIT University

Except external referenced documents and images

All rights reserved. Apart from any use permitted under the Copyright Act 1968
no part may be reproduced, stored in a retrieval system or transmitted by any means
or process whatsoever without the prior written permission of the publisher.

This report was commissioned by Safe Work Australia.

Authors
Helen Lingard
Amanda Warmerdam
Salman Shooshtarian

About the Centre for Construction Work Health and Safety Research

The Centre for Construction Work Health and Safety Research provides
leading-edge, applied research to the construction and property industries.
Our members are able to work with organisations to analyse health and
safety (H&S) performance and identify opportunities for improvement.
We can develop and evaluate innovative solutions, provide specialised
H&S programs or undertake other research-based consulting activities.
Our work addresses real-world H&S challenges and our strong international
linkages provide a global perspective to our research.

Centre for Construction Work Health and Safety Research

RMIT University
Building 8, Level 8, Room 34
360 Swanston Street
Melbourne VIC 3000
Phone: +61 3 9925 2230
Fax: + 61 3 9925 1939
Email: [email protected]
www.rmit.edu.au/research/health-safety-research
 Final Report
The definition of a construction project

Published by Centre for Construction Work Health and Safety Research

August 2017
Final Report

Contents

Part 1: Executive summary 10

Part 2: Introduction 14

Part 3: Research methods 16

3.1 Literature review 16
Search strategy 16
Search terms 17
Unpublished and ‘grey’ sources 17
Selection criteria 18
3.2 Semi-structures interviews with industry representatives 18
Measures 18
Data analysis 18
Data presentation and disclaimer 18
3.3 Scenario modelling 19
Scenario development 19
Scenario modelling parameters 19

Part 4: Literature review 20

4.1 Construction work health and safety performance 20
4.2 Construction as a priority industry 20
4.3 Construction is a heterogeneous industry 20
What is construction work? 21
4.4 Literature review aims 23
4.5 Work health and safety regulation in Australia 23
Purpose of the work health and safety regulation 23
Historical development and principle-based approach 23
Historical context of harmonisation 25
The model Act and model Regulations 27
Summary and conclusions 30
4.6 Specific requirements relating to construction 31
The definition of a construction project 31
Assumptions and rationale underpinning this definition 31
Concerns about the appropriateness and impact of the definition 32
Summary and conclusions 37
4.7 State/territory jurisdictional variations 38
States that did not adopt the model WHS Act and Regulations 39
States/territories that amended the model Act and Regulations 46
High risk construction work 49
Consequences of inconsistencies 49
Summary and conclusions 50
4.8 Work health and safety in the construction industry 50

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Why construction requires special treatment 50

Construction incident causation 51
Summary and conclusions 59
4.9 The importance of coordination and planning 60
Integration of work health and safety into planning and design 60
International response 61
Summary and conclusions 66
4.10 Different thresholds for triggering construction-specific requirements 66
Different types of threshold 66
Summary and conclusions 67
4.11 Considerations relating to effectiveness of a definition 67
What is practical? 67
What is understandable? 67
What is equitable? 68
What is effective? 68
Summary and conclusions 68

Part 5: Interview results 69

5.1 Introduction 69
5.2 Sample characteristics 69
5.3 Overview of the perceived effectiveness of the monetary definition (Australia) 70
5.4 Effectiveness of the monetary definition 70
5.5 Effectiveness of the monetary definition: Perspectives by stakeholder group 76
5.6 Overview of the perceived ineffectiveness of the monetary definition 76
5.7 Perceived ineffectiveness of the monetary definition 77
5.8 Ineffectiveness of the monetary definition: Perspectives by stakeholder group 83
5.9 Overview of the potential problems associated with the monetary definition 84
5.10 Potential problems associated with the monetary definition 86
Loopholes 87
Capture failure 90
Inadvertent capture 94
5.11 Indexation 97
Support for indexation 97
Considerations relating to indexation 98
Indexation methods identified in the interview data 103
5.12 Overview of indexation impact 104
5.13 Indexation impact 105
5.14 Overview of participants’ comments relating to the association between WHS risk
and contract sum of construction works 108
5.15 The association between WHS risk and contract sum of construction works 109
5.16 Overview of the perceived effectiveness of the ‘five or more persons’ threshold 113
5.17 Participants’ reasons for believing that a ‘five or more persons’ threshold definition
would be effective 113
5.18 Effectiveness of the ‘five or more persons’ threshold definition: Perspectives by
stakeholder group 119

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5.19 Overview of the perceived ineffectiveness of the ‘five or more persons’ threshold
definition 120
5.20 Ineffectiveness of the ‘five or more persons’ threshold definition 121
5.21 Ineffectiveness of the ‘five or more persons’ threshold definition: Perspectives by
stakeholder group 127
5.22 Overview of the alternative methods for defining a construction project section 128
5.23 Alternative methods or threshold mechanisms for defining a construction project 130
Construction activity-based definition 130
A multifactorial approach 139
The use of a WHS risk matrix framework 143
Number of contractors engaged at a worksite 145
5.24 Other mechanisms that could augment a threshold definition 153
Exclusion list 154
5.25 Notifiable works 155
5.26 WHS supervisor/coordinator 156

Part 6: Scenario modelling 158

6.1 Introduction 158
6.2 Research approach 158
6.3 Scenario development 158
6.4 Cost estimation 159
6.5 Sensitivity analysis 160
Variation by geographic location 160
Variation by design specification (materials/finishes) 161
6.6 Development of estimates 161
6.7 Basic scenario cost estimates 163
Scenario one: Small teaching space in an educational facility 163
Scenario two: Two-storey home renovation with adjacent pool 163
Scenario three: Small commercial warehouse 163
Scenario four: 2.5km fencing 164
Scenario five: Single-storey dwelling (one-off construction) 164
Scenario six: Single-storey house (volume home built) 164
6.8 Cost estimate variation by design features over time 173
6.9 Cost estimates by state/territory 2011-2017 179
6.10 Cost estimates by regional/metro locations 2011-2017 185
6.11 Building price index (BPI) versus consumer price index (CPI) 191
6.12 Implications for linking the monetary threshold definition to indexation 197
6.13 Comparison with relevant features of construction work 197
The presence of high risk construction work 197
Number of people working at the same time at a project worksite 198
Number of contractors engaged at the same time at a project worksite 198
Application of relevant features 199
6.14 Overview of scenario modelling 200

Part 7: Conclusions 203

7.1 Introduction 203

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7.1 Research question 1 203

7.2 Research question 2 205
7.3 Research question 3 207
7.1 Research question 4 208
7.2 Research question 5 209
7.3 Research question 6 210
7.4 Research question 7 210
7.5 Research question 8 212
7.6 Research question 9 213
7.7 Research question 10 215
7.8 Research question 11 216
7.9 Research question 12 218
Research observations 219

Part 8: References 220

Appendix A: List of trades present on a residential site over the duration of the
build. 229

Appendix B: Risk assessment tool for QLD prequalification system 231

Appendix C: International definitions of a construction project 235

Appendix D: Semi-structured interview schedule 238

List of Figures
Figure 4.1: 296 Fatality reports related to trenching operations between 1997 and 2001 in
the USA 36
Figure 4.2: Guidance documentation released by WorkSafe Victoria 40
87
Figure 4.3: Constraint-Response model 52
88
Figure 4.4: The ConAC model of construction accident causation 54
126,127
Figure 4.5: Hierarchical project planning framework 61
Figure 5.1: Overview of themes and sub-themes relating to perceived effectiveness of the
monetary definition 70
Figure 5.2: Overview of themes and sub-themes for ineffectiveness of the monetary
threshold definition 77
Figure 5.3: Overview of the themes and sub-themes related to potential problems
associated with the monetary definition 85
Figure 5.4: Overview of the key themes relating to indexation impact 104
Figure 5.5: Overview of the key themes and sub-themes relating to the association
between WHS risk and contract sum of construction works 108
Figure 5.6: Overview of the key themes and sub-themes for the perceived effectiveness of
the ‘five or more persons’ threshold definition 113
Figure 5.7: Overview of the key themes and sub-themes relating to the ineffectiveness of
the ‘five or more persons’ threshold definition 121
Figure 5.8: Overview of participants’ commentary about alternative definitions or threshold
mechanisms 129

4 RMIT University Centre for Construction Work Health and Safety Research
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Figure 6.1: Format used to present cost estimates for construction works scenarios 162
Figure 6.2: Cost estimate for small teaching space by design 173
Figure 6.3: Cost estimate for two-storey home renovation (with pool) by design 174
Figure 6.4: Cost estimate for pre-cast concrete panel warehouse by design 175
Figure 6.5: Cost estimate for 2.5km fence construction by design 176
Figure 6.6: Cost estimate for single dwelling single-storey house by design 177
Figure 6.7: Cost estimate for single-storey house (volume built) by design 178
Figure 6.8: Comparison of construction cost estimates for a teaching space by capital city 180
Figure 6.9: Comparison of construction cost estimates for a two-storey renovation (with
domestic swimming pool) by capital city 181
Figure 6.10: Comparison of construction cost estimates for a pre-cast concrete warehouse
by capital city 182
Figure 6.11: Comparison of construction cost estimates for the erection of a 2.5km fence
by capital city 183
Figure 6.12: Comparison of construction cost estimates for a single-storey house (single
dwelling) by capital city 184
Figure 6.13: Comparison of construction costs between capital cities for a single-storey
house (volume built) 185
Figure 6.14: Construction cost estimates for a small teaching space in metropolitan
(Brisbane) and regional (Cloncurry) Queensland 186
Figure 6.15: Construction cost estimates for a two-storey renovation (with domestic
swimming pool) in metropolitan (Brisbane) and regional (Cloncurry) Queensland 187
Figure 6.16: Construction cost estimates for a pre-cast concrete warehouse in
metropolitan (Brisbane) and regional (Cloncurry) Queensland 188
Figure 6.17: Construction cost estimates for a 2.5km metal fence in metropolitan
(Brisbane) and regional (Cloncurry) Queensland 189
Figure 6.18: Construction cost estimates for a single dwelling, single-storey house in
metropolitan (Brisbane) and regional (Cloncurry) Queensland 190
Figure 6.19: Construction cost estimates for a volume built single-storey house in
metropolitan (Brisbane) and regional (Cloncurry) Queensland 191
Figure 6.20: Comparison of percentage change between BPI in Sydney (New South
Wales), regional housing CPI and all groups CPI 193
Figure 6.21: Comparison of percentage change between BPI in Brisbane (Queensland),
regional housing CPI and all groups CPI 194
Figure 6.22: Comparison of percentage change between BPI in Adelaide (South
Australia), regional housing CPI and national all groups CPI 195
Figure 6.23: Comparison of percentage change between BPI in Perth (Western Australia),
regional housing CPI and national all groups CPI 196

List of Tables
Table 3.1: Search terms used in the literature review 17
Table 4.1: Advantages and disadvantages of CPI 34
Table 4.2: Advantages and disadvantages of annual (or biannual) indexing 34
Table 4.3: Australian current and previous thresholds for a construction project by
jurisdiction 39

5 RMIT University Centre for Construction Work Health and Safety Research
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Table 4.4: Variations in VIC 41

Table 4.5: Points of difference between Western Australian WHS legislation and the
model WHS legislation 44
Table 4.6: Models of construction complexity 58
Table 4.7: Main responsibilities under CDM (2015) Regulations 64
Table 4.8: Examples of thresholds of different natures 66
Table 5.1: Demographic characteristics of interview participants 69
Table 5.2: Themes relating to the perceived effectiveness of the current monetary
definition 71
Table 5.3: Indicative quotations relating to participants’ perceptions of the simplicity and
clarity of the monetary threshold definition 72
Table 5.4: Indicative quotations relating to participants’ perceptions of the industry
acceptance of the monetary threshold definition 73
Table 5.5: Indicative quotations relating to participants’ perceptions of the monetary
threshold definition as an appropriate threshold to trigger additional WHS planning
and coordination requirements 74
Table 5.6: Indicative quotations relating to participants’ perceptions of the ease of
enforcement of the monetary threshold definition 75
Table 5.7: Indicative quotations relating to participants’ perceptions of the salience of the
monetary threshold definition 75
Table 5.8: Effectiveness of the monetary definition by stakeholder group 76
Table 5.9: Themes relating to the perceived ineffectiveness of the current monetary
threshold definition 77
Table 5.10: Indicative quotations relating to perceptions that the monetary threshold
definition is arbitrary/not associated with WHS risk 78
Table 5.11: Indicative quotations relating to participants’ perceptions that the monetary
threshold definition is too low/captures low risk works 80
Table 5.12: Indicative quotations relating to participants’ perceptions of the impact of
construction costing methods on the operation of the monetary threshold 82
Table 5.13: Indicative quotations relating to participants’ perceptions that a national
monetary threshold creates regional variations and can impact equity 83
Table 5.14: Ineffectiveness of the monetary definition by stakeholder group 84
Table 5.15: Themes relating to the potential problems identified 86
Table 5.16: Keywords used for post-hoc rating of magnitude/seriousness of problems 87
Table 5.17: Indicative quotations regarding participants’ perceptions of contract splitting,
identified as a potential problem related to monetary threshold definition 88
Table 5.18: Indicative quotations relating to perceptions of accounting practices and cash
payments identified as a potential problem related to monetary threshold definition 90
Table 5.19: Sub-themes identified relating to capture failure (monetary definition) 91
Table 5.20: Indicative quotations relating to participants’ perceptions of the monetary
threshold definition’s lack of reference to high risk construction work 91
Table 5.21: Indicative quotations relating to participants’ perceptions of the monetary
threshold definition’s lack of sensitivity to works presenting specific WHS risks 92
Table 5.22: Indicative quotations from participants who believe that capture failure is not a
problem 93
Table 5.23: Indicative quotations relating to the influence of the cost of materials on
potential inadvertent capture 94

6 RMIT University Centre for Construction Work Health and Safety Research
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Table 5.24: Indicative quotations relating to the influence of the geographical location of
works on potential inadvertent capture issues 96
Table 5.25: Indicative quotations relating to participants’ perceptions of inadvertent
capture as a result of works over an extended duration 96
Table 5.26: Indicative quotations relating to participants’ support for indexation of the
monetary threshold definition 98
Table 5.27: Considerations relating to indexation 98
Table 5.28: Indicative quotations relating to participants’ perceptions that indexation of the
monetary threshold definition is influenced by political forces 99
Table 5.29: Indicative quotations relating to participants’ additional considerations relating
to frequency of review of the monetary threshold definition 101
Table 5.30: Indicative quotations relating to participants’ perceptions that indexation of the
monetary threshold definition may add subjectivity and complexity to operation of the
definition 102
Table 5.31: Indexation methods suggested by participants 103
Table 5.32: Perceived impact of index-linking on the operation of the monetary threshold
definition 105
Table 5.33: Indicative quotations relating to participants’ perceptions that the impact of
indexation of the monetary threshold definition would be negligible 106
Table 5.34: Indicative quotations relating to participants’ perceptions that indexation of the
monetary threshold definition would result in fewer worksites being captured 106
Table 5.35: Indicative quotations relating to participants’ perceptions of the potential
impact of indexation on harmonisation of WHS legislation 107
Table 5.36: Participants’ beliefs related to the relationship between contract sum and
WHS risk 109
Table 5.37: Indicative quotations regarding the perceived lack of association between
WHS risk and contract sum 109
Table 5.38: Features of construction sites which potentially increase both contract sum
and WHS risk 111
Table 5.39: Indicative quotations relating to participants’ perceptions of the association
between WHS risk and smaller (less costly) works 112
Table 5.40: Reasons given for the perceived effectiveness of a ‘five or more persons’
threshold definition 114
Table 5.41: Indicative quotations relating to participants’ perceptions of association
between WHS risk and the number of people on site 115
Table 5.42: Indicative quotations relating to participants’ perceptions of the effectiveness
of the ‘five or more persons’ threshold definition (unrelated to price) 117
Table 5.43: Indicative quotations relating to participants’ perceptions of the effectiveness
of the ‘five or more persons’ threshold definition (less easy to avoid) 117
Table 5.44: Indicative quotations relating to participants’ perceptions of the effectiveness
of the ‘five or more persons’ threshold definition (consistent operation) 118
Table 5.45: Indicative quotations relating to participants’ perceptions of the effectiveness
of a ‘five or more persons’ threshold definition (simple and clear) 118
Table 5.46: Effectiveness of the ‘five or more persons’ threshold definition by stakeholder
group 120
Table 5.47: Sub-themes relating to the ineffectiveness of the ‘five or more persons’
threshold definition 121

7 RMIT University Centre for Construction Work Health and Safety Research
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Table 5.48: Reasons provided by participants for the perception that the ‘five or more
persons’ threshold definition has low reliability 122
Table 5.49: Indicative quotations relating to participants’ perceptions that the ‘five or more
persons’ threshold definition may capture low risk work or sites 125
Table 5.50: Reasons provided by participants for the perception that the ‘five or more
persons’ threshold definition may fail to capture high risk construction work activities 127
Table 5.51: Ineffectiveness of the ‘five or more persons’ threshold definition by
stakeholder group 128
Table 5.52: Potential alternative methods or threshold mechanisms for defining a
construction project 130
Table 5.53: Indicative quotations regarding participants’ perceptions of the objectivity and
clarity of high risk construction work 131
Table 5.54: Indicative quotations regarding participants’ perceptions of how data and
existing legislation should inform the definition of a construction project 132
Table 5.55: Indicative quotations regarding participants’ perceptions of the association
between high risk construction work and the need for WHS planning and
coordination 133
Table 5.56: Indicative quotations regarding participants’ perceptions that high risk
construction work is not well-defined 135
Table 5.57: Indicative quotations regarding participants’ perceptions of the current list of
high risk construction work activities 136
Table 5.58: Indicative quotations regarding participants’ perceptions that specifying a
number of HRCW activities would create an arbitrary threshold 137
Table 5.59: Indicative quotations regarding the development of a threshold definition
based on specified construction methods or technologies 138
Table 5.60: Indicative quotations regarding the development of a threshold definition
based on the presence or use of plant 138
Table 5.61: Indicative quotations relating to participants’ positive comments about the
application/usefulness of a multifactorial threshold definition 140
Table 5.62: Indicative quotations relating to participants’ comments about the
application/usefulness of integrating person hours into a multifactorial threshold
definition 142
Table 5.63: Indicative quotations relating to the potential for a multifactorial definition to
increase subjectivity and make compliance and enforcement more complicated 142
Table 5.64: Indicative quotations relating to the potential for a multifactorial definition to
increase loopholes 143
Table 5.65: Indicative quotations relating to the perceived benefits of a risk matrix
framework 144
Table 5.66: Indicative quotations regarding the perceived challenges inherent in using a
risk matrix framework 144
Table 5.67: Indicative quotations linking a threshold based on the presence of more than
one contractor (PCBU) at a worksite with the need for WHS planning and
coordination 146
Table 5.68: Indicative quotations relating to the perceived ease of comprehension of a
threshold based on the presence of more than one contractor (PCBU) at a worksite 148
Table 5.69: Indicative quotations relating to the perceived ease of enforcement of a
threshold based on the presence of more than one contractor (PCBU) at a worksite 148

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Table 5.70: Indicative quotations relating to the perception that a threshold based on the
presence of more than one contractor (PCBU) at a worksite would be too broad in its
capture 149
Table 5.71: Indicative quotations relating to the perception that a threshold based on the
presence of more than one contractor (PCBU) at a worksite would fail to capture
certain works 150
Table 5.72: Indicative quotations relating to potential loopholes associated with a
threshold based on the presence of more than one contractor (PCBU) at a worksite 151
Table 5.73: Indicative quotations relating to the perceived number of contractors at which
the threshold should be set 152
Table 5.74: Indicative quotations relating to participants’ perceptions of the equivalence of
the multiple contractor definition to the monetary threshold definition 153
Table 5.75: Other mechanisms suggested by participants to augment the operation of the
threshold definition 154
Table 5.76: Indicative quotations relating to the perceived usefulness/feasibility of an
exclusion list 154
Table 5.77: Indicative quotations relating to participants’ perceptions of notifiable works 156
Table 5.78: Indicative quotations relating to participants’ perceptions of the appointment of
a WHS supervisor/coordinator 157
Table 6.1: Assumptions for scenario development 159
Table 6.2: Cost estimate for small teaching space 166
Table 6.3: Cost estimate for two-storey home renovation with pool 167
Table 6.4: Small commercial warehouse using prefabricated concrete panels 169
Table 6.5: Cost estimate for erecting a 2.5 kilometre fence 170
Table 6.6: Cost estimate for single-storey dwelling (one-off) 171
Table 6.7: Single-storey dwelling (volume built) 172
Table 6.8: Summary of the construction project scenarios modelled by different variables
in relation to the monetary threshold. 201
Table 7.1: Interview participants’ perceptions of the impacts associated with the
application of alternative threshold definitions 214

9 RMIT University Centre for Construction Work Health and Safety Research
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Part 1: Executive summary

This report presents the findings of research examining the definition of a construction project and the
operation of this definition in triggering the specific requirements under Part 6.4 of the model Work
Health and Safety Regulations.

Construction is a heterogeneous industry, comprising multiple different forms of employment and

industry sectors. Construction work varies enormously in terms of the size, scope and complexity of
works, contractual arrangements between participants and types of technologies deployed.
Construction work is delivered by temporary project organisations, often comprising multiple
participants (design consultants, other technical contributors, general and specialist trade
contractors). In this fragmented delivery environment, planning and coordination of work is important
to ensuring that work health and safety (WHS) is managed, that information is shared and that
participants work together effectively to ensure workers’ health and safety are protected. Previous
empirical research has identified the importance of ‘upstream’ planning, and effective coordination
and management of different project contributors to ensuring construction workplaces are safe and
healthy.

A review of international and Australian literature revealed that there has been very little academic
research relating to the impact of the selection of a threshold to trigger specific legislative duties for
construction WHS coordination and planning. The review revealed that different forms of threshold
have been applied to legislation triggering various management planning duties in construction work.
These include:

● a universally applied monetary threshold,

● a multi-level monetary threshold triggering different levels of duties,
● a threshold based on the number of contractors present,
● a threshold based on the number of workers present,
● a threshold based on the presence or high risk construction work,
● a threshold based on an assessment of the level of WHS risk (as opposed to the presence of
prescribed activities), and
● various forms of hybrid thresholds based on a combination of factors (e.g. cost and the
1
presence of high risk construction work).

However, the literature did provide some insights concerning the relationship between the cost (or
contract price) of construction work and the level of WHS risk inherent in this work. The literature
review revealed that construction project costing is influenced by factors unrelated to WHS risk and
the initial contracted price for works may escalate as a result of variations and changes that occur
during the life of a project. The literature review also identified evidence to indicate that WHS and the
incidence of safety incidents is more frequent in relatively low cost construction works. These findings
raise questions about the impact of the current monetary threshold definition of a construction project
in the model WHS Regulations.

The review also revealed that complexity in construction work is characterised by multiple factors
unrelated to cost (or contract sum) and that characteristics of complexity are widely linked to
increased risk in construction work. Complexity is understood to increase WHS risk, as well as
_____
1 Not all of these were applied to WHS-related duties. A multi-level financial threshold applied to environmental waste management planning,
while the use of a general risk matrix applied to prequalification of contractors for tendering purposes.

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increasing the risk of project failure, cost and time over-runs and poor quality and environmental
outcomes.

Interviews were conducted with 50 construction industry stakeholders. These stakeholders were
located in all Australian states and territories and represented industry employer associations,
regulators, unions and construction companies. Interviews were also carried out with a small number
of international construction WHS experts. The interviews explored stakeholders’ views about the use
of a monetary threshold as a means to trigger duties to appoint a principal contractor who must then
engage in additional duties related to WHS planning, communication and coordination of activity.
Interviews also explored participants’ perceptions of alternative threshold mechanisms, and the need
to link a monetary threshold to some form of consumer price index.

Participants who perceived the current monetary threshold to be effective generally explained this
view in terms of the acceptance of the industry for the monetary threshold, the simplicity and clarity of
the definition and the ease with which it could be understood and enforced. Participants who
perceived the monetary threshold to be ineffective indicated that it is an arbitrary figure unrelated to
WHS risk. The majority of participants perceived that there is little or no association between the
contract sum for construction work and the level of WHS risk inherent in the work. Many of these
participants were opposed to the application of a purely monetary threshold and favoured an
alternative based on the level of WHS risk inherent in construction works.

Many also argued the current value of $250,000 in the model WHS Regulations is too low.
Participants who perceived the monetary threshold is not effective also identified inconsistencies and
anomalies in costing methods deployed in the construction industry as a problem impacting the
equitable application of the monetary threshold.

Problems identified in relation to the operation of a monetary threshold included:

● specified loopholes,
● examples of capture failure of high risk works, and
● examples of inadvertent capture of low risk works.

Participants identified that the practices of splitting contracts into smaller packages of works to avoid
capture, paying subcontractors in cash or quoting below the threshold and subsequently increasing
the project value through variations and claims may occur frequently or moderately frequently in the
industry. Participants identified specific examples of failure to capture work that involves high risk
construction work activities or other specific WHS risks that warrant additional planning and
coordination as being a limitation associated with the use of a single monetary threshold. A smaller
number of participants indicated that the $250,000 threshold is so low that these participants
2
perceived it to be unlikely that dangerous works would not be captured. Participants identified some
examples of inadvertent capture of low risk construction works, undertaken over an extended duration
or undertaken in locations in which the cost of materials, labour and transport impact construction
costs, irrespective of WHS risk.

The majority of participants indicated that a monetary threshold should be linked to some form of
consumer price index in order that it is able to keep pace with the rising costs of construction over
time. However, concerns were also raised about the frequency with which these changes should
occur. Annual change was generally regarded to be undesirable because it was perceived to be too
_____
2 It must be noted that the $250,000 threshold has been increased in several Australian jurisdictions, potentially increasing the likelihood of
capture failure.

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frequent and likely to create confusion and compliance issues. Questions were also raised about the
appropriate form of indexation to which the threshold should be linked. Regulators, in particular,
identified considerations relating to the use of state or region-based price index in order to reflect
regional differences in rates of increase over time. It is likely that more detailed analysis of the impact
of different forms of price index and regional variations would be needed to identify adverse outcomes
associated with the selection of a price index, for the purpose of adjusting the monetary threshold
over time.

Almost half of the interview participants expressed the belief that a ‘five or more persons’ threshold
would overcome the limitations they identified in relation to the monetary threshold. These participants
expressed the view that the number of people engaged at a worksite is a better indicator of
complexity and risk than a dollar value, and more appropriately reflects the need for WHS planning,
coordination and communication. However, almost half of the interview participants perceived a ‘five
or more persons’ threshold to be:

● unreliable and difficult to administer (because the number of workers engaged at a worksite is
difficult to predict and varies over time), and
● more likely to capture small, low risk works than a monetary threshold and negatively impact
small-to-medium sized construction firms.

When asked to consider alternative threshold mechanisms that could be used to trigger the principal
contractor duties under the model WHS Regulations, a majority of participants suggested that the
threshold should reflect the presence of particular construction activities. Activities cited included the
presence of high risk construction work, the use of plant or the use of other specific construction
methods or technologies (for example, tilt up construction).

Many participants also favoured a multifactorial approach in which a monetary threshold is combined
with another trigger using an ‘and’ or an ‘or’ conjunction. That is, the principal contractor duties should
apply when more than one condition is satisfied, or when one or more conditions apply.

Participants who did not favour a multifactorial threshold considered that it would be challenging to
administer and would produce practical difficulties for compliance and enforcement.

Relatively fewer participants favoured the use of a risk matrix framework or a threshold based on the
number of contractors or Persons Conducting a Business or Undertaking (PCBUs) engaged at a
worksite. Participants opposed to a threshold based on the number of PCBUs at a worksite indicated
that such a threshold would capture all domestic construction work undertaken.

Six scenario construction works were developed. These were based on various assumptions relating
to size, scope, context, design features and materials. The scenarios were costed with reference to
published data in the Rawlinsons Australian Construction Handbook (2017). Sensitivity analysis was
performed to determine variation in the operation of the $250,000 threshold by:

● geographic location (i.e. by state and territory and whether the work is undertaken in a
metropolitan or regional area), and
● complexity of design and choice of materials and finishes.

The sensitivity analysis revealed that, under certain circumstances and given our specified
assumptions, these characteristics all impacted the operation of the monetary threshold. In particular
cost variations between states and territories and between regional and metropolitan areas raise
questions about equity in the application of a single level monetary threshold. Cost variations

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associated with the specification of different materials and finishes also substantially impacted
whether or not works would be captured by the monetary threshold definition.

The scenario modelling also revealed that some works that participants identified as requiring
additional WHS planning and coordination, such as the construction of a warehouse building using
pre-cast concrete panels (tilt-up construction), would be captured by the monetary threshold
irrespective of where they are located. However, other works that have particular characteristics with
the potential to impact WHS may fall below the threshold. For example the construction of a teaching
space in an educational facility could potentially involve working in close proximity to a vulnerable
group of members of the public (schoolchildren). The WHS aspects of this work would potentially
warrant additional planning and coordination as a result.

The scenario modelling also revealed that issues that may be largely unrelated to WHS risk (such as
contracting strategy and selection of materials) can also significantly impact the cost of a package of
works, while being unlikely to impact the WHS requirements associated with the work. The example
of the 2.5km fence construction showed that, if constructed from metal the cost would exceed the
threshold value of $250,000 in all regional and metropolitan locations, whereas, were the fence to be
constructed using timber, in the majority of locations its cost would fall below the threshold. The
location of the fence would also likely impact the need for WHS planning and coordination. If
constructed in a paddock, additional WHS planning may not be necessary but, if conducted adjacent
to a road, additional traffic management considerations would apply.

The scenario modelling suggests that, while it may be generally true to state that large and complex
construction projects are likely to cost more and present high WHS risk, there are also examples of
low cost projects that present specific and serious WHS challenges. Further, in some cases, cost (and
contract sum) increases as a function of factors that may not create an increased level of WHS risk.

The scenario modelling also revealed changes in the operation of the monetary threshold over time,
such that some works that would not originally have been captured by a $250,000 threshold in 2011,
would now be captured due to increasing construction costs during this time.

An analysis of rates of increase in different price indices within Australia also revealed variations to
which a national ‘all groups’ consumer price index and a regional housing consumer price index
reflected an increase in building prices applicable to state/territory capital cities over the period 2011
to 2017. This confirms comments made by interview participants that indexing the monetary threshold
should reflect regional variations in rates of inflation.

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Final Report

Part 2: Introduction
RMIT was commissioned by Safe Work Australia to research and review the definition of a
construction project and the operation of this definition in triggering the specific requirements under
Part 6.4 of the model WHS Regulations. In particular, the review sought to:

● examine the effectiveness of the current threshold on safety outcomes, and

● consider the likely impact of changing the definition of construction project under Part 6.4 of the
model WHS regulations.

Research questions were as follows:

1. Is a higher monetary threshold associated with a higher risk and more complex and/or larger
construction work?

2. How effective is the current definition of a construction project under the model WHS
Regulations?

3. Is the use of a monetary threshold appropriate?

4. What would be the likely impact of applying periodic indexation to a monetary threshold
value?

5. Should a monetary threshold be subject to CPI?

6. How common are potential issues identified by Safe Work Australia such as:

 capturing smaller, less risky construction work due to inflationary pressures, expensive
fittings or regional/remote location of construction work,
 capturing minor construction work over extended periods or where later additions to
construction work push the cost over the current monetary threshold, or
 preparation of contracts to avoid the threshold.

7. What are the proxy measures for triggering a coordination role by a principal contractor used
domestically and internationally and what is the effectiveness of these alternative proxy
measures in managing WHS risks?

8. What proxy measures or alternative definitions have been used internationally?

9. What is the likely impact of changing the definition of a construction project under Part 6.4 of
the model WHS Regulations?

10. What would be the likely impact of moving from a monetary threshold to a ‘number of persons
on site’ threshold?

11. What would be the likely impact of introducing principal designer duties similar to the
Construction (Design and Management) Regulations 2015 in the United Kingdom?

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12. How would a modified definition impact the capacity of the regulations to meet their objectives,
such that they offer a practical and objective trigger for the additional responsibilities for
principal contractors?

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Final Report

Part 3: Research methods

The research was completed in three stages using three different research methods. These are as
follows:

● a literature review was undertaken,

● semi-structured interviews with key industry stakeholders and interview data was subject to
thematic content analysis, and
● scenario modelling to ascertain variation in the operation of the threshold definition by
geographic location and design specifications.

3.1 Literature review

Search strategy

The following databases were searched to identify relevant literature:

● Australian Building Construction and Engineering Database

● ICE ebook collection
● Informa Law
● National Construction Code
● RIBA ebook collection
● Factiva
● Business source complete
● ProQuest
● AUSA : Australasian University Safety Association.
● NIOSH : the National Institute for Occupational Safety and Health.
● Newsbank newspapers : Australia and the world
● EBSCO
● Medline
● Embase, and
● IngentaConnect.

Australian sources were searched for documents published within the timeframe of 2008 to the
present. This timeframe was selected as this was the date of the Workplace Relations Ministers’
Council meeting on 1 February 2008. Ministers agreed the use of model legislation was the most
effective way to achieve harmonisation of WHS laws. International sources were searched for
documents published from 1990 to the present time. This ‘window’ was selected to take in information
about comparable international legislation, such as the UK Construction (Design and Management)
Regulations (CDM). A timeframe was not applied to academic sources.

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Search terms

Search terms used in the review are presented Table 3.1.

Table 3.1: Search terms used in the literature review

cooperation efficiency

coordination evaluation

construction project regulations proxy measures for construction projects

trigger for principal contractor duties effectiveness of construction project threshold

legal responsibilities for construction projects consultation

principal contractor responsibilities principal designer

Unpublished and ‘grey’ sources

A comprehensive search was made of internet resources. A number of sites were searched, although
the main focus was placed on SWA and the website of relevant state or territory regulators. The non-
exhaustive list below provides examples of the sites searched.

● http://www.qbcc.qld.gov.au
● http://workplaceohs.com.au
● http://www.constructionlawmadeeasy.com
● http://parlinfo.aph.gov.au
● www.comcare.gov.au
● www.claytonutz.com
● http://www.constructionenquirer.com
● http://enewsletters.constructionexec.com
● https://www.constructionnews.co.uk
● http://constructionblog.practicallaw.com
● http://enr.construction.com
● http://www.constructiondive.com
● http://www.building.co.uk
● https://www.designandbuild.com.au/blog
● http://www.constructioninfocus.com.au
● http://www.insideconstruction.com.au
● http://cdn.aigroup.com.au
● http://www.cfmeu.asn.au
● https://hia.com.au
● http://www.cepu.asn.au/CEPU/links
● http://www.actu.org.au
● http://www.commerce.wa.gov.au
● http://www.industrialrelations.nsw.gov.au
● http://www.masterbuilders.com.au
● http://www.coag.gov.au
● https://www.acci.asn.au, and
● https://www.legislation.gov.au/Details/F2016C00979.

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Final Report

Selection criteria

Following a detailed examination of all resources, documents were retained based on their relevance
to the research questions.

3.2 Semi-structures interviews with industry representatives

Measures

Interview questions explored participants’ perceptions of:

● the effectiveness, advantages and disadvantages of the current financial threshold definition for
a construction project, and
● the potential effectiveness, advantages and disadvantages of alternative types of threshold
definition, and
● the appropriateness and implications of linking the financial threshold to a consumer price
index.

Data analysis

The interviews were transcribed and coded using NVIVO 11, a proprietary software package for
qualitative data analysis. The coding process involved the development of an initial coding list based
on the research aims. The data were then analysed using thematic content analysis. Themes,
patterns and insights were documented. Data that contradicted the majority view was also identified.
This approach allowed new themes to emerge and, when necessary, triggered the refinement of
original themes. For example, the discussion of a construction project sometimes triggered a
discussion of the definition of construction work. Based on the connection that participants drew
between the operation of the threshold definition of a construction project and the way that
construction work is defined in the model WHS legislation, the broader definition of construction work
was included as a theme in the analysis.

As themes and sub-themes emerged in this iterative analysis, consensus among researchers was
reached through group discussions. Inter-rater reliability was established with a second member of
the research team coding 10% of the transcripts. This resulted in 90% agreement, with full consensus
reached through a research team discussion and resolution of differences in interpretation.

Data presentation and disclaimer

The themes are discussed in a de-identified format to preserve anonymity of respondents. The
frequency of themes emerging from the data analysis was counted to provide a reflection of the
relative weight or importance of these themes. In some cases a single participant raised a theme
multiple times. In these cases, the theme was only counted once. Some quotes were abridged or
modified to be grammatically correct without loss or change of meaning. All information provided in
this report is for guidance purposes only and should be read in conjunction with the relevant
legislation. The information presented does not constitute a determination, ruling or legal advice.

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Final Report

3.3 Scenario modelling

Scenario development

Six scenarios were developed to test the operation of the current monetary threshold definition of a
construction project.

Scenarios were developed with reference to examples that were cited by interview participants. These
examples were cited as examples of inconsistency, inadvertent capture and/or failure to capture (e.g.
3
high risk work) .

The construction works scenarios include the:

● construction of a small teaching space in an educational facility,

● renovation of a two-storey residential building and construction of an adjacent swimming pool,
● construction of a 2.5km long fence adjacent to a road,
● construction of a small commercial warehouse using pre-cast concrete panels,
● construction of a ‘one-off’ single-storey dwelling, and
● construction of a single-storey dwelling by a volume home-builder.

Scenario modelling parameters

These scenarios were used to test the sensitivity of the monetary threshold definition of a construction
project against various other project parameters, including:

● location, and
● design complexity and/or the cost of materials or finishes.

The impacts of rising costs of construction and the effects of linking the monetary threshold definition
to a method of consumer price indexation were also considered in this modelling.

Detailed methodological information (including the assumptions underpinning the modelling) is

presented in Part 6: Scenario Modelling of this report.

_____
3 The developed scenarios are hypothetical and do not reflect features of specific real-life construction projects or works referred to by
participants. Each scenario is based on a set of stated assumptions.

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Final Report

Part 4: Literature review

4.1 Construction work health and safety performance

Internationally, the construction industry is overrepresented in accident rates compared to other

industries. The Australian work-related injury survey conducted between 2009 and 2010 showed that
4
57,000 construction workers had incurred injury at work . This represents 5.9% of the construction
industry population in Australia, which is 156 injured workers per day. This percentage is comparable
4
to workers across all industries who had incurred a work-related injury (5.7%) . In contrast, fatality
data from 2003 to 2015 shows that the construction industry is overrepresented, accounting for 15%
5
of all worker fatalities . The construction industry can be split into various classes using the Australian
Bureau of Statistics’ (ABS) Australian and New Zealand Standard Industry Classification (ANZSIC).
From 2008 to 2013, within the construction industry, heavy and civil engineering consistently had the
highest incident rate of serious claims, while construction services accounted for the largest
4
proportion of serious claims (64%) . Construction services include land development and site
preparation, building structure services, building installation services, building completion services
and other construction services.

4.2 Construction as a priority industry

The Australian Work Health and Safety (WHS) Strategy 2012-2022 provides a framework to drive
improvements in WHS in Australia. It promotes a collaborative approach between the
Commonwealth, state and territory governments, industry employers, unions and other stakeholder
groups to achieve the vision of Australian workers experiencing healthy, safe and productive working
6
lives. The Australian WHS Strategy identifies the construction industry as a priority industry,
reflecting the industry’s unique challenges and high risk work environments.

4.3 Construction is a heterogeneous industry

The Australian construction industry is characterised by predominately small businesses and non-
standard employment. In particular, high levels of (multi-level) subcontracting, self-employment and
labour hire are prevalent.

In 2009, 72.5% (713,000) of people employed in the Australian construction industry were
organisationally employed, compared to 88.6% for all industries. Some 218,000 workers operated on
an 'Own Account' basis, making up 22.1% of the construction industry’s workforce. This is significantly
7
higher than the 8.6% of workers that operated on an ‘Own Account’ basis in all Australian industries .
Research shows that compared to their organisationally employed counterparts, self-employed
workers in the UK construction industry work longer hours, experience higher levels of conflict
8
between their work and personal life, and express more concern about their job security . These are
all issues that can negatively impact construction workers’ health and potentially also their safety.

The Australian construction industry is also dominated by small-to-medium sized enterprises (SMEs).
According to the Australian Bureau of Statistics (ABS), 93.8% of construction businesses have fewer
9
than five employees, and just over two-thirds of all people working within the industry work for SMEs .
Conversely, less than 1% of construction businesses employ 20 or more people, and companies of

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Final Report

this size employ only 13.6% of the construction workforce. ABS data indicates that the average
number of people employed by construction businesses in 2002-2003 was 1.8 per business for
residential building businesses, and 4.7 per business for the non-residential and non-building (that is,
10
engineering, industrial and services) sectors . The ABS reports that during 2002-2003, 64.7%
(219,926) of construction businesses earned income less than $100,000, and a further 25.3%
(86,035) earned income between $100,000 and $500,000. Further, small businesses (those with
income less than $100,000) accounted for 72% (or 199,000 persons) of all working
proprietors/partners, but only 6.2% (27,400) of all employees, which is indicative of high levels of self-
employment in this sub-sector of the construction industry.

Subcontracting is a standard practice in the Australian construction industry. According to ABS data
for the period 2002-2003, a total of $125.7 billion was generated by the trade services, building and
construction industry. Of this, contracting income comprised $83.0 billion (66% of the total), and
subcontracting income accounted for $42.7 billion (34%). The proportion of income accounted for by
subcontracting varied by asset type. For example, in the period 2002-2003, income generated from
subcontracting accounted for 36.8% of the total income generated in the housing sector, 36.6% of the
total income generated in the non-residential construction sector, and 26.0% of income generated in
10
constructing roads and bridges .

Although subcontracting can benefit principal contractors in terms of labour flexibility and the
changing requirements of the market, subcontracting has also been linked to poor health and safety
11
performance . Subcontractors are located at the lower end of the hierarchical structure in the
12
construction industry . They have the least influence on decision making in the construction process
and have the highest exposure to WHS hazards and risks.

What is construction work?

The construction industry involves a variety of processes including:

● the construction of new buildings or structures

● additions and alterations to existing structures
● demolition or wrecking of existing buildings or structures
● installation, maintenance and repair of existing structures, and
● site preparation activities.

The definition of construction work under the model WHS Regulations is provided below.

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Final Report

Construction work is defined under Regulation 289 of the model WHS Regulations as follows:

1. In this Chapter, construction work means any work carried out in connection with
the construction, alteration, conversion, fitting-out, commissioning, renovation,
repair, maintenance, refurbishment, demolition, decommissioning or dismantling
of a structure.

2. Without limiting subregulation (1), construction work includes the following:

(a) any installation or testing carried out in connection with an activity referred to
in subregulation (1);

(b) the removal from the workplace of any product or waste resulting from
demolition;

(c) the prefabrication or testing of elements, at a place specifically established for

the construction work, for use in construction work;

(d) the assembly of prefabricated elements to form a structure, or the

disassembly of prefabricated elements forming part of a structure;

(e) the installation, testing or maintenance of an essential service in relation to a

structure;

(f) any work connected with an excavation;

(g) any work connected with any preparatory work or site preparation (including
landscaping as part of site preparation) carried out in connection with an activity
referred to in subregulation (1);

(h) an activity referred to in subregulation (1), that is carried out on, under or near
water, including work on buoys and obstructions to navigation.

3. In this Chapter, construction work does not include any of the following:

(a) the manufacture of plant

(b) the prefabrication of elements, other than at a place specifically established

for the construction work, for use in construction work;

(c) the construction or assembly of a structure that once constructed or

assembled is intended to be transported to another place;

(d) testing, maintenance or repair work of a minor nature carried out in

connection with a structure.

3
(e) mining or the exploration for or extraction of minerals.

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Final Report

4.4 Literature review aims

The literature review examines the academic and ‘grey’ literature that is relevant to the type and
nature of the threshold that might be used in the operation of the definition of a construction project.
Importantly, the review also includes considerations about qualitative features of construction projects
that impact on the requirement for project WHS planning, managing, monitoring and coordination.

4.5 Work health and safety regulation in Australia

Purpose of the work health and safety regulation

The purpose of the law is to ensure that members of a society behave according to a set of
acceptable rules. Contravention of these rules results in some form of sanction that society deems to
be commensurate with the seriousness of the breach. The Council of Australian Governments
(COAG) identified the following principles for effective regulation:

● It should be kept to the minimum required to achieve desired objectives

● It should minimise regulatory impact upon competition
● It should, where possible, be focused on outcomes
● It should be compatible with international standards
● It should not restrict international trade
● It should be regularly reviewed
● It should be flexible and capable of amendment, and
13
● It should seek to standardise bureaucratic discretion .

In relation to WHS, the law exists to identify the responsibility of the parties involved in industrial or
commercial activities. It imposes responsibilities on employers (and others) to protect the health and
safety of workers when they are at work and protects the right of people to participate in the workforce
without suffering injury or ill health as a result. As such, the law should be of primary importance in
providing a ‘level playing field’ and ensuring that employers do not profit from failing to provide
adequate protection for their workers’ health and safety.

Historical development and principle-based approach

14
Gunningham identified three types of standards, which broadly reflect phases in the implementation
of preventive WHS legislation. These are specification standards, principle-based standards, and
systems standards. The requirements of early WHS legislation were expressed in the form of
specification standards, which clearly informed duty holders how to achieve an outcome by describing
14
in precise detail what must be done in order to comply. Gunningham suggests that specification
standards have certain benefits. First, they are easy to interpret and understand. This makes it easier
for employers to know how to comply, which is particularly important in the case of small to medium-
sized enterprises which often lack the resources or expertise to deal with less specific types of WHS
standard. Specification standards also make it easier for employees’ representatives, trade unions
and government inspectors to identify breaches in the WHS legislation. In the absence of specification
standards, a failure to comply may be evident only after an injury has occurred or an illness becomes
evident. However, specification standards have been criticised for lacking flexibility and it is argued
that:

● they are not well suited to certain types of occupational hazards (such as psychosocial
hazards), and

23
Final Report

● they do not provide incentive to improve WHS performance above a minimum level of
compliance.

As a result, the framing of WHS legislation in Australia now reflects what Gunningham calls principle-
based standards and process standards. Under principle-based standards, legislative responsibilities
are expressed as general duties to eliminate or reduce WHS risk so far as is reasonably practicable.
Framed in this way, general duties are sufficiently broad to cover emerging hazards and ensure that
no new hazards fall ‘between the cracks.’ The general duties:

● are also adaptable and can accommodate technological changes occurring within industrial
processes, and
● are concerned with creating a positive attitude towards the prevention of work-related injury and
ill-health.

A feature of recent WHS legislation is the inclusion of process requirements. Process standards
require that a duty holder must follow a certain process in managing particular hazards or WHS
15
generally . For example, manual handling regulations require that hazard identification, risk
assessment and risk control processes be implemented in the management of manual handling risks.
This type of standard goes further than establishing the general duties of obligation holders, and
16
focuses attention on how WHS is being managed. Frick & Wren suggest that regulators in many
countries are currently placing a great deal of emphasis on the requirement of duty holders to adopt a
systematic approach to the management of WHS. Since the end of the 1980s, Walters suggests that
regulation of the management of WHS has been a prominent feature of legislation within the
17
European Union (EU) .

The legislative focus on the systematic management of WHS has increased the number of process
requirements in WHS legislation. The rationale for focusing on the management of WHS rather than
to inspect and enforce compliance with prescriptive standards is because, if WHS is being
systematically managed, compliance with detailed specification or principle-based requirements will
18
automatically follow . Johnstone notes that the inclusion of process requirements is useful where
regulators have difficulty specifying a required goal or outcome, but believe that the risk of injury or
15
illness will be significantly reduced if a certain process is followed . Walters describes legislative
18
provisions requiring the management of WHS as ‘regulating self-regulation’ . Following the European
15
model, Australian regulators have introduced requirements for the systematic management of WHS .

The requirements triggered by a threshold value of $250,000 under the model WHS Regulations are
an example of such process requirements.

Prior research has critically reviewed historical process standards implemented in the construction
industry. For example, in 1997, Queensland (QLD) legislators established a process requirement to
complete WHS Plans prior to starting work on any construction site where total expenditure would
19
exceed $40,000 . Johnstone reported that industry and the inspectorate criticised the requirement for
the following reasons:

● industry participants thought that by providing a work plan they would be in compliance
● some industry participants were unable to understand risk management concepts and were ill-
equipped to operate in a self-regulatory environment
● many industry participants bought off-the-shelf, tick/flick model work plans and thus did not
analyse their own risks, and
19
● enforcement was inconsistent .

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Final Report

Despite these criticisms, a construction industry task force endorsed the value of work plans and
WHS management systems, stating that they were essential strategic solutions to WHS problems in
20
the construction industry .

21
Ferris et al. also reported on a case-control investigation of the response of small builders to the
requirement to produce WHS Plans. Their results suggested that the requirement was better
accepted where the following conditions applied:

● builders were in geographical areas where industry associations had been actively discussing
the requirement in seminars and in mail-outs
● the industry association had developed standard contracts with the WHS Plan requirement
integrated
● builders had developed links with the WHS inspectorate through long term contact with the
local office
● clients included WHS clauses in their contracts, and
● the industry association had held promotional ‘road shows’ (in non-metropolitan areas).

In contrast, inconsistent compliance or non-compliance with the requirement to prepare WHS Plans
occurred where the following conditions applied:

● builders did not belong to an industry association

● builders did not believe the requirement applied to housing sites
● economic and time pressures were so acute that requirements were knowingly breached to
enable business survival
● ignorance of the WHS Plan requirement was claimed
● the benefits of the WHS Plans were so obscure to the builders that nominal acquiescence
rather than commitment was displayed
● contractors worked solely on very small construction jobs or maintenance work which were
excluded from the requirement, and
● builders were unaware of the requirement.

These findings highlight the importance of industry consultation and communication with regard to the
implementation of process-based standards for WHS.

Historical context of harmonisation

Prior to harmonisation across the nine different Australian jurisdictions under which WHS legislation is
enacted, there were multiple laws relating to WHS. These included ten specific WHS statutes
comprising six state Acts, two territory Acts and two Commonwealth Acts (including Seacare) and
22
over 50 legislative instruments applying to other activities . The lack of national consistency in WHS
13
became the subject of two major reviews by the Industry Commission (1995) and the Productivity
23
Commission (2004) . The model WHS Act and Regulations were then developed by SWA in 2011 as
part of harmonisation efforts and the COAG National Reform Agenda aiming to reduce regulatory
24
burden and create a seamless national economy. These Regulations were based on the previously
enacted National Standards and National Codes of Practice as well as a widespread process of
consultation with relevant stakeholders. The Intergovernmental Agreement for Regulatory and
Operational Reform in OHS, and the SWA Act 2008 provided for harmonised WHS laws to be
25
complemented by a nationally consistent approach to compliance and enforcement . The objectives
of harmonising WHS laws through a model framework were:

● to protect the health and safety of workers

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Final Report

● to improve safety outcomes in workplaces

● to reduce compliance costs for business, and
● to improve efficiency for regulatory agencies.

The achievement of these objectives comprised four components:

● harmonisation of principal WHS Acts

● harmonisation of WHS Regulations
● development and adoption of Codes of Practice, and
● nationally consistent compliance and enforcement policies.

Historically, Commonwealth and state government efforts toward harmonisation based on national
26,27
standards and common core legislative provisions were met with mixed success . In 2010, a
research report from the Productivity Commission revealed that legislative frameworks varied in
28
scope, form, detail, administration and enforcement across Australian jurisdictions . Reports have
sought to understand the reasons for this mixed success, citing:

● each state’s or territory’s own industrial relations culture

● environment and policy objectives
● local interests and resistance to change
● states’ and territories’ treatment of national standards as optimal or minimal standards that they
could choose to ignore or build upon according to local needs and circumstances, and
● genuine differences in opinion about how to best address issues that are technically complex,
26,28-30
economically important and politically and industrially sensitive .

31
Moreover, harmonisation proved to be a challenging political process involving difficult trade-offs .
WHS harmonisation involved negotiating the interests and perspectives of multiple, diverse
26
stakeholder groups with varying perceptions and objectives . Windholz and Hodge argue that
industry associations and union groups have “been concerned to ensure the benefits they enjoy under
31
existing WHS laws are not lost or diluted in the process of harmonisation .” Windholz also suggests
that both groups have taken advantage of the opportunity that Australia’s federal system of
government provides to re-frame nationally agreed issues before more ideologically sympathetic
30
state/territory governments .

The development of the harmonised laws represented significant efforts (i.e., time, energy, money)
from governments and stakeholders. While initial progress was quick and generally accepted by
stakeholder groups, Windholz suggests that some stakeholders’ expectations may have been
26
unrealistic, creating a very real likelihood that they would be disappointed . As the process moved
from the generality of the harmonisation promise to the policy particulars of the Act, Regulations and
Codes, stakeholders were confronted by the nature and extent of their differences, and the threat
harmonisation posed to previously hard fought for rights and benefits. These tensions risked
30
fracturing support for the reform . Windholz conducted interviews with stakeholders with the aim of
identifying the most controversial or significant changes. The following areas were identified:

● primary duty of care

● duty of workers and others
● duty of officers
● consultation, representation and participation
● protection against adverse action, and
26
● offences and penalties .

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Final Report

The relative success of the legislative changes made in relation to harmonisation efforts is highly
subjective with different stakeholders in different jurisdictions expressing differing opinions and
viewpoints. While overall, higher jurisdictional consistency has been achieved following harmonisation
(even with some states’ non-adoption), the non-adoption of the model Regulations in some
jurisdictions and the partial adoption with variation of the model Regulations in other jurisdictions,
31
demonstrates the inherent challenges of creating uniformity of policy .

While some jurisdictions arguably gained new WHS provisions, others perceive they have ‘lost’
provisions. However, notwithstanding the patchiness of adoption, multi-jurisdictional employers have
26
generally welcomed the reduction in jurisdictional overlap and legislative difference . While
harmonisation has brought about a number of modernising reforms and a higher level of jurisdictional
consistency, the reform arguably did not meet its initial aim of complete national consistency and
some stakeholders’ expectations may not have been realised. Johnstone observes that for some
27
employers there is too little rationalisation; for some unions and academics too little reform .
26
Meanwhile, Windholz argues that, for advocates of uniformity, there are too many variations . Some
commentators have gone so far as to suggest that “the reform efforts may have merely added more
32
confusion and just a different set of differences” and the “combination of variations ... may lead the
33
reform to do more harm than good .”

The model Act and model Regulations

The model WHS Regulations support the model WHS Act by setting out mandatory obligations on
specific matters. These regulations are written in terms of processes or outcomes that Persons
Conducting a Business or Undertaking (PCBUs) must follow or achieve to meet their general duties
under the Act in relation to these matters. The WHS Codes of Practice provide practical guidance to
support the model WHS Act and model WHS Regulations.

Section 6.4, Regulation 292 of the model WHS Regulations contains the definition of a construction
project. The model WHS laws state that construction works which cost $250,000 or more are
construction projects. The operation of this definition imposes additional WHS duties on the principal
contractor, mostly related to planning and coordination of construction activities to ensure WHS is
effectively managed. There are some variations by jurisdiction which will be elaborated on in the
following sections of this report but the additional WHS duties that are applicable when the monetary
3
threshold is met are listed below .

Specific control measure – signage identifying principal contractor

Regulation 308
The principal contractor for a construction project must ensure that signs are installed,
that:

(a) show the principal contractor's name and telephone contact numbers (including an
after hours telephone number); and

(b) show the location of the site office for the project, if any; and

(c) are clearly visible from outside the workplace, or the work area of the workplace,
where the construction project is being undertaken.

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Final Report

WHS management plan – preparation

Regulation 309
(1) The principal contractor for a construction project must prepare a written WHS
management plan for the workplace before work on the project commences.
(2) A WHS management plan must include the following:
a. the names, positions and health and safety responsibilities of all persons at
the workplace whose positions or roles involve specific health and safety
responsibilities in connection with the project;
b. the arrangements in place, between any persons conducting a business or
undertaking at the workplace where the construction project is being
undertaken, for consultation, co-operation and the co-ordination of activities
in relation to compliance with their duties under the Act and these
Regulations;
c. the arrangements in place for managing any work health and safety incidents
that occur;
d. any site-specific health and safety rules, and the arrangements for ensuring
that all persons at the workplace are informed of these rules;
e. the arrangements for the collection and any assessment, monitoring and
review of safe work method statements at the workplace.

WHS management plan – duty to inform

Regulation 310
The principal contractor for a construction project must ensure, so far as is reasonably
practicable, that each person who is to carry out construction work in connection with the
project is, before commencing work, made aware of:
(a) the content of the WHS management plan for the workplace; and
(b) the person's right to inspect the WHS management plan under regulation 313.

WHS management plan – review

Regulation 311
(1) The principal contractor for a construction project must review and as necessary
revise the WHS management plan to ensure that it remains up-to-date.
(2) The principal contractor for a construction project must ensure, so far as is
reasonably practicable, that each person carrying out construction work in connection
with the project is made aware of any revision to the WHS management plan.

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Final Report

High risk construction work – safe work method statements

Regulation 312
The principal contractor for a construction project must take all reasonable steps to obtain a
copy of the safe work method statement relating to high risk construction work before the high
risk construction work commences.

Copy of WHS management plan must be kept

Regulation 313
(1) Subject to sub-regulation (2), the principal contractor for a construction project must
ensure that a copy of the WHS management plan for the project is kept until the
project to which it relates is completed.
(2) If a notifiable incident occurs in connection with the construction project to which the
statement relates, the person must keep the WHS management plan for at least 2
years after the incident occurs.
(3) The person must ensure that, for the period for which the WHS management plan
must be kept under this regulation, a copy is readily accessible to any person who is
to carry out construction work in connection with the construction project.
(4) The person must ensure that for the period for which the WHS management plan
must be kept under this regulation, a copy is available for inspection under the Act.
(5) In this regulation, WHS management plan means the initial plan and all revised
versions of the plan.

Further health and safety duties – specific regulations

Regulation 314
The principal contractor for a construction project must put in place arrangements for ensuring
compliance at the workplace with the following:
(a) Division 2 of Part 3.2;
(b) Division 3 of Part 3.2;
(c) Division 4 of Part 3.2;
(d) Division 5 of Part 3.2;
(e) Division 7 of Part 3.2;
(f) Division 8 of Part 3.2;
(g) Division 9 of Part 3.2;
(h) Division 10 of Part 3.2;
(i) Part 4.4.

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Final Report

Further health and safety duties – specific risks

Regulation 315
The principal contractor for a construction project must in accordance with Part 3.1 manage
risks to health and safety associated with the following:
(a) the storage, movement and disposal of construction materials and waste at the
workplace;
(b) the storage at the workplace of plant that is not in use;
(c) traffic in the vicinity of the workplace that may be affected by construction work
carried out in connection with the construction project;
(d) essential services at the workplace.

Summary and conclusions

WHS legislation establishes a set of requirements and responsibilities on employers (and other duty
holders) to protect the health and safety of workers when they are at work. Thus, WHS legislation
protects the rights of people to participate in the workforce without suffering injury or ill health as a
result. WHS legislation has historically been written in different ways. Early WHS legislation adopted a
prescriptive approach – also referred to as specification standards. This approach specified the ways
in which WHS risks should be controlled in a given situation. This approach was deemed inflexible
and unable to cope readily with technological change. Modern WHS legislation adopts what has been
referred to as a principle-based approach in establishing general duties to eliminate WHS hazards
and reduce risks so far as practicable. More recently, process-based standards have become a
feature of WHS legislation in Australia, and internationally. Process-based standards reflect
requirements relating to the way that WHS is managed. The responsibilities incorporated into the
model WHS Regulations for the management of WHS in construction projects are an example of this
type of regulation. The specific requirements relating to construction projects include requirements for
the provision of signage identifying the principal contractor responsible for delivery of a construction
project, as well as for the preparation, communication and review of a project WHS Management
Plan, the retention of safe work method statements for high risk construction work and the
management of specific WHS risks.

The model WHS Regulations (along with the Model WHS Act, and supporting Codes of Practice)
were developed as part of an initiative to bring about the harmonisation of WHS legislation across all
Australian jurisdictions. Academic research examining this harmonisation initiative has identified
challenges and concluded that, although greater consistency was achieved, there still remain quite
substantial differences between jurisdictions.

In the next section of this report we consider specific issues relating to construction that impact on the
need for additional planning, coordination and management to protect WHS. We also consider the
impact of construction characteristics on the operation of the current threshold definition of a
construction project.

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Final Report

4.6 Specific requirements relating to construction

The definition of a construction project

Construction WHS management has improved significantly following the introduction of WHS
34,35
legislation . Designating a principal contractor as being responsible for putting in place
arrangements to ensure specific WHS requirements are met aims to ensure that duties are
appropriately allocated in the context of the temporary, multi-employer organisation structures typical
of construction projects. One objective of the appointment of a principal contractor is to ensure
coordination, cooperation and consultation on WHS activities across construction sites at which
multiple contractors or PCBUs are operating. However, the threshold for designating a construction
project was intended to exclude the smallest construction workplaces at which coordination problems
22
are deemed to be a less of a significant issue . The monetary threshold definition for a construction
project ($250,000) is intended to be a proxy for the level of WHS risk presented by a construction
22
project . The adoption of an appropriate definition to trigger specific requirements for WHS planning
and coordination is important because an ineffective definition could potentially jeopardise the ability
of the legislation to meet its stated objectives.

Unintended or undesirable consequences flowing from the choice of a threshold definition could, for
example, include:

● the exclusion of specific high risk (but low value) projects, or

● the inclusion of low risk projects involving relatively simple construction works repeated over an
extended period (thereby increasing their value, without adding substantially to the risk).

The former could potentially limit the legislation’s ability to improve the health and safety of workers,
while the latter potentially increases compliance costs and regulatory burden. A SWA internal report
states: “It is considered that the proposed revised threshold [$250,000] is appropriate in the context of
national consistency and achieves a fair balance between a regulated solution and fair WHS
22
protection across construction industry sectors.”

The need for the definition of a construction project to be effective can be linked back the objective of
harmonisation. The definition should be balanced and nationally consistent to secure the health and
safety of workers.

Assumptions and rationale underpinning this definition

The operation of the definition of a construction project as applied in the model WHS Regulations is
underpinned by a fundamental assumption that the size (value or cost) of a construction project is
directly related to WHS risk and therefore more costly projects should be subject to more stringent
process-based regulatory requirements.

However, when examining the nature of the process-based duties triggered by the definition, it is
apparent that characteristics of construction projects other than value/cost may be relevant to the
need for such measures.

The characteristics of the construction industry that create a need for planning and coordination of
WHS efforts are discussed in Part 4.8 of this report and the importance of planning and coordination
in relation to construction project WHS performance is identified in Part 4.9.

Also inherent in the currently used monetary threshold definition are two assumptions:
● first, the monetary definition assumes that cost/value is a suitable proxy for risk, and

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Final Report

● second, the monetary definition assumes that the specified value represents the correct or
appropriate threshold at which the additional duties are needed to manage WHS risks.

However, the use of a monetary definition is blunt and, arguably, the figure selected is arbitrary. There
are also concerns about the appropriateness of this definition as it is impacted by changes in the
economy, including regional variations and the costs of construction over time. These factors are
discussed in the following sections.

Concerns about the appropriateness and impact of the definition

Key considerations regarding the use of a monetary definition include indexation, escalating costs,
competitive pricing, and construction project procurement methods. An overview of these issues is
provided in the following sections. To provide background information, the method for valuing
construction work for the purposes of the model WHS Regulations, according to The Construction
Work Code of Practice is first presented.

The Code defines the cost of construction as the contract price for carrying out the work and sets out
relevant inclusions:

● project management costs associated with the work,

● the costs of fittings and furnishings, including any refitting or refurbishing associated with the
work (except where the work involves an enlargement, expansion or intensification of a current
use of land), and
● any taxes, levies or charges (other than GST) paid or payable in connection with the work by or
under any law.

The Code excludes:

● the cost of the land on which the development is to be carried out, including the civil
engineering, utility and other land development costs involved in a land subdivision
● the costs associated with marketing or financing the development (including interest on any
loans), and
● the costs associated with legal work carried out or to be carried out in connection with the
development.

Thus this method is likely to be influenced by the way that commercial construction companies price
their services, including the extent to which they estimate costs, allocate profit margins and
allowances for risk contingency. As we discuss later in this report, cost estimating in construction is
not a precise science and it is quite common for costs to escalate during the life of a construction
project.

Indexation

The construction project threshold definition expressed in the model WHS Regulations was derived
through discussions with subject matter experts and from earlier OHS regulations applying in New
South Wales (NSW) and Victoria (VIC). The $250,000 amount was first prescribed in NSW laws in
22
2001 when the average new house cost $145,000 . However, given that the costs of construction are
not likely to be stable, and will fluctuate in response to market conditions, the appropriate duration for
a fixed price threshold value may be questioned.

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Final Report

One legitimate and important question facing the use of a monetary definition is whether the value
should be subject to indexation. It has been argued that inflation is responsible for inadvertent
capture, whereby relatively low risk construction projects are included under the definition, due to
22
rising costs of construction work .

The Australian Bureau of Statistics provides three indexation methods:

1. the consumer price index,

2. the producer price index, and

3. the wage price index.

There are advantages and disadvantages associated with using each method. The consumer price
36
index (CPI) is widely used and understood in Australia . Arguably, the CPI does not take into account
changes in building costs associated with changes in the costs of materials and labour as it is more
closely associated to consumer costs than business costs. That is, CPI may not be sufficiently
sensitive to reflect cost increases in the construction context. In contrast, the producer price index
(PPI) does include measures specific to the construction industry. Yet, the measure is infrequently
updated and does not take into account regional differences in costs. The cost of construction
activities is directly associated with wage costs. The wage price index is published by each
state/territory and does consider broad industry groups. Thus, if indexation is appropriate, it is far from
clear what form of indexation is best applied for the purposes of reviewing the threshold definition of a
construction project.

Employing an indexation method that is customised to meet the particulars of the construction
industry context is desirable, but has the potential to create additional regulatory burden (i.e. in
specifying new methods for calculation and requisite communication and education programs). Thus,
the choice of a particular mode of indexation would need to be carefully considered and subject to
robust impact evaluation. Any change in relation to the indexation of the threshold definition would
also require extensive consultation with industry members and organisations. Table 4.1 and Table 4.2
provide excerpts from an internal SWA document discussing the advantages and disadvantages of
various forms of indexation. These advantages and disadvantages have been subsequently explored
in the interviews conducted in Stage Two of this research project.

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Final Report

Table 4.1: Advantages and disadvantages of CPI

CPI

Advantages Disadvantages

Well-established ABS index that is easy to use, CPI doesn’t necessarily reflect changes in
widely cited and well-understood construction costs

Simple There may be more appropriate indexes available

(albeit more complex)

No technical disputes about adjustments Requires periodic review to ensure monetary

threshold remains meaningful, and is consistent
with policy intent

Source: Safe Work Australia (2011).

Table 4.2: Advantages and disadvantages of annual (or biannual) indexing

Annual (or biannual) indexing

Advantages Disadvantages

Maintains a meaningful monetary threshold over Blunt tool—no guarantee that all low-risk
time, designed to exclude lower-cost (and construction projects are excluded, and all high-risk
presumably lower-risk) construction work construction projects are covered

Ensures a risk-based approach to regulation No differentiation between states/territories

(indexing for the Commonwealth presents
challenges)

Requires constant updating and review of

explanatory materials

Requires annual transitional arrangements to deal

with construction projects that fall outside scope of
regulation when the threshold is adjusted

No scope for review prior to automatic adjustment

Possible complexity (e.g. to deal with negative

adjustments)

Source: Safe Work Australia (2011).

Construction project cost and WHS

Using a dollar figure as a threshold definition that triggers process-based WHS duties in construction
projects raises the question as to whether the dollar figure should reflect the cost of work, the tender
price or the value of a project to the client. Each of these things is expressed in dollar terms but is a
different figure. Typically, contractors will estimate the costs of consruction (using fairly robust cost
estimating tools) but will then add a sum to this for their expected profit margin as well as
contingency/risk that they perceive to be inherent in the project. Thus, the tender price is cost plus the
allocated amount for profit and risk. The value of a project is the amount that a client is prepared to
pay for the project. In some instances this may not be the lowest tender price, particularly in the case

34
Final Report

of high risk or complex pieces of work. Thus, the difference between cost, price and value is an
important consideration in the determination of how a monetary threshold definition is operationalised.

Further, there are also many factors that can influence the cost estimating process, as well as
ultimate allocations for profit and risk. Construction costs can be interpreted as any cost associated
37
with construction works, including expediture on labour, plant and materials . However, the cost of a
project is not purely based on these factors, as construction project costs are influenced by market
conditions, the scale and scope of the project, complexity of the project, method of construction, site
constraints, location of the project, design criteria and/or buildability, the client’s monetary position,
38
and the strategic value in winning work for a particular contractor . Other considerations may relate
to availability of cash, urgent need for work, past experience in similar projects, degree of difficulty,
project risk, a contractor’s current workload, and contract size. The cost estimation of construction
projects is therefore very complex. Cost estimates are particularly prone to uncertainty and risk, since
the industry context:

● is highly dynamic and changeable,

● comprises many parties with different business and project objectives, and
● is exposed to uncontrolled enviroments, including the weather and project uncertainty (e.g.
39
geotechnical conditions etc) .

Construction is arguably one of the most high risk industries, not only in terms of WHS, but also in
terms of the risk of adverse or unforeseen events impacting project cost and time performance. All
types of risk (including scope changes, unsuitable ground conditions, inclement weather, disputes,
client’s cash flow problems, subcontractor performance and default etc.) can have significant
39
monetary ramifications for a project or contractor .

Further, large and small-to-medium sized contractors often behave differently in relation to costing
work. In situations of high uncertainty, large constractors typically adjust their tender price upwards,
while medium and smaller organisations are more concerned with their level of experience and ability
40
to complete a job, when estimating the costs . Further, the level of project risk is often determined
subjectively (i.e. based on anecdotal experience) and dealt with by adding an approximate
41
contingency amount to project cost .

Overestimated costs can result in a high tender price and rejection by the client, while underestimated
42
costs can lead to contractor losses . Research shows that construction costs are underestimated in
almost nine out of 10 public sector projects, leading to the question of whether this was error, or acts
43
of strategic misrepresentation . The variability and routine underestimation of costs could potentially
impact on the operation of a monetary threshold definition for a construction project.

Two high profile examples of underestimation include the 2012 London Olympics and the Edinburgh
Trams project. The London Olympics was awarded for £2.4 billion in 2005, but altered to £9.3 billion
44
in 2007 after significant scope changes, and was completed for £8.9 billion in 2010 . The Edinburgh
Trams project was originally costed at £375m in 2003, but the total cost reached £776m in 2014,
45
despite not achieving completion of the original scope .

46 47
Such cost escalation can be attributed to improperly managed risk and uncertainty , rework , scope
48 49 50
creep , optimism bias ; but also suspicions of manipulation and opportunistic behaviour . While
these projects were obviously on a very large scale, it is highly likely that similar challenges and
practices occur in smaller scale projects operating at the margin of the monetary threshold definition
for a construction project. For example, it is therefore possible that a project cost is deemed to be
excluded on an initial cost estimate, but then subject to a cost blowout, that pushes it above the

35
Final Report

threshold value. Arguably, because project costs are calculated in the early stages of projects, and
51
thus are sometimes ‘best guesses’ there is the risk that projects may be excluded when they
arguably should be subject to the process-based planning and coordination requirements.

The construction industry has been known for malpractice and opportunistic behaviour, including so-
called ‘suicide bidding’, in which a contractor submits a tender that is less than the actual cost to
52
improve their chances of winning the bid . During the construction phase of the project, the
52
contractor then tries to recover the expected margin, through variations and claims . This approach
53
often results in contractual disputes, as contractors attempt to charge clients extra . However,
54
unsuccesful contractors unable to recoup their margin, risk becoming insolvent . Suicide bidding has
53
been identified as a cause of business failure in construction . In some cases, the industry’s poor
performance in terms of pricing work is attributed to client pressures. For example, in the UK
construction industry during the 2000s recession, the Civil Engineering Contractors Association
acknowledged that suicide bidding had become rife in the industry, but blamed the public sector
54
procurement process for focusing on lowest price rather than best value .

Also, in terms of WHS, the available research evidence suggests that projects that cost the least are
55
statistically the most dangerous . As illustrated in Figure 4.1, 48% of fatal accidents in trenching
operations examined in the US construction industry occurred in projects with a value of less than
US$250,000, and was this was often attributed to the fact that, in small projects, insufficient budget
allocation is provided for relevant protection systems, equipment or other construction WHS
55
measures . This research suggests that certain construction activities are dangerous irrespective of
project value or cost. Arboleda and Abraham observed that the fatality risk for small contractors (less
than 50 workers) on small projects (less than US$250,000) was high and that greater WHS effort
55
should therefore be focused on smaller construction projects .

Figure 4.1: 296 Fatality reports related to trenching operations between 1997 and 2001 in the
USA

The analysis of Arboleda and Abraham suggests that, in certain construction activities, a monetary
threshold definition could potentially exclude some projects, despite the fact that the level of WHS risk
presented is high.

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Final Report

Procurement methods

Contractual mechanisms in procuring construction projects can impact WHS outcomes. Relationship-
based forms of contracting, such as alliancing and delivery partnerships, have the aim of improving
56
cooperation and collaboration in construction projects . These arrangements place shared
responsibility for project delivery and performance on the project team, encouraging shared goals,
57
improved communication, and more positive working environments . Conversely, more traditional
arrangements for project delivery, including design-bid-build and design and construction
arrangements are generally characterised by a large degree of variability in the integration between
58
design and construction . Despite the fact that, under a design and construction contract, one
organisation is procured to provide both design and construction services, clients maintain arms-
length involvement, design work is often outsourced and the supply network remains fragmented in
both design and construction stages of the project.

Projects also vary in terms of payment mechanisms for contractors. Remuneration can be paid on a
fixed price (lump sum) payment or cost-reimbursable basis. The latter places more risk on the
contractor, while the former provides for a greater sharing of risk between the parties.

The payment mechanism is reported to impact the costs of construction, as well as impacting on the
tendency for construction contractors to spend money or ‘cut corners’ with regard to WHS. For
example, fixed price payment mechanisms are more likely to encourage corner cutting compared to
cost reimbursable mechanisms.

These procurement and commercial arrangements are likely to impact upon the costs of construction
and commercial incentives to invest in WHS. These considerations are also likely to have a bearing
on the operation of a purely monetary threshold definition.

Summary and conclusions

The current definition of a construction project under the model WHS Regulations is a monetary
threshold. Thus, projects valued at $250,000 or more are included, while those valued at less than
$250,000 are excluded. The monetary threshold is underpinned by the assumption that the more
costly a construction project, the higher the WHS risk and/or the greater the need for the application
of specific requirements relating to WHS planning and coordination by a principal contractor.

A monetary threshold is simple to apply and easy to comprehend. However, it can be seen as a blunt
and possibly arbitrary cut off point. There are also questions about how the value is determined as
cost estimating in construction is often imprecise and cost blow outs are relatively commonplace.

A fixed monetary threshold may also lose currency over time as the costs of construction are subject
to market changes (sometimes related to the cost of raw materials) and inflationary pressures.
Indexing may be considered, although the best price index to link the threshold to is also unclear.

The operation of the monetary threshold definition also needs to be understood in the context of the
diversity of procurement arrangements, contracting strategies and payment mechanisms utilised to
deliver construction projects. These can have an impact upon the way that WHS is managed, as well
as the way projects are costed and paid for.

The international research evidence also suggests that incidents and injuries in some high risk
construction tasks (e.g. trenching) are more prevalent on relatively low value packages of construction
work.

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Final Report

In the next section of the report we consider state/territory jurisdictional variations in the adoption of
the model WHS Regulations and operation of the threshold definition for a construction project.

4.7 State/territory jurisdictional variations

4
Prior to adopting model legislation , several Australian jurisdictions had in place a per person
threshold to trigger specific WHS planning requirements. This was derived from the National Standard
for Construction Work. The National Standard for Construction Work was established to protect
persons from the hazards associated with construction work by:

(a) requiring specified classes of persons to ensure these hazards are identified, the risks they pose
assessed, and either the risks eliminated or, where this is not reasonably practicable, the risks are
minimised; and

(b) requiring the provision of information, consultation, planning, documentation, training and other
measures to ensure occupational health and safety.

The Standard did not supersede any obligations under legislation in any jurisdiction but did establish
an obligation for a person with control of a construction project where ‘five or more persons’ are
working, or are likely to be working, simultaneously on a construction site to ensure that:

(a) a site-specific occupational health and safety management plan is prepared before the work
commences; and

(b) the plan is monitored, maintained and kept up to date during the course of the work.

This obligation was independent of the definition of a construction project which was broadly defined
as “a project involving construction work, and includes design, preparation, and planning.”

Thus, construction projects could be of any size, yet additional obligations for the development of a
site-specific occupational health and safety management plan were triggered by the number of people
working on (or anticipated to work on) a site simultaneously.

It is unclear how the threshold number of five persons was established. However, in our discussions
with one construction WHS expert in the UK it was suggested that historically, in UK legislation every
business has been required to establish a health and safety policy. However, in the case of a
59
business with less than five employees the policy does not need to be formal (i.e. written down) . The
UK Construction (Design and Management) Regulations 2007 also restricted the application of 4 to
12 and 19 when “the largest number of persons at work at any one time carrying out construction
work included in the project will be or, as the case may be, is less than five.” While the per person
threshold was identified as “workable” by key stakeholders in Australian discussions prior to the
establishment of the model WHS Regulations, a monetary threshold was selected because this was
22
perceived to be transparent and unambiguous . It is noteworthy that an analysis by the Queensland
regulator found that a standard house build would employ, on average, 26 contractors/trades (see
Appendix A for list), though these tradespeople may work sequentially not concurrently.

The definitions currently used to trigger specific construction WHS provisions in the WHS legislation
are shown in Table 4.3. The previous threshold represents the threshold that immediately preceded
_____
4 Excluding Western Australia and Victoria.

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Final Report

the current threshold. A per person threshold was in place in the Australian Capital Territory and
Northern Territory prior to the introduction of the model WHS Regulations.

Table 4.3: Australian current and previous thresholds for a construction project by jurisdiction

Jurisdiction Current Threshold Previous Threshold

5
Commonwealth60 $250,000 No previous threshold in place

Northern Territory $500,000 $250,000

Victoria $350,000 $250,000

South Australia $450,000 $250,000

New South Wales $250,000 (a) $250,000 or more; or

(b) high risk construction work is
undertaken and the cost of the
work does not exceed $250,000,
or;
(c) demolition work or asbestos
removal work for which a licence
is required under Chapter 10 to
carry on the business of that work
is undertaken (regardless of the
6
cost of the work).

7
Queensland61 $250,000 $80,000

Australian Capital Territory62 $250,000 or more; or $250,000

demolition or refurbishment of a
structure containing loose-fill
asbestos

Tasmania63 $250,000 ‘five or more persons’ working or

8
likely to be working

Western Australia ‘five or more persons’ working or ‘five or more persons’ working or
likely to be working likely to be working

States that did not adopt the model WHS Act and Regulations

The model WHS laws have not been adopted in all Australian jurisdictions. Thus, Victoria and
Western Australia have chosen not to adopt the model WHS Act and Regulations. Reasons that could
be found for the non-adoption and subsequent legislative variations are described below.

_____
5 This was based on personal communications with the regulators in the Commonwealth. Alternative sources suggested that the per person
threshold was in place.
6 This was taken from the OHS Regulation 2001 under the OHS Act 2000.
7 At the time of harmonisation, QLD were considering increasing the amount of the financial threshold.
8 This was unable to be confirmed by the regulator.

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Final Report

Victoria

“...we don’t have a problem with harmonising on a national basis, but if that’s going to set
Victoria back – if that’s going to set Victorian business back – then we’re not going to
stand by and watch that happen.”

Victorian Premier - Ted Baillieu (2012)

The Victorian Government has stated that it will not adopt the model WHS laws in their current form.
Victoria's OHS Regulations 2007 will expire in 2017. WorkSafe Victoria is currently undertaking work
64
to review and revise its OHS legislation by this date . According to a report produced by Price
Waterhouse Coopers that was commissioned by the Victorian Government, key reasons for the non-
adoption include the impact on small to medium-sized enterprises. The report also provides an overall
assessment that the benefits of implementing the 20 proposed changes would not outweigh the costs
65
(approximated as $3.44 billion over five years) . The report argues that the costs of implementation
would primarily be borne by:

● small enterprises (employing less than 20 employees), which represent 90% of Victorian
businesses,
● organisations operating only in Victoria, which represent 99% of Victorian businesses, and
● metropolitan organisations, which represent 72% of Victorian businesses.

Following the 2014 Victorian OHS Regulation Amendments, Victorian legislators increased the
construction project threshold from $250,000 to $350,000. According to WorkSafe Victoria, the
proposed amendment did not impose an increased regulatory burden and thus no Regulatory Impact
Statement was undertaken relating to this change. The change was communicated in guidance
documentation released by WorkSafe Victoria (see reproduced Figure 4.2).

Figure 4.2: Guidance documentation released by WorkSafe Victoria

OHS Regulations OHS Regulations What do I need to do?

(pre 1 July 2014) (from 1 July 2014)

Construction

5.1.13 Application of Subdivision 5.1.13 Application of Subdivision Principal contractor duties will now
only apply to projects if the cost of
(1) This Subdivision applies to a (1) This Subdivision applies to a
construction project if the cost of construction project if the cost of the project is $350,000 or more.
This means that a health and
the project is $250,000 or more. the project is $350,000 or more.
safety coordination plan will only
be required if the cost of the project
is $350,000 or more.

The construction project threshold amount of $350,000 was considered as part of the OHS Regulation
review for 2017. A number of employee and employer representatives were consulted and the
2
threshold retained . The reasons for retaining the construction project threshold was contained in the
Regulatory Impact Statement for Proposed Occupational Health and Safety Regulations 2017 and the
Equipment (Public Safety) Regulations 2017 released in June 2016. An excerpt for this statement is
presented below.

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Final Report

“Consideration was given to the suitability of the current principal contractor threshold
amount of $350,000 which was increased from $250,000 in the 2014 amendment to the
OHS Regulations. The OHS Act does not allow for the indexation of the threshold. A
number of indexation methodologies were considered to determine the optimum value to
accommodate the life of the proposed Regulations. Trends in indexation were calculated
using historical averages and after considering the options, it is proposed to retain the
threshold at $350,000 for the life of the 2017 OHS Regulations. The $350,000 amount is
considered to adequately cover the larger, higher risk construction projects where
coordination risks are a key issue. Consideration was also given to alternative
approaches to a dollar threshold for example having a threshold based on the number of
employees on site as the coordination risks increase as the number of employees
increases. However it was considered that, while more closely aligned with the risk than a
dollar threshold, it would be difficult to implement and enforce. For simplicity and
2
enforceability a dollar threshold was maintained” .

An industry informant suggested that the $350,000 threshold was, in part, based on an analysis of
building permit data. In 2007, an analysis of building permit data found that 13% of building permits
issued related to projects deemed to be high risk construction projects. The industry informant
suggested that the increase in the threshold value was intended to ensure that a similar proportion of
projects, reflecting high risk work that requires extra coordination effort are captured.

The non-adoption of the model WHS Act and Regulations in some Australian jurisdictions has
resulted in jurisdictional inconsistencies in WHS duties and terminology applied to the construction
industry. In Victoria, the owner (of a facility or structure to be built) is deemed to be the principal
contractor of the workplace where the construction project is to be carried out unless the owner:

1. appoints a principal contractor for the construction work performed for or on behalf of the
owner; and

2. authorises the principal contractor to manage or control the workplace to the extent necessary
to discharge the duties imposed on a principal contractor.

If domestic premises become a workplace due to construction work being performed and the owner of
those premises engages a person to manage or control the workplace, the person engaged is taken
to be the principal contractor for the purposes of this Subdivision.

Further variations are shown in Table 4.4.

Table 4.4: Variations in VIC

Model Regulations Victorian variations

a project that involves construction work Health and safety coordination plans
where the cost of the construction work $350,000 or more
is $250 000 or more
The $350,000 is the threshold for the Victorian PC duties to
operate. These are both the Health and Safety Coordination
Plan (HSCP) and the signage duty as per Regs 5.1.15 &
5.1.16. The threshold is not relevant for other duties.

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Final Report

(1) In this Chapter, a person conducting a (1) The owner is the principal contractor of the workplace
business or undertaking that where the construction project is to be carried out unless the
commissions a construction project is, owner:
subject to this regulation, the principal (a) appoints a principal contractor for the
contractor for the project. construction work performed for or on
behalf of the owner; and
(b) authorises the principal contractor to
manage or control the workplace to the
extent necessary to discharge the duties
Note the fundamental difference. In WHS a imposed on a principal contractor
PC is by definition a PCBU & hence has
PCBU duties. This is reinforced by the note
at the start of Part 6.3.

The equivalent is NOT the case in

Victoria. The PC may or may not be an
employer with attendant employer duties. (2) If domestic premises become a
Separate tests apply and separate duties. workplace due to construction work
being performed and the owner of those
premises engages a person to manage
or control the workplace, the person
engaged is taken to be the principal
contractor for the purposes of this
Subdivision.

WHS management plan—preparation Not a specific requirement beyond arrangements for the co-
(1) The principal contractor for a ordination of the health and safety of persons engaged to
construction project must prepare a written perform construction work
WHS management plan for the workplace
before work on the project commences. The requirement for a PC to prepare, prior to work beginning,
(and do other things in relation to) a HSCP is the direct
equivalent under Victorian regulations. The content of the
WHS & HSCP are very similar except Victoria does not make
(2) A WHS management plan must include reference to WHS 309(2)(e) re actions with SWMS.
the following:
(a) the names, positions and health and
safety responsibilities of all persons at the
workplace whose positions or roles involve
specific health and safety responsibilities in
connection with the project;
(b) the arrangements in place, between
any persons conducting a business or
undertaking at the workplace where the
construction project is being undertaken, for
consultation, co-operation and the co-
ordination of activities in relation to
compliance with their duties under the Act
and these Regulations;
(c) the arrangements in place for
managing any work health and safety
incidents that occur;
(d) any site-specific health and safety
rules, and the arrangements for ensuring
that all persons at the workplace are
informed of these rules;

(e) the arrangements for the collection No specific requirement

and any assessment, monitoring and
review of safe work method statements at
the workplace.

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Final Report

(2) If a notifiable incident occurs in No specific requirement

connection with the construction project to
which the statement relates, the person
must keep the WHS management plan for at
least 2 years after the incident occurs.

(3) The person must ensure that, for the (a) any person engaged to perform construction work at the
period for which the WHS management plan workplace; and
must be kept under this regulation, a copy is (b) any person about to commence work at the workplace;
readily accessible to any person who is to and
carry out construction work in connection (c) an employee member of a health and safety committee, a
with the construction project. health and safety representative or a person nominated under
regulation 2.2.2(4) [issue resolution]

Some industry stakeholders have expressed the view that the variations are not overly problematic.
For example, a report by the Australian Industry Group (AIG) asserted “…whilst there are some minor
variations in relation to signage and management plans, it would be relatively straightforward to
develop an approach that complies with the Victorian regulations and also adopts the requirements of
the model WHS laws. The Victorian laws are silent on the specific amenities and risks; however, in
Victoria a principal contractor would most likely be expected to manage these issues as part of their
66
‘general duty’” . Indeed, although the duty of a Principal Contractor is limited in the Victorian
Regulations (relative to the model WHS Regulations), in fact an organisation deemed to be a Principal
Contractor will also be an employer and will therefore have employers’ duties under other sections of
the Victorian OHS Act (notably sections 21 and 26 which establish general duties).

Western Australia

“...the State Government supported the principle of nationally harmonised laws but could
not support the introduction of an OHS regime which would adopt inferior standards to
the existing State regime.”

Western Australian Minister for Commerce, Troy Buswell 2009.

Western Australia has not adopted the harmonised legislation except as it relates to the mining
sector. An alternative non-monetary definition is used in Western Australia to trigger specific
construction project-based management responsibilities. Thus, if ‘five or more persons’ are working or
are likely to be working at a construction site, it is deemed to be a construction project.

Western Australia has expressed in-principle support for the concept of harmonisation, but the
67
threshold has been a contentious issue with representatives expressing that they “would be watchful
68
of introducing aspects of the harmonised laws that are not suitable for WA” . During a regulatory
impact statement development period, it was identified that changing to a monetary threshold would
be inequitable and costly for smaller businesses and construction companies operating in regional or
rural locations. The additional cost for small business was cited as being associated with additional
paperwork (i.e. generated by the development, implementation and documentation of systematic
WHS management processes) that larger businesses may already have in place. It was also argued
that works being undertaken regionally or remotely would be classified as construction projects were

43
Final Report

a monetary threshold definition to be applied, while the same projects would be out of scope of the
definition in metropolitan areas, due to geographic differences in the costs of construction. Thus, it is
argued that in Western Australia, a monetary definition would create an uneven level of coverage
across the construction industry.

This argument was made during a podcast discussion featuring a member of WorkSafe Western
Australia in June 2016. The representative describes particular challenges associated with
rural/regional construction works in Western Australia.

“…and when you think about it, the cost of constructing a house in somewhere like the
northwest of Western Australia, or the Kimberley, is going to be far more expensive than
that than in Perth. When you look at the cost of construction etcetera, if there's a dispute,
WorkSafe would then have to go and have a look at the contract and determine if it is a
1
$250,000 contract as opposed to doing a simple headcount.”

The representative also argued that one problem inherent in using a monetary threshold to trigger
project-specific WHS responsibilities lies in the difficulty of establishing an appropriate threshold value
that will remain applicable over time. He explained: “some of the other jurisdictions that introduced
monetary thresholds, $250,000 I think is the amount they introduced in the Eastern states, and some
four years down the track they’re now going through the agonies of trying to work out whether it
should be $250,000, $300,000, $500,000..a million dollars.”

Western Australia also differs from the model WHS legislation in terms of principal contractor duties
(called main contractor duties in Western Australia) and the definition of high risk construction work
(HRCW). Western Australia received 50 public submissions relating to the applicability of the model
WHS legislation (known as “the Green Bill”). The development of WHS legislation continues, in close
consultation with the Western Australian Department of Mines and Petroleum. The points of
difference between the Western Australian WHS legislation and the model WHS legislation are shown
in Table 4.5.

Table 4.5: Points of difference between Western Australian WHS legislation and the model
WHS legislation

Model Regulations Western Australia

a project that involves construction work where the Regulation 3.142

cost of the construction work is $250 000 or more OHS management plan
5 or more persons are likely to be working at the
same time

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Final Report

(1) In this Chapter, a person conducting a Main contractor

business or undertaking that commissions a (a) the person for whose direct benefit all the work
construction project is, subject to this done at a construction site exists upon its completion;
or
regulation, the principal contractor for the project.
(b) if the person mentioned in paragraph (a) has
(2) If the person referred to in subregulation (1) engaged another person, other than as his or her
engages another person conducting a business or employee, to do or cause to be done all the work at
undertaking as principal contractor for the the construction site, the other person so engaged
construction project and authorises the person to [s. 3.137 also defines client using (a)]
have management or control of the workplace and
to discharge the duties of a principal contractor
under this Chapter, the person so engaged is the
principal contractor for the project.
(3) If the owner of residential premises is an
individual who directly or indirectly engages a
person conducting a business or undertaking to
undertake a construction project in relation to the
premises, the person so engaged is the principal
contractor for the project if the person has
management or control of the workplace.
(4) A construction project has only one principal
contractor at any specific time.

WHS management plan—preparation (b) describes what occupational health and safety
(1) The principal contractor for a construction project induction training will take place in respect of
must prepare a written WHS management plan for construction work on the site
the workplace before work on the project
commences. (e) includes information, to the extent to which the
(2) A WHS management plan must include the main contractor has it, that relates to
following: (i) the identified hazards to which a person at the
(a) the names, positions and health and safety construction site is likely to be exposed; and
responsibilities of all persons at the workplace whose (ii) the risk of injury or harm to a person resulting from
positions or roles involve specific health and safety those hazards; and
responsibilities in connection with the project; (iii) the means by which the risk may be reduced
(b) the arrangements in place, between any
persons conducting a business or undertaking at the (f) includes the safe work method statements (if any)
workplace where the construction project is being for the site
undertaken, for consultation, co-operation and the [No specific mechanism for review and assessment.
co-ordination of activities in relation to While providing and updating SWMS is the
compliance with their duties under the Act and responsibility of persons with day-to-day, on-site
these Regulations; control of high risk work, the main contractor must
(c) the arrangements in place for managing any prepare and update SWMS if unable to identify an
work health and safety incidents that occur; appropriate person]
(d) any site-specific health and safety rules,
and the arrangements for ensuring that all persons at
the workplace are informed of these rules;

WHS management plan—duty to inform Regulation 3.141

The principal contractor for a construction project The main contractor must ensure, as far as
must ensure, so far as is reasonably practicable, that practicable, that
each person who is to carry out construction work in (a) each person doing construction work at the
connection with the project is, before commencing construction site has been given a copy of the plan
work, made aware of:

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Final Report

WHS management plan—review (b) if the plan is amended — each such person is
(2) The principal contractor for a construction project given a copy of the changes that relate to the
must ensure, so far as is reasonably practicable, that person’s work, as soon as practicable; and
each person carrying out construction work in
connection with the project is made aware of any
revision to the WHS management plan.

Copy of WHS management plan must be kept (i) a person doing construction work at the
(3) The person must ensure that, for the period for construction site; and
which the WHS management plan must be kept (ii) a person about to commence construction work at
under this regulation, a copy is readily accessible to the construction site; and
any person who is to carry out construction work in (iii) a member of a safety and health committee for
connection with the construction project. the construction site who is an employee; and
(iv) a safety and health representative for the
construction site.

Other variations include the formal 'main contractor' not being formally appointed in Western Australia
(as a principal contractor can be under the model WHS regulations) but being deemed to be in this
role as determined by the direct benefit they derive from the construction work. In addition to any
'deemed' main contractor, under the Western Australian Regulations designers, clients and employers
are required to consult with one another to ensure that the construction work can be done without risk
to safety and health. Depending on the nature of the contracting arrangements and the particular
circumstances of the project, the main contractor and the client could be the same person. In that
case, the client will need to comply with the main contractor and client requirements of the Western
Australian Regulations.

States/territories that amended the model Act and Regulations

The Commonwealth Government and Tasmania are the only jurisdictions that have implemented the
9
model WHS Regulations without amendments relative to the definition of a construction project,
additional Principal Contractor duties and High Risk Construction Work. The Northern Territory (NT),
Australian Capital Territory (ACT), South Australia (SA), Queensland and New South Wales
governments have all made amendments which are briefly summarised in the following sections.

Northern Territory

In 2015, the Northern Territory government undertook public consultation regarding the WHS
(National Uniform Legislation) Act and Regulations. Possible amendments were aimed at “reducing
the regulatory burden faced by businesses and workers where the cost of compliance has increased
69
without a corresponding increase in health and safety outcomes” . Of the possible amendments,
many supported harmonised legislation and opposed changes which were thought to increase the
complexity of cross-jurisdictional operations. Following a national review conducted in 2014/15, there
was a recommendation to increase the threshold to $450,000. This threshold was intended to exclude
standard single-dwelling residential construction and account for increasing construction costs in the
coming years. The Northern Territory government also identified unique regional considerations,
including the higher cost of raw materials, fuel, transport and labour compared to other jurisdictions.

_____
9 This based on correspondence with the regulators.

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Final Report

As such, it was decided that an additional buffer would be added and the threshold was set to
10
$500,000. No variations in the duties or definitions of High Risk Construction Work were identified.

Australian Capital Territory

The Australian Capital Territory has introduced a variation to the model WHS Regulations. The
threshold value to trigger specific project-based WHS responsibilities was not increased but a multi-
faceted definition was adopted that includes “demolition or refurbishment of a structure containing
loose-fill asbestos” regardless of the value of the work. Thus the definition adopts a two-pronged
approach based on project value and/or a high risk activity. On 28 October 2014, the Australian
Capital Territory Government announced the Loose‐fill Asbestos (Mr Fluffy) Insulation Eradication
Scheme, which included an offer from the Government to buy all homes in the Territory affected by
loose‐fill asbestos insulation. A subsequent investigation by the Auditor-General reviewed WorkSafe
ACT’s management of its regulatory responsibilities for the demolition of loose-fill asbestos contained
houses. As such, this has been a continuing area of focus for the Australian Capital Territory. Our
11
analysis did not reveal variations to the duties nor HRCW by this jurisdiction .

South Australia

South Australia increased the monetary threshold definition for a construction project to $450,000. A
report prepared by RSC Advising Pty Ltd, identified some key concerns including that a monetary
value may not be a valid indicator of the inherent hazards or risks in a construction project and that
70
$250,000 is too low for the residential sector . The South Australian additional Principal Contractor
12
duties are consistent with the model WHS Regulations .

Queensland

Queensland was the first state to adopt the 2005 National Standard for Construction Work into
regulation. However, rather than applying the five person threshold used in the standard, Queensland
legislators adopted a monetary threshold to trigger additional Principal Contractor duties including the
development of WHS management plans (called OHS coordination plans at the time). The original
threshold value was $80,000. An industry informant has advised that the choice of monetary threshold
reflected the decision taken by legislators to maintain consistency with other industry-specific
13
legislation and processes . This included the Portable Long Service Leave Act 1991 and
prequalification of building suppliers for state government contracts.

The Building and Construction Industry (Portable Long Service Leave) Act 1991 provides for long
service leave payments for workers in the Queensland building and construction industry, regardless
71
of whether they work on different building and construction works for one or more employers . The
14
requirement applies provided the cost of works exceeds $150,000 (ex GST) . This threshold covers:

_____
10 This was confirmed by the regulator via personal correspondence.
11 A response from the regulator confirming this statement was not able to be attained prior to the submission of this report.
12 This was unable to be confirmed with the regulator prior to the publication of this report.
13 No documented evidence for the rationale of this threshold could be found in the public domain nor provided by the regulator.
14 QLD provides a structured approach to costing projects that varies from the Construction Work Code of Practice for valuing construction
projects. The cost of work is the total of all costs (excluding GST) that relate directly and indirectly to building and construction work. This
includes, but is not limited to, the value of all labour and materials to be used (including materials supplied by the owner), plant, equipment,
design and project management. If the contract price reflects the total of all direct and indirect costs, then the cost may be determined by the
contract price (or if there is more than one contract, the sum of the contract prices). The cost of feasibility studies and environmental impact
statements should be included in the total cost of work and claimed as exemptions. All goods, materials, supplies and services, whether
sourced from within Queensland, interstate or overseas, to be used for work in Queensland, must be included in the total cost of building
and construction work.

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Final Report

● a Portable Long Service Leave levy,

● a WHS levy, and
● a Construction Skills Queensland levy.

The Queensland Government Department of Housing and Public Works also employs monetary
thresholds for prequalification of building suppliers. The Queensland Government’s process for
selection of consultants is based on a system of prequalification. The system records registered
consultants including information on past performance on commissions, and the types of
commissions each consultant is prequalified to undertake. It also provides a comprehensive
assessment of each consultant’s capabilities and commitment to continuous improvement against
prescribed criteria. The threshold for requiring prequalification is either:

(i) when commission exceeds $30,000, or

(ii) the services risk rating is 3 or 4.

All building contractors who are directly contracted on government building projects require
prequalification if the project is valued at more than $500,000. Key trade or specialist subcontractors
72
can be registered under contractors in the prequalification system . The approach to service risk
assessment for consultants has its basis in the risk management processes advocated in the
Australian/New Zealand Standard AS/NZS 4360:1999 Risk Management. The assessment focuses
on three key areas of risk, namely:

● time overruns,
● cost overruns, and
● the potential for functionality or commission requirements not being met.

The tool is provided in Appendix B for reference.

15
Queensland has one additional duty for Principal Contractors which is under Schedule 315A . This
relates to the provision of worksite amenities (see below).

315A Amenities
(1) Schedule 5A states particular duties of a principal contractor about amenities.
(2) A principal contractor must ensure that an amenity provided under schedule 5A is maintained in
a hygienic, safe and serviceable condition, including by ensuring that there is a system for—
(a) inspecting and cleaning the amenity; and
(b) if the amenity has facilities to dispose of sanitary items
for females—the adequate and hygienic disposal of the
sanitary items.

New South Wales

In New South Wales the appointment of a Principal Contractor was covered under section 210 of the
now repealed OHS Regulations 2001. The implementation of the model WHS Regulations saw the
removal of parts b and c of this definition for the appointment of a Principal Contractor. Under the
revised legislation, demolition work or asbestos removal work may be undertaken at a project with a
_____
15 The regulator was unable to confirm this variation prior to the report completion date.

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Final Report

value of less than $250,000 without requiring the appointment of a Principal Contractor. Prior to this
16
change the appointment of a Principal Contractor was required regardless of the value of the work .
There are no variations in the duties in NSW.

High risk construction work

There are further jurisdictional differences in relation to the definition of High Risk Construction Work.
According to the Model WHS regulations a Safe Work Method Statement (SWMS) is required for all
High Risk Construction Work. SWMSs establish safe procedures and practices for undertaking these
73
activities . Activities are broken down into a series of job tasks or steps and the hazards and risk
controls identified for each task or step. High Risk Construction Work activities identified in the model
WHS Regulations are listed below. Outlining variations in HRCW by jurisdiction was beyond the
scope of this report. However, it is noteworthy that using the presence of High Risk Construction Work
to trigger additional project-specific responsibilities in the WHS legislation would require a review of
HRCW definitions and differences across jurisdictions.

● Construction work where there is a risk of a person falling 2m or more;

● Construction work on telecommunications towers;
● Construction work involving demolition;
● Construction work involving the disturbance or removal of asbestos;
● Construction work involving structural alterations that require temporary support to prevent
collapse;
● Construction work involving a confined space;
● Construction work involving excavation to a depth greater than 1.5m;
● The construction of tunnels;
● Construction work involving the use of explosives;
● Construction work on or near pressurised gas distribution mains and consumer piping;
● Construction work on or near chemical, fuel or refrigerant lines;
● Construction work on or near energised electrical installations and services;
● Construction work in an area that may have a contaminated or flammable atmosphere;
● Tilt-up and precast concrete construction work;
● Construction work on or adjacent to roadways or railways used by road or rail traffic;
● Work on construction sites where there is any movement of powered mobile plant;
● Work on construction sites where there are artificial extremes of temperature;
● Construction work in, over or adjacent to water or other liquids where there is a risk of
drowning; and
● Construction work involving diving.

Consequences of inconsistencies

The inconsistencies between jurisdictions can create practical and economic challenges. It has been
argued that differences and duplication between jurisdictions adversely impact productivity, workforce
30
mobility, and business competitiveness .

The lack of true harmonisation of WHS legislation creates complexity for constructors operating
across multiple jurisdictions.

A New Zealand report highlighted the economic challenges associated with differing regulatory bodies
and structures, inspectorate regimes and legislative content. Multiple WHS regimes increase the
_____
16 This definition was provided in personal correspondence from the regulator.

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Final Report

costs borne by governments, while economies of scale and scope may be achieved through shared
74
production of WHS policy across the jurisdictions .

According to a report by Access Economics, other issues associated with multiple WHS regimes
include the following:

● inconsistent WHS standards across jurisdictions lead to confusion and complexity which have
negative impacts on the WHS of workers;
● inconsistent WHS standards across jurisdictions cause confusion, complexity and duplication
for some businesses;
● inconsistent record keeping, notification and reporting requirements across jurisdictions for
identical WHS hazards lead to complexity and considerable administrative burdens;
● similar breaches in different jurisdictions are subject to different enforcement activities and
significantly different penalties;
● incentive for industry to move to jurisdictions with less stringent or costly regulation
27
● competition between jurisdictions to attract business by reducing the levels of WHS ; and
● disincentive for businesses to participate in multiple markets across jurisdictions resulting in
75
reduced competition .

Summary and conclusions

Despite attempts to achieve harmonisation of WHS legislation across Australian jurisdictions,

differences remain. Victoria and Western Australia did not adopt the model WHS legislation. Further,
even in the adopting states/territories, variations have been introduced by legislators. These
variations relate to a number of features of the legislation, including the threshold definition of
construction projects, and consequently the way in which WHS planning and coordination
responsibilities are triggered in different jurisdictions. The legislation in all jurisdictions except for
Western Australia expresses the threshold definition in monetary terms, although the dollar values are
not consistent. The highest value threshold definition is $500,000 in the Northern Territory. Western
Australia has retained a threshold definition of ‘five or more persons’ working, or expected to be
working, at a construction site. The Australian Capital Territory has adopted a dual-pronged definition
of a project value of $250,000 or more or a project at which there is demolition or refurbishment of a
structure containing loose-fill asbestos. Inconsistencies have been identified as creating unnecessary
complexity, increasing administrative burden and presenting challenges for compliance and
effectiveness.

4.8 Work health and safety in the construction industry

Why construction requires special treatment

The construction industry presents some particular challenges relating to the management of WHS.
Manu et al. describe how construction project features including: the nature of project, site
restrictions, methods of construction, project duration, design complexity, the procurement system,
76
and subcontracting can all contribute to incident causation . Thus, it has been argued that the
industry’s relatively poor WHS record is due to its project-based nature, as key characteristics of
77
projects are repeatedly cited as root causes of incidents . However, industry-level characteristics,
78 79,80 81,82
including competitive tendering , the transient workforce , long and complicated supply chains
83
and the constant demand for progress can all militate against healthy and safe ways of working.
These project and industry level characteristics are discussed in the following sections of the report.

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Final Report

Construction incident causation

The unique features of construction work organisation, such as supply chain fragmentation, temporary
projects, dynamism and uncertainty, has led to the development of a number of construction-industry
specific incident causation models. These are briefly summarised below.

ARCTM model
84
Abdelhamid and Everett developed a safety incident root causes tracing model (ARCTM),
emphasising the need to investigate unsafe acts in the construction industry. ARCTM proposed three
root causes for construction safety incidents:

1. failing to identify an unsafe condition that existed before an activity was started or that
developed after an activity was started,

1. deciding to proceed with a work activity after the worker identifies an existing unsafe condition;
and

2. deciding to act unsafe regardless of initial conditions of the work environment.

ARCTM further proposed four causes for unsafe conditions: ‘management actions/inactions’, ‘worker
or co-worker unsafe acts’, ‘non-human-related events’, and/or ‘unsafe conditions that are pre-existing
or natural part of the initial construction site conditions’. The model however has been criticised for
adopting a narrow view of incident causes by focusing entirely on site personnel and workers’
behaviour and not sufficiently identifying the systemic factors in the supply chain, or those relating to
85,86
designers and clients .

The Constraint-Response model

87
Suraji et al. describe the complex interaction of factors that contribute to the occurrence of
construction site safety incidents. They propose a Constraint-Response incidents causation model
(see Figure 4.3). The model holds that the parties involved in each stage of the construction project
lifecycle (conception, design, and construction) experience constraints on their decision making. Their
responses to these constraints, in turn, constrain the actions of participants in the subsequent stages.
Ultimately, unless carefully managed, the cumulative effect of constraints and responses will be
experienced as hazardous site conditions, inappropriate work practices, or unsafe actions at the
construction site. Thus, incident causes can be traced back from the immediate site level conditions,
actions and practices, to the planning and control activities of site supervisors and managers, to
subcontractors’ constraints and responses, to principal contractors’ constraints and responses, and to
the constraints and responses experienced by designers and clients in the design and project
87
conception stages .

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Final Report

87
Figure 4.3: Constraint-Response model

Physical & Business Environment

Project Conception Constraints

Project Management Client Project Design

Constraints Responses Constraints

Project Management
Designer Responses
Responses

Construction Management Constraints

Construction Management Responses

Subcontractor Constraints

Subcontractor Responses

Operative
Constraints
Inappropriate Inappropriate
Construction Construction
Control Planning

Inappropriate
Inappropriate Inappropriate Site
Construction
Operative Action Condition
Operation

Undesired Events

Ultimate Undesired Events

Undesired Outcomes

The Constraint-Response causation model recognises ‘project design constraints’ (for example,
conflicting project objectives, technical difficulties, time constraints) as contributing factors in the
causal chain of events leading up to a construction safety incident. Designers’ responses to these
constraints then become constraints experienced by the management team during the construction
stage of the project – for example, a design that may be difficult and/or expensive to construct safely.
These constraints accumulate as work flows from one stage to the next. The cumulative impact of the
87
constraints may result in undesired events and outcomes, including accidental injury .

The Construction Accident Causality (ConAC) Model

On behalf of the UK’s HSE, a 2003 report prepared by Loughborough University and the University of
Manchester Institute of Science and Technology (UMIST ) sought to test a holistic model of

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construction safety incident causation by carefully investigating the causes of 100 non-fatal
construction incidents resulting in injury. The research team obtained information from people
involved in incidents, including injured workers and their supervisors, to describe the processes of
incident causation in construction. Based on their analysis, they developed a Construction Accident
Causality (ConAC) model. Figure 4.4 shows the ConAC model. The ConAC model acknowledges that
construction safety incidents occur as a result of a complex process, involving proximal causes as
well as factors that are upstream of the construction work.

The ConAC model identifies originating influences affecting safety incidents in construction as
including:

● client requirements
● features of the economic climate
● prevailing level of construction education
● design of the permanent works
● project management issues
● construction processes, and
● the prevailing safety culture and risk management approach.

Deficiencies in the risk management system were apparent in almost all the 100 incidents studied.
This represents a significant management failure.

Project management failures were also commonly reported, most of which involved:

● inadequate attention to coordinating the work of different trades, and

● managing subcontractors to ensure that workers on site had the requisite skills to perform the
work safely.

The next level of contributing causes identified in the ConAC model is termed ‘Shaping factors’. This
level includes issues such as:

● the level of supervision provided

● site constraints
● housekeeping
● work hours
● the state of workers’ health and fatigue, and
● poor communication within work teams.

The ConAC model identifies the most immediate contributing causes of construction safety incidents
as:

● the suitability, usability and condition of tools and materials

● the behaviour, motivation and capabilities of individual workers, and
● features of the physical site environment, such as layout, lighting and weather conditions.

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88
Figure 4.4: The ConAC model of construction accident causation

Originating Influences
client requirements, economic climate, construction education

permanent works design, project management, construction processes

safety culture, risk management

Shaping Factors
attitudes/motivations
site constraints
knowledge/skills
work scheduling
supervision
housekeeping
health/fatigue

actions layout/space

Site Factors
Worker Factors

behaviour lighting/noise
capabilities hot/cold/wet
communication local hazards

work team workplace

accident

materials equipment

Immediate suitability Material/

Accident usability Equipment
Circumstances condition Factors

design
specification
supply/availability

Shaping Factors

permanent works design, project management, construction processes

safety culture, risk management

client requirements, economic climate, construction education

Originating Influences

89
Cooke and Lingard state that the ConAC model is potentially useful in causal analysis of work-
related fatal incidents in the construction industry. However, they also identify two specific limitations:
1) the classification of factors is open to interpretation potentially leading to different causal pathways,
and 2) not all incident scenarios were represented adequately by the ‘hierarchical’ sequence of causal
factors implied by the HSE model. This is consistent with recent ideas about safety as an emergent
property of work systems.

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90
Gibb et al. assessed the value of the ConAC framework stating that the model helps the analysis of
construction safety incident causation and arguing that the framework has international applicability.
However, they also acknowledge the issue of WYLFIWYF (what-you-look-for-is-what-you-find) raised
91
by Lundberg et al., in relation to inconsistent incident investigations techniques. Thus incident
investigation and causes identified will be heavily influenced by the (often unstated) assumptions
inherent in the model of incident causation to which an investigation process adheres.

The Constraint-Response and ConAC models adopt a similar framework to that presented in
92
Reason’s ‘Swiss Cheese’ model . However, the construction industry provides the context for the
Constraint-Response and ConAC models. Consequently, they directly address some of the unusual
organisational features of construction (such as producing a bespoke product for a particular client,
separating design and construction, and the extensive use of lengthy subcontracting chains). The
57
importance of these factors is evidenced in empirical studies. For example, Haslam et al., found
that, in almost 50% of incident cases studied, originating factors such as a change to the permanent
works design could have reduced the level of risk that preceded an accident.

Systems model of construction incident causation

In 1994, Rasmussen et al., discussed how objectives and constraints inherent within a work system
shape boundaries of acceptable behaviour for workers. According to Rasmussen, two primary
pressures push the work behaviours within the system towards the boundary of functionally
acceptable performance. These are:

(i) production pressures for increased efficiency, and

(ii) the tendency for least effort.

When crossing the boundary of functionally acceptable performance there will be a high tendency for
human error. Safety efforts in the system attempt to counter this pressure, however, continuous
pressure to work close to these boundaries suggests that systems need to be designed to being error
tolerant.

93
Building on Rasmussen’s model, Mitropoulos et al. proposed a systematic model of construction
incident causation. Focusing on the activity level, their theory explained how the combination of a
construction system characteristics and construction activity generate hazardous situations. They
further proposed that when human error coincides with hazardous conditions there is potential for a
93 93
safety incident . Based on the model, Mitropoulos et al. argue that:

● unpredictability of the task and the environment can lead to increased safety incidents,
● effective production planning can positively affect safety, through reduction in task
unpredictability, and
● in complex and unpredictable task conditions, the need for production efficiency must be
reduced to avoid safety incidents.

Evidence from studies in the construction industry have supported arguments that safety incident
causation in construction involves a complex system of risk elements and conditions with a high level
of social and technical interdependencies among them. Based on a review of the major theories of
94
construction incident causation, Hosseinian and Torghabeh state that while unsafe acts and unsafe
conditions are generally identified as the immediate (direct) causes of incidents other factors such as
physical and mental condition of the person, as well as environmental forces and supervisory safety
performance are also contributory (indirect) causes.

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Final Report

The above models of incident causation suggest that the way construction work is organised present
some particular challenges that, if not carefully managed can produce undesirable WHS
consequences. Risk factors common to the models presented include:

● constraints and WHS risk factors introduced through construction procurement,

● constraints and WHS risk factors associated with design decision-making,
● project management considerations and resourcing,
● site-based constraints, construction processes and work scheduling,
● subcontracting and considerations of supervision and coordination,
● physical risk factors in the site environment, and workers’ capabilities, attitudes and behaviours.

The ‘upstream’ risk factors associated with procurement and design reveal the need for consideration
of WHS and coordination of decision-making in the pre-construction planning and design stages of a
construction project. In relation to integrating WHS considerations into design decision-making, these
are addressed in Part 6.2 of the model WHS Regulations (Duties of Designer of Structure and Person
Who Commissions Construction Work).

However, the need to ensure effective WHS planning of on-site construction work, communication of
site-specific WHS information and coordination of subcontractors’ activities is also evident.

Subcontracting

Construction has relied upon flexible forms of employment to cope with the uncertainty and workload
80
fluctuations associated with competitive tendering . Subcontracting has become an almost
95
universally applied practice , however, subcontracting is reported to have impacts on work practices
96
and WHS . Mayhew et al. define subcontracting as ‘the process of subletting the performance of
11
tasks’ but suggest that this can take many forms, including self-employment, outsourcing, body hire,
independent contracting and the use of agency labour.

In construction, a subcontractor is ‘a firm that contracts with a general contractor to perform some
96
aspect of the general contractor’s work’ . Subcontracting is a feature of the construction industry in
Australia (and many other countries), as the operations of general contractors are not sufficiently
extensive to justify the full time employment of skilled craftsmen in all of the requisite construction
trades. Neither, in the context of market volatility, is it feasible for construction firms to own, operate
and maintain specialised equipment that might have a limited use in a construction project.

The percentage of construction work that is undertaken by specialist and trade subcontractors is
97,98
estimated to be as much as 90% of the total value of a construction project . The proportion of
96
work subcontracted is also higher in building than civil engineering projects .

Within the construction industry, the prevalence of subcontracting is cited as a challenge for many
aspects of the industry’s performance. Reasons for this include the fact that easy entry into the
construction industry has enabled subcontractors to establish themselves with little capital investment
98
and often with insufficient experience, or capability to undertake work to accepted standards .
Further, because many subcontractor organisations are small, they are often purported to have
99
insufficient resources to devote to the application of modern management techniques . The under-
capitalisation of many subcontractor organisations has been identified as an impediment to the
100
adoption of WHS measures in the Australian construction industry .

Relationships between principal contractors and subcontractors are reported to be poor. Practices like
post award ‘bid-shopping’ (in which principal contractors try to get subcontractors to decrease their

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Final Report

submitted bids) and delayed payment for services create competitive pressures and encourage
96,97
‘corner cutting’ . The development of long term relationships between principal contractors and
subcontractors has been recommended as a means to create better working relationships. However,
despite the increasing use of ‘relationship’ contracting and the consideration of non-cost criteria the
101
management of subcontractors remains cost-driven and ‘arms-length’ .

82
Subcontracting is often linked to poor WHS performance . Some data suggests that self-employed
individuals are four times more likely to be killed and 15 times more likely to be injured in the course
102
of their work . In one Finnish study, Salminen, Saari, Saarela and Rasanen report the risk of serious
occupational incidents to be significantly higher for employees of subcontractors than for employees
103
of principal contractors . The presence of multiple subcontractors on large projects makes it difficult
104
to coordinate WHS while, on smaller projects, subcontractors are often unsupervised .

While larger companies in the construction industry have invested heavily in the development of
formal WHS management systems, many subcontractors are smaller firms with less mature WHS
management processes. Further, Breslin argues that competitive pressures in the construction
industry are so great that principal/head contractors frequently award work to subcontractors whose
104
WHS practices are poor . Once engaged, subcontractors are then placed under even greater
pressure to ‘cut corners’ as a result of unrealistic construction programs, with the result that a culture
104
of completing the job as quickly as possible and moving to the next project prevails .

The above analysis suggests that subcontracting is a feature of the construction industry that
increases the need for principal contractors’ duties, which allocate specific responsibility for the
development of a site-specific WHS management plan establishing site-specific WHS roles,
responsibilities and arrangements that will apply in the delivery of a construction project. In the
context of multiple subcontractors establishing unambiguous responsibility for the overall coordination
of WHS activities and for ensuring appropriate consultation and cooperation with regard to WHS is
also important.

Construction project complexity and WHS risk

The complexity of a construction project is often assumed to be directly related to the risk of project
105 106 107
failure and has been identified as a causal factor in construction safety incidents , . The
complexity of construction work has also been identified as creating the need for more effective
108
planning, coordination and management mechanisms in order to reduce the risk of failure . Thus,
attention to project planning, coordination and control is fundamental to the management of risk in
construction projects.

Characteristics of construction project complexity are presented in Table 4.6. While there is
considerable variation in the components, all of the models suggest that project complexity has
76
multiple sources .

The complexity of construction work can contribute to WHS risk and increase the need for planning
and coordination. For example, the use of different construction technologies, the unpredictability of
work and the overlap and/or interdependencies of construction stages can all impact WHS risk in
construction work.

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Table 4.6: Models of construction complexity

Model & Author Number of List of factors in the model

factors

Gidado 1996 Five109 The employed resources

The environment
Level of scientific and technological knowledge
Number of different parts of the workflow
Interaction between the parts in the workflow

Chan 1998 Five110 Clients’ attributes

Site condition/access problems
Buildability of project design
Quality of design coordination
Quality management

Akintoye 2000 Six38 Expected project organisation

Type of structure
Site constraints
Method of construction and construction techniques
Scale and scope of the project
Complexity of the design and construction

Cicmil & Marshall Three56 Complex processes of communicative and power relating among
2005 project actors
Ambiguity and equivocality related to project performance criteria
(success/failure) over time
The consequence of time flux (change, unpredictability and the
paradox of control).

Sinha et al., 2011 Three111 The workers

A project Material
manager’s tool. Tools used in carrying out the project activities

Santana 1990 Ten112 Owner and investor

Scales of Cost and financing
complexity Terms of study and execution
Stages of project
Administrative and legal framework
Impact on natural and social environment
Physical location
Technology
Resources
Logistics of the construction

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Final Report

Xia & Chan 2012 Six113 Building functions, structure building functions and structure
Construction method
Urgency of project schedule
Project size/scale
Geological condition
Neighbouring environment

Remington & Four114,115 Experience and ability of organisational members

Pollack 2007
Project organisational structure and its exchange and
coordination with other key participants
Project culture
Project business process

Maylor et al., Five116 Mission

2008
Organisation
The MODeST
Delivery
Model
Stakeholders
Team

Geraldi et at., Five107 Structural

2011 Uncertainty
Dynamics
Pace
Socio-political complexity

However, while project cost is likely to be linked to complexity, it may not be the only factor worthy of
consideration when deciding what construction project attributes need to be considered to trigger the
operation of specific requirements for WHS planning, coordination and management in construction
projects. The nature of work to be undertaken should also be a consideration.

For example, refurbishment work and demolition have been identified to be generally more dangerous
117
than new work and particular adverse health and safety hazards have been identified in relation to
118
underground work . The physical size of a worksite is also an important consideration, for example,
57
influencing the physical distance between work colleagues or high levels of background noise .

Indeed, in a submission in relation to draft model WHS Regulations and Codes of Practice, legal
experts Professor Richard Johnstone and Michael Tooma argue that “The threshold cost of a
construction project…[contained in the model WHS Regulations] is somewhat dated and places an
arbitrary requirement in relation to the application of the legislation. In risk-based regulations, the cost
of a project is irrelevant. Although the operation of the provisions does trigger the requirements based
119
on HRCW definition, the inclusion of such a monetary threshold can be misleading to duty holders” .

Summary and conclusions

The construction industry presents a challenging organisational context within which to manage WHS.
Structural characteristics of the industry, including the project-based nature of work, high levels of
product complexity, technological and trade specialisation, a fragmented supply chain and heavy

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reliance on subcontracting and competitive tendering processes all create pressures that can
adversely impact WHS. These organisational and industry-level characteristics are reflected in
contemporary safety incident causation models, particularly those developed with specific reference
to the construction industry. All of these features combine to create a situation in which there is an
elevated need for WHS planning and coordination as the efforts and activities of multiple stakeholders
must be coordinated to ensure that the multiple sources of technological and organisational
complexity in construction projects are appropriately managed in relation to their potential WHS
impacts.

4.9 The importance of coordination and planning

Integration of work health and safety into planning and design

As shown in Part 4.8 of this report, theoretical models developed to explain the occurrence of
incidents, injuries and fatalities in the construction industry reflect the fact that incidents can often be
traced back to decisions made before construction work commenced (i.e. during project planning and
120
design stages) . Also, construction projects possess certain characteristics that make planning for
WHS particularly important. But, addressing WHS in the planning and pre-construction stages of a
construction project is sometimes difficult due to the fragmented supply chain, traditional procurement
121
methods and client pressures to commence work at the earliest opportunity .

122
Nonetheless effective planning can play a major role in the reduction of site safety incidents . A
review of the UK construction industry found that construction projects are often poorly resourced and
123
disorganised, and sound project planning is sometimes lacking . This can lead to a ‘crisis
management’ approach in which WHS is considered as an after-thought. Research in Brazil explored
the way that WHS is integrated into construction project management. The need for a formal project
124
planning process was identified . This finding has previously been supported by research
125
emphasising the need for ‘integrated approaches’ to managing WHS through the project life cycle’ .

This has been recognised by industry. For example, in Australia, the Guide to Best Practice for Safer
Construction established a set of principles and a framework through which clients, designers and
constructors could work share responsibility for WHS in a construction project. The Guide established
best practices for the Planning, Design, Construction and Completion stages of the project life cycle
and placed a strong emphasis on project planning and the early consideration and control of WHS
risk (see Figure 4.5). The Guide was overseen by an industry steering group comprising leading
construction industry associations, professional bodies and government agencies with an interest in
the construction industry. The guide can be accessed in full at
http://researchbank.rmit.edu.au/view/rmit:2663

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Final Report

126,127
Figure 4.5: Hierarchical project planning framework

International response

The Council of European Communities Directive 92/57/EEC – Temporary or Mobile

Construction Sites

In 1992, the Council of European Communities implemented the Directive 92/57/EEC – Temporary or
Mobile Construction Sites (hereafter referred to as The Directive). The Directive established minimum
safety and health requirements for temporary or mobile construction sites. Temporary or mobile
construction sites’ were defined as “any construction site at which building or civil engineering works
are carried out.” The Directive established requirements that:

● the client or the project supervisor appoint one or more coordinators for safety and health
matters for any construction site on which more than one contractor is present, and
● the client or the project supervisor ensures that, prior to the setting up of a construction site, a
safety and health plan is drawn up.

The client (or an appointed project supervisor) was also required to communicate prior notice to the
authorities before the commencement of construction work, clearly display and, if necessary,
periodically update this notice. The notification was required for constructions sites:

● on which work is scheduled to last longer than 30 working days and on which more than 20
workers are occupied simultaneously, or
● on which the volume of work is scheduled to exceed 500 person-days.

The Directive established principles for the consideration of WHS at preparation and execution stages
of a construction project and established specific duties for persons coordinating WHS matters. Duties
in the project preparation stage included:

● ensuring a WHS plan is was drawn up for a project, and

● preparing a file appropriate to the characteristics of the project containing relevant WHS
information to be taken into account during any subsequent works.

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Duties in the project execution stage included:

1. coordinating the implementation of the general principles of prevention and safety:

● when technical and/or organisational aspects are being decided, in order to plan the various
items or stages of work which are to take place simultaneously or in succession, and
● when estimating the period required for completing such work or work stages.

2. coordinating the implementation of the relevant provisions in order to ensure that employers and
self-employed persons:

● apply WHS principles in a consistent manner, and

● follow a WHS plan.

3. making adjustments required to the safety and health plan to take account of the progress of the
work and any changes which have occurred,

4. organising cooperation between employers, including successive employers on the same site,
coordination of their activities with a view to protecting workers and preventing accidents and
occupational health hazards and ensuring that self-employed persons are brought into this
process where necessary,

5. coordinating arrangements to check that the working procedures are being implemented correctly,
and

6. taking steps necessary to ensure that only authorised person are allowed onto the construction
128
site .

Construction (Design and Management) Regulations (UK)

In 1994, the UK responded to the EU Directive by enacting the Construction (Design and
Management) Regulations (CDM Regulations) which:

● established specific statutory WHS duties for clients and designers, and
● required the creation of a project-specific health and safety file to ensure WHS information was
documented and communicated through all stages of the project lifecycle.

Commonly referred to as the CDM Regulations, the first version of these Regulations defined
construction broadly as:

● the construction, alteration, conversion, fitting out, commissioning, renovation, repair, upkeep,
redecoration or other maintenance (including cleaning which involves the use of water or an
abrasive at high pressure or the use of substances classified as corrosive or toxic), de-
commissioning, demolition or dismantling of a structure,
● the preparation for an intended structure, including site clearance, exploration, investigation
(but not site survey) and excavation, and laying or installing the foundations of the structure,
● the assembly of prefabricated elements to form a structure or the disassembly of prefabricated
elements which, immediately before such disassembly, formed a structure,
● the removal of a structure or part of a structure or of any product or waste resulting from
demolition or dismantling of a structure or from disassembly of prefabricated elements which,
immediately before such disassembly, formed a structure, and

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● the installation, commissioning, maintenance, repair or removal of mechanical, electrical, gas,

compressed air, hydraulic, telecommunications, computer or similar services which are
normally fixed within or to a structure.

Under the original CDM Regulations, a project was notifiable if the construction phase:

● was longer than 30 days, or

● would involve more than 500 person days of construction work.

The original CDM Regulations established specific duties for construction clients (Section 4), and
developers (Section 5). The Regulations also required the appointment of a Planning Supervisor and
Principal Contractor (Section 6). The Planning Supervisor had specific duties in relation to notifying a
project to the authorities, ensuring design work was coordinated to ensure WHS was properly
integrated, ensuring a project Health and Safety File was created to record relevant WHS information
and ensuring a project Health and Safety Plan was developed. The Principal Contractor had specific
responsibilities to provide information and training to contractors or employers engaged in
construction work and ensure that processes were in place for employees and self-employed persons
at a project to discuss and offer advice on health and safety issues that could affect them. Finally,
Section 19 required contractors engaged at the site cooperate with the principal contractor in relation
to health and safety.

The CDM Regulations (1994) stated that the requirements relating to clients, developers, the Planning
Supervisor and Principal Contractors, including those related to the development of project health and
safety plans and coordination, were not applicable if:

● the project was not notifiable, and

● the largest number of persons at work at any one time carrying out construction work included
in the project would be less than five.

Also, unless a developer was engaged by the client, certain client requirements, including the
requirement to appoint a Planning Supervisor and Principal Contractor did not apply in relation to
projects carried out for a domestic client. Planning Supervisor and Principal Contractor requirements
to coordinate design, planning and the work of contractors and the self-employed were also not
required for domestic projects (unless a developer was involved).

Thus, the threshold criteria for triggering specific planning, coordination and management
requirements under the CDM Regulations (1994) were related to:

● project size, in terms of duration (to determine whether a project was notifiable),
● project size, in terms of number of workers (to determine whether specific provisions would
apply), or
● type of client, e.g. domestic or otherwise (to determine whether specific provisions would
apply).

In the UK, the CDM Regulations have been extensively critiqued and have been subjected to several
17
reviews and revisions. The most recent revision occurred in 2015.

The CDM Regulations (2015) have some notable differences. The main responsibilities are shown in
Table 4.7 below.
_____
17 http://www.legislation.gov.uk/uksi/2015/51/pdfs/uksi_20150051_en.pdf

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Table 4.7: Main responsibilities under CDM (2015) Regulations

Duty holder Responsibility

Clients are organisations or individuals for whom a Make suitable arrangements for managing a project.
construction project is carried out. This includes making sure:

● other dutyholders are appointed;

● sufficient time and resources are allocated.

Make sure:

● relevant information is prepared and

provided to other dutyholders;
● the principal designer and principal
contractor carry out their duties;
● welfare facilities are provided.

Domestic clients are people who have construction Domestic clients are in scope of CDM 2015, but
work carried out on their own home, or the home of their duties as a client are normally transferred to:
a family member that is not done as part of a
business, whether for profit or not. ● the contractor, on a single contractor project;
or
● the principal contractor, on a project
involving more than one contractor.

However, the domestic client can choose to have a

written agreement with the principal designer to
carry out the client duties.

Designers are those, who as part of a business, When preparing or modifying designs, to eliminate,
prepare or modify designs for a building, product or reduce or control foreseeable risks that may arise
system relating to construction work. during:

● construction; and
● the maintenance and use of a building once
it is built.

Provide information to other members of the project

team to help them fulfil their duties.

Principal designers are designers appointed by the Plan, manage, monitor and coordinate health and
client in projects involving more than one safety in the pre-construction phase of a project.
contractor. They can be an organisation or an This includes:
individual with sufficient knowledge, experience and
ability to carry out the role. ● identifying, eliminating or controlling
foreseeable risks;
● ensuring designers carry out their duties.

Prepare and provide relevant information to other

dutyholders. Provide relevant information to the
principal contractor to help them plan, manage,
monitor and coordinate health and safety in the
construction phase

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Principal contractors are contractors appointed by Plan, manage and monitor construction work under
the client to coordinate the construction phase of a their control so that it is carried out without risks to
project where it involves more than one contractor. health and safety. For projects involving more than
one contractor, coordinate their activities with others
in the project team – in particular, comply with
directions given to them by the principal designer or
principal contractor. For single-contractor projects,
prepare a construction phase plan.

Contractors are those who do the actual Plan, manage and monitor construction work under
construction work and can be either an individual or their control so that it is carried out without risks to
a company health and safety. For projects involving more than
one contractor, coordinate their activities with others
in the project team – in particular, comply with
directions given to them by the principal designer or
principal contractor. For single-contractor projects,
prepare a construction phase plan.

Workers are the people who work for or under the They must:
control of contractors on a construction site.
● be consulted about matters which affect their
health, safety and welfare;
● take care of their own health and safety and
others who may be affected by their actions;
● report anything they see which is likely to
endanger either their own or others’ health
and safety;
● cooperate with their employer, fellow
workers, contractors and other dutyholders.

Source: HSE129.

Of particular relevance to this report, under the CDM Regulations 2015, a construction project is
notifiable if the work on a construction site is scheduled to:

● last longer than 30 working days and have more than 20 workers working simultaneously at
any point in the project, or
● exceed 500 person days.

Thus, the criteria for notification have been revised to reflect the criteria included in the EU Directive.

Exception for domestic clients

However, the EU Directive did not permit the exclusion of the application of client duties to domestic
130
construction clients . The Construction Industry Council commented that the “implementation and
130
enforcement” of the application of the client duties to domestic clients would be “extremely difficult” .

The CDM Regulations (2015) include Section 7 specifically dealing with the application of the
Regulations to domestic clients.

Thus, where the client is a domestic client, client duties in relation to managing a project and duties to
notify the authorities of the project must be carried out by:

(a) the contractor for a project where there is only one contractor;

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(b) the principal contractor for a project where there is more than one contractor; or

(c) the principal designer where there is a written agreement that the principal designer will fulfil those
duties.

Section 7 also states that if a domestic client fails to make the appointments required:

(a) the designer in control of the pre-construction phase of the project is the principal designer; and

(b) the contractor in control of the construction phase of the project is the principal contractor.

If a domestic client fails to make the appointments required, the regulations automatically make the
contractor in control the principal contractor and the designer in control the principal designer. The
domestic client can choose to have a written agreement with the principal designer to carry out the
client duties.

Summary and conclusions

The need for planning and coordination with respect to WHS in construction projects is acknowledged
in industry guidance and legislation. In the UK, the Construction (Design and Management)
Regulations 2015 establish duties for clients, principal designers and principal contractors, other
contractors and workers. Principal Contractors are responsible for planning, managing and monitoring
construction work under their control. Where more than one contractor is engaged in the project,
Principal Contractors are also responsible for coordinating their activities in the project team. Specific
provisions apply to domestic clients under the UK CDM Regulations 2015.

4.10 Different thresholds for triggering construction-specific requirements

Different types of threshold

Various threshold mechanisms for triggering specific legislative responsibilities in the construction
industry have been applied. Table 4.8 presents some examples of such mechanisms. Not all of these
apply to WHS legislation.

Table 4.8: Examples of thresholds of different natures

Nature Example Threshold Example Application

Monetary $250,000 Definition of a construction

project in Tasmania used to
trigger additional principal
contractor duties

Number of people 5 or more persons working or Definition of a construction

likely to be working project in WA used to trigger
additional principal contractor
duties

Number of contractors More than one contractor Definition of a construction

project in the UK used to trigger
additional principal contractor,
principal designer and client
duties

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High risk construction work A list of activities e.g., Used to trigger the need for
construction work involving SWMS
demolition

Risk matrices/ assessment See Appendix B Used for prequalification of

building suppliers for state
government contracts in
Queensland

Multi-level monetary with Two level monetary with duties Used for Site Waste
commensurate duties relevant to the level. First Management Plans in the UK.
threshold project value less than The lower threshold triggered
£300,000 and second threshold fewer duties than the higher
£500,000131. threshold

Multi-faceted (a) $250,000 or more; or Definition of a construction

(b) high risk construction work is project in NSW under the 2001
model WHS Regulations used to
undertaken and the cost of the
work does not exceed $250,000, trigger principal contractor duties
or;
(c) demolition work or asbestos
removal work for which a licence
is required under Chapter 10 to
carry on the business of that
work is undertaken (regardless of
18
the cost of the work).

Summary and conclusions

A variety of different threshold mechanisms have been used to trigger legislative responsibilities in
construction projects. These include minimum monetary thresholds, numbers of people, numbers of
contractors, the presence of high risk construction work, qualitative or semi-quantitative risk analysis,
and threshold definitions which combine more than one attribute or multiple criteria.

4.11 Considerations relating to effectiveness of a definition

These sections ask important questions concerning the effectiveness of a definition.

What is practical?

A practical definition should be easy to use. That is, the conditions under which it is applicable or not
applicable should be easy to identify. These conditions should not be subjective. The construction
environment is unique with sites changing daily. The definition should be reliable and robust to this
unique context.

What is understandable?

Definitions need to be understood by all stakeholders. For example, an inspector must be able to
easily understand the definitions’ application to a variety of construction works. To the extent that it is
reasonably practical, all members of the construction industry must be able to make sense of their
legislative requirements.
_____
18 This was taken from the OHS Regulation 2001 under the OHS Act 2000.

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What is equitable?

Stakeholder groups or individuals should be equally impacted by the definition. For example,
variations in geographical location, organisational size or industry sector should not mean that the
definition is applied differently.

What is effective?

How does the definition meet the intent of the legislation, and by extension of that, the broader
outcomes of WHS legislation? Where the overall objective is to improve safety on construction sites,
do stakeholders who are subject to the legislation understand how the legislation meets this need?
Moreover, the enactment of that legislation in practice should produce positive safety outcomes.

Summary and conclusions

Multiple criteria can be applied to determine the effectiveness of a threshold definition for the
purposes of triggering specific WHS responsibilities in construction projects. These include what is
practical, understandable, equitable, and the extent to which the intentions of the legislation are met
as a result. Industry stakeholders’ perceptions of the effectiveness of different forms of threshold
definition will be explored in the next stage of the research.

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Part 5: Interview results

5.1 Introduction

In Part 5 of this report we present the analysis of the semi-structured interviews conducted with key
industry stakeholders. The aim of these interviews was to explore construction industry stakeholders’
perspectives relating to:

● the appropriateness and impact of the current monetary threshold definition of a construction
project, and
● the desirability and impact of adopting an alternative threshold definition.

5.2 Sample characteristics

A total of 50 representatives from the construction industry in Australia were interviewed. Participants
had an average tenure of 12 years’ experience in construction and/or work health and safety (WHS)
roles. Each state and territory in Australia was represented in the sample. The majority of
respondents were male (n = 39, 80%) with a mean age of 50 years (ranging in age from 31 to 64
years). Stakeholders and jurisdictions represented are presented in Table 5.1.

Table 5.1: Demographic characteristics of interview participants

Demographics table

Stakeholders represented n %

Employer/industry association 16 32

Regulator or government agency 14 28

Private construction organisation 6 12

Union 7 14

Other 7 14

Jurisdiction

Victoria 15 30

New South Wales 8 16

Australian Capital Territory 7 14

Tasmania 2 4

Queensland 4 8

Western Australia 3 6

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South Australia 3 6

Northern Territory 2 4

Commonwealth 2 4

International participants

United Kingdom 4 8

5.3 Overview of the perceived effectiveness of the monetary definition

(Australia)
19
Overall, participants provided 51 positive evaluations of the monetary threshold definition .
Comments made were coded and grouped into the themes and sub-themes shown in Figure 5.1.

Figure 5.1: Overview of themes and sub-themes relating to perceived effectiveness of the
monetary definition

Financial
definition
effectiveness

Accepted by Appropriate Easy to

Simple/clear Salient
industry threshold enforce

Easy to Appropriate
Comfortable
understand cut off

Point where
Objective Accustomed things become
'risky'

Easy to
Understood by
assess
industry
application

Easy to
communicate

5.4 Effectiveness of the monetary definition

Table 5.2 presents the key themes raised by participants relating to the effectiveness of the monetary
definition. The themes are presented in descending order of the frequency with which they were
mentioned by interview participants.

_____
19 Some individuals cited multiple reasons for the definition’s effectiveness and a portion of individuals presented both positive and negative
evaluations of the definition.

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Table 5.2: Themes relating to the perceived effectiveness of the current monetary definition

Frequency Effective

13 Simple/clear

13 Accepted by industry

12 An appropriate threshold to trigger WHS planning and coordination needs

7 Easy to enforce

6 Salient (because it is monetary) to construction industry participants

Each of these themes is described in more detail below.

Simple and clear

The perception that the monetary threshold definition is simple and clear was the most frequently
cited reason given by participants who believed the current threshold definition is effective.

Four distinct sub-themes were identified as being relevant to the simplicity and clarity of the monetary
threshold definition. The most frequently cited explanation for the simplicity and clarity of the monetary
threshold definition related to the ease with which participants believe it can be understood.
Participants also regarded the monetary threshold definition as being objective and not reliant on
subjective interpretation. Participants believed it is easy to apply and communicate to industry
stakeholders. In the opinion of these participants, whether a project falls within or outside the current
monetary threshold definition should be easy to determine and subject to little argument. Participants
also highlighted the particular need for simplicity and clarity in relation to the prevalence of small
businesses in the construction industry. Table 5.3 provides some indicative quotations regarding
participants’ views about the simplicity and clarity of the monetary threshold definition.

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Table 5.3: Indicative quotations relating to participants’ perceptions of the simplicity and
clarity of the monetary threshold definition

Simplicity and Quotations

clarity

Simple and clear “I think they’re really, really clear and for a lot of people in industry the thing they need
to refer to is often so ... written not in normal speak ... a bit litigious ... this is really easy
it’s a nice simple definition.” (Industry association)
“And for the end user or the middle person the people like me who have to explain the
responsibilities and what is the law to ‘Mums and Dads’ and just normal people who are
trying to make a dollar and do business this is applicable to them.” (Industry
association)
“Nice and clean this one, one sentence; 250 grand you’re up for it.” (Industry
association)
“And the way it’s written now it’s pretty simple.” (Industry association)
“Oh I think the definition works quite well I mean it’s quite clear.” (Industry association)
“… think in terms of the cut-off whether people can figure out if it applies to them or not,
yeah I mean there’s no question about it.” (Industry association)
“I think construction project is quite clear, the definition of that is quite clear [it] is work of
a value of $250,000 or more.” (Industry association)
“250 or 350 is pretty easy to understand.” (Industry association)
“… it’s construction work, it’s of a certain value, and then it triggers a certain
requirement, it’s nice and simple. In our world it’s very simple.” (Construction company)
“And the problem is a lot of construction people are very black and white, so they’ll read
things literally and not sort of consider it in a broader context. So you’ve got to keep it
pretty simple.” (Construction company)
“And it can’t be much simpler than what it is now, it’s well understood and it is quite
simple.” (Construction company)
“Oh look, it’s a clear guideline; I mean it makes it simple.“ (Construction company)
“That is what you have got with your monetary model thing. It is clear to everybody you
know.” (International construction company)
“Your monetary one I like because it is very, very clear, and it is a very easy message to
put out.” (International construction company)
“Because small to medium enterprises and they’re often principal contractors as well
running their own small jobs. And also the big boys it’s one little simple sentence that
everyone can read and understand.” (Industry association)
“…the dollar threshold is really simple.” (Industry association)
“There was a lot of discussion … across the country over the last 15 years about, what
is the best way to clarify it? What does the line in the sand look like? These always
come back to this dollar value because it does provide that real line.” (Industry
association)
“And you could look at invoices you could look at bills, you know this is what this is
going to cost, okay, we are working in this environment. This is what this project is going
to cost, okay it is not really a project it is just a little bit of maintenance work. And so I
think it is quite neat and I would be interested to see how the wriggle bit happens at the
boundary.” (International construction company)

Accepted by industry

Participants expressed the view that construction industry stakeholders are “comfortable” and
“accustomed” to the current monetary threshold definition of a construction project. Participants
commented that the requirements relating to the appointment and duties of a principal contractor are
now well established and understood within the Australian construction industry.

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Some participants (n = 4) also expressed the view that a monetary threshold definition is effective as
it mirrors the approach taken in other construction industry-relevant legislation. Table 5.4 provides
some indicative quotations regarding participants’ views about the industry acceptance of the
monetary threshold definition.

Table 5.4: Indicative quotations relating to participants’ perceptions of the industry acceptance
of the monetary threshold definition

Industry acceptance Quotations

of the definition

Accepted by industry “People are in a comfort level around the level it’s at now in terms of degree of
risk and degree of supervisions complexity.” (Regulator)
“We are where we are. And we’ve all arrived at what we think is a reasonable
level.” (Regulator)
“There’s a monetary threshold and builders know what a contract value is and
nobody seems to have any issues with it.” (Industry association)
“And that’s it and I mean ... most of our members have no problem in deciding
whether that captures their work or not.” (Industry association)
“Generally I think they're [monetary threshold definitions] understood by
industry and they're kind of applied. So I don't know if there'd be any real
issues with how that kind of threshold is being used, or understood or applied
by the industry.” (Regulator)
“I think it’s pretty well accepted and it’s followed.” (Industry association)
“There’s no argument, it’s in. It’s just keeping the education process up and
running and being consistent with it.” (Construction company)
“I think overall on the whole I think the definition is relatively sound.”
(Regulator)
“But once again that monetary threshold just being that it is consistent, the
industry is used to, that it being a dollar amount.” (Industry association)
“I think the dollar value captures, and it has been around for a long time too I
believe.” (Industry association)

Right threshold for coordination needs

Eight participants stated the belief that the monetary threshold of $250,000 was an appropriate
threshold to trigger the additional construction project-related duties. Some suggested that $250,000
is a reasonable value at which the WHS risk involved in a construction project could be expected to
require additional WHS planning and coordination effort. However, little justification or evidence was
cited in support of this viewpoint.

Four (50%) of the eight participants of the belief that the current threshold definition establishes an
appropriate threshold were based in Queensland. Table 5.5 provides some indicative quotations
regarding participants’ views about the effectiveness of the monetary threshold definition.

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Table 5.5: Indicative quotations relating to participants’ perceptions of the monetary threshold
definition as an appropriate threshold to trigger additional WHS planning and coordination
requirements

Appropriate Quotations
threshold to
trigger additional
WHS planning and
coordination
duties

Appropriate “So the fact that it’s [a] quarter of a million satisfies me but also the role of [our
threshold for organisation]. Because it covers for a lot of small to medium enterprises, the
coordination needs Mums and Dads. And it’s encouraging for us that so many people ring up and
want to keep up to date with the legislation.” (Industry association)
“But as far as we’re concerned, $250,000 as a sort of a marker, is adequate.”
(Union)
“Then you don’t get into the argument about what’s high risk and people have
different perceptions of risk and some people determine risk being untreated
risk, others determine it as being treated risk so you get into all this argument
about what is risk and how is risk determined and is it high, low, medium and so
on, whereas if you use a dollar figure, bang, it just triggers it automatically.”
(Construction company)
“...at the $3000 there would very rarely be any need for coordination, but at
$250,000 there probably is.” (Industry association)
“I think it works reasonably well the issue for me is how else are you going to
define a construction project? You can’t define it by the size of a block of land
or you know the tallness of a building. It needs to have something there so I
think from that point of view it’s good to have a reasonable figure.” (Industry
association)
“So the arbitrary figure is probably not a bad way for people to determine at this
point it needs to be done.” (Regulator)
“So it’s probably adequately placed for the industry ... that number is okay.”
(Industry association)
“Yeah, and I think it’s kind of pitched at the right level in terms of Queensland
anyway, like I’m noting some of the jurisdictions have put their thresholds up.”
(Regulator)
“Consensus seems to be that in terms of the existing definition, there doesn’t
really appear to be much appetite for change.” (Industry association)
“It’s an appropriate benchmark to start with. I wouldn’t go any higher. I know the
housing, and I keep referring back to this because we’ve had big debates ... on
this. They say it’s too low, you know? And I say well, I think it’s just right where
it is. Anything higher and you start getting towards the luxury housing market
which, you know, is on a grander scale that most people can’t afford. Not the
people I deal with anyway. And I think it’s… so I think the 250,000 mark is
good.” (Union)

Easy to enforce

Participants in all industry stakeholder groups believed the current monetary threshold definition of a
construction project to be easy to enforce. They argued that the definition is clear and it is therefore
easy for a regulator duty holder to determine whether construction works fall within the scope of the
legislative requirements for a construction project. It was suggested that this inclusion/exclusion could
be easily verified by checking contract documentation. Table 5.6 provides some indicative quotations
regarding participants’ views about the ease of enforcement of the monetary threshold definition.

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Table 5.6: Indicative quotations relating to participants’ perceptions of the ease of

enforcement of the monetary threshold definition

Ease of Quotations
enforcement

Easy to enforce “Show me your costings of what your project is worth. That’s an easier one to
enforce.” (Industry association)
“So it’s pretty easy to talk to and it’s pretty easy to explain to people as well.” (Industry
association)
“So the money number is probably not a bad way the industry’s saying well over that
it’s full blown, formalised principal contractor processes.” (Construction company)
“Being able to collect the evidence to establish that that project is indeed above the
threshold if someone's there saying, ‘No it's not’, but I think most of the time it's pretty
obvious.” (Regulator)
“Easy one administratively. You don’t get into shades of grey about high risk activities,
for example.” (Regulator)
“There is something to be said for a definition which, whilst we might think the
industry’s got its head around it, and understands it, there is something to be said,
though, for a reasonably blunt definition, because it is simple to determine.” (Industry
association)
“Similarly the regulators look at that as an important thing because when there's an
incident the first thing they ask right ‘who’s got management control of that specific
work?’ and the next question is ‘who’s the principal contractor in control of the site?’
So it’s quite an important arbitrary number around control of the site.” (Construction
company)

Salient to construction industry participants

Participants also noted the salience of a monetary threshold definition to an industry in which cost is a
key factor in winning construction work and determining a project’s success or failure. Thus, it was
noted that defining a construction project in monetary terms is meaningful and relatable in the
construction industry. However, this argument did not account for the difference between the cost and
price of particular construction works (see literature review), or the fact that costs are subject to
estimation errors and/or unexpected escalation in some instances. Table 5.7 provides some indicative
quotations regarding participants’ views about the perceived salience of the monetary threshold
definition.

Table 5.7: Indicative quotations relating to participants’ perceptions of the salience of the
monetary threshold definition

Perceived salience Quotations

Salient to industry “People would take notice of money in a way they will not of, five
(because it is monetary) people in the construction, you do not think to stop and count but you
do think about the money.” (International construction WHS expert)
“I understand why they’ve got the dollar value in play, or the numbers
in play, the dollar values to help those guys that don’t really understand
what the hell a principal contractor is and place the responsibility onto
the contractor doing that work.” (Industry association)
“When it comes down to it, it all boils down to money. Unless you’re
going into greater risk component to it, then that would overcomplicate
again. But it really does need to have a black and white threshold on
there.” (Industry association)

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5.5 Effectiveness of the monetary definition: Perspectives by stakeholder

group

Reasons given for the effectiveness of the monetary threshold definition were analysed by
stakeholder group. Table 5.8 shows the frequency with which themes were raised by each
representative of each stakeholder group as a proportion of the total number of times a theme was
mentioned. Employer/industry associations were more likely to perceive the monetary threshold
definition to be easy to enforce and salient. Fifty per cent of comments about the acceptance of the
monetary threshold definition were also made by employer/industry association representatives.
Proportionally, more comments that the monetary threshold represents an appropriate threshold value
were made by union representatives (29%). Regulators or government agencies accounted for over
one third of comments regarding the simplicity and clarity of the threshold (39%) and also the
acceptance of the threshold by industry (38%).

Table 5.8: Effectiveness of the monetary definition by stakeholder group

Stakeholder Accepted by Appropriate Easy to

Simple/clear Salient
group industry threshold enforce

Employer
/industry 30% 50% 35% 75% 75%
association

Regulator or
government 39% 38% 29% 5% 0%
agency

Private
construction 23% 12% 7% 20% 0%
organisation

Union 0% 0% 29% 0% 0%

Other 8% 0% 0% 0% 25%

Total per cent 100% 100% 100% 100% 100%

Note: Qualitative data is subject to interpretation. These percentages are indicative and understood to reflect the
researchers’ interpretation of interview data.

5.6 Overview of the perceived ineffectiveness of the monetary definition

Overall, participants commented 61 times on the ineffectiveness of the monetary threshold definition.
Participants’ comments were thematically analysed and grouped into themes and sub-themes as
shown in Figure 5.2.

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Figure 5.2: Overview of themes and sub-themes for ineffectiveness of the monetary threshold
definition

Financial
definition:
Ineffectiveness

Project costing Not harmonised/

Arbitrary Too low
anomalies inequitable

Integrated or
Fails to capture Inflation impacts
fragmented
HRCW capture
procurement

Not the point where Lack of clarity about

Blunt instrument
things become 'risky' costing approach

Complex
Demand/supply and
construction
cost variation
methods

Price competition
Low value work and market
conditions

Cost estimating
error/uncertainity
and cost escalation

5.7 Perceived ineffectiveness of the monetary definition

Table 5.9 presents themes raised by participants relating to perceived ineffectiveness of the monetary
threshold definition of a construction project. The themes are presented in descending order of the
frequency with which they were mentioned by participants. These themes were raised more
frequently than those raised in relation to perceptions that the definition is effective (see Table 5.2).

Table 5.9: Themes relating to the perceived ineffectiveness of the current monetary threshold
definition

Frequency Ineffective

19 Arbitrary figure/lack of association with WHS risk

18 Too low/captures low risk works

17 Anomalies relating to project costing methods

7 Creates regional variations/inequitable in its current operation

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Each of these themes is discussed in relation to sub-themes below.

Arbitrary operation and lack of association with WHS risk

The most frequently cited reason that participants gave for believing that the current monetary
threshold definition is ineffective was the arbitrary nature of this definition and the lack of association
between the monetary threshold and level of WHS risk in a particular construction activity or worksite.
Nineteen participants (38%) expressed this view.

For example one regulator gave the following example of how a small construction firm with limited
experience could potentially be awarded larger, more complicated work packages that present higher
levels of WHS risk: “…take housing, it's getting more complex these days. You're getting people,
jumped up builders who built stick and frame houses who suddenly take on a job to build a big house.
Now that needs pre-cast panels. Now I've got a crane coming on site. Now I've got a crane with
outriggers that are likely to sink into the trench that the plumber dug five weeks ago. I've got [a] huge,
much bigger risk coming in. I've got overhead power and I've got big booms sticking out because now
I've got a concrete boom that has to reach up and over and dump concrete into the trench at the back.
So the complexity definitely goes up and the risks go up”.

In these circumstances it was noted that additional WHS planning and coordination of work would be
warranted. Further commentary relating to the perceived ineffectiveness of the monetary threshold
definition can be found in Table 5.10.

Table 5.10: Indicative quotations relating to perceptions that the monetary threshold definition
is arbitrary/not associated with WHS risk

Arbitrary and not Quotations

associated with
WHS risk

Arbitrary/not “Well see to me a risk is a risk regardless [of] whether it’s 450, 250 or, you know
associated with WHS $10, it doesn’t matter. I believe you should be looking at risk and basing
risk everything on risk not on a monetary value.” (Regulator)
“And the problem that you've got with imposing a monetary threshold is that then
maybe there's the premise or maybe there's the view that a monetary threshold
then equates to the risk of the site or the risk of the work that’s going on, on the
site or the hazards that are on the site. And we argued quite strongly that we
thought that was a dangerous precedent, we were beaten by the majority but my
view quite strongly is that it is an inappropriate way of defining a construction
project.” (Regulator)
“You're trying to deal with something based on upon another value than what
you're trying, then what your outcome is so if your value is reducing the risk and
that there's these sites you’re saying are high risk which is why they need
management plans then you need to measure that by the level of risk and you
can't do that by a monetary value or a people …” (Industry association)
“I don’t know a monetary definition itself should really come into it. I mean I think it
needs probably to be a bit more prescriptive about what is a, you know, the
difference in construction or construction sites.” (Union)
“Look, I don’t think it’s the best trigger, I would like to see some further work done
around a risk based framework to identify whether that’s more accurate, you know
identifying when those extra obligations should be imposed on businesses rather
than just an arbitrary monetary figure, whatever it happens to be. I don’t think it’s
ideal.” (Regulator)

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“So if you build a less than average house you're allowed to be less safe?”
(Construction WHS expert)
“So those arbitrary numbers are used for well, first appointment of a principal
contractor, so they are the arbitrary numbers by which clients or others would
appoint a principal contractor and in doing so invoke a number of responsibilities
under the act.” (Construction company)
“You should always look at what work is being conducted and what are the risks
or what are the hazards associated with that work rather than, oh it’s only worth
$299,000 so the high risk construction principles don’t apply. I think that’s wrong.”
(Union)
“And again I get back to the point, the $300,000, $350,000, whether it’s $500,000,
I’d be surprised whether any regulatory body … go out and ask a builder ‘How
much is this worth?’ And I don’t think they should, they should be saying ‘What are
you doing?’ and then judging it on that.” (Union)
“It’s a really arbitrary figure.” (Industry association)
“... [the monetary threshold] should be based on your exposure to high risk
activities not on the value of the project.” (Construction company)
“I don’t think it’s the right measure, I don’t think it’s the right trigger.” (Union)
“As a safety practitioner from my point of view as well, it doesn't matter what the
site build costs, the same rules should apply.” (Construction company)
“I think you should replace the monetary level. I think it’s risk complexity.”
(Construction company)
“I mean I don’t particularly love the idea of the $250,000. It’s not clear to me under
the New South Wales provision there was guidance on what the 250,000 was a
reference to ... so it’s not clear what 250 means. It’s not even clear why it’s 250?”
(Construction company)
“I think any monetary threshold is a poor indicator of risk.” (Industry association)
“I assume it was used because no one could come up with something better.”
(Union)
“My question would be, ‘Why does a more expensive job create greater risk?’”
(Industry association)
“I think ideally we would have a risk based framework where the additional
requirements come into play on projects where there is a significant additional risk
of the workplace safety issue.” (Regulator)
“Because you could have small projects under the $350,000 that is at great risk to
workers.” (Union)
“ …so why does a $244,000 project not have the same requirements as the
$252,000? You know what I mean? That is the problem with the arbitrariness of
any dollar threshold, it is what comes under and what comes above which is a
problem across all sorts of … areas.” (Industry association)

Level of the threshold definition – too low

Fourteen participants (28%) expressed the view that they believe the current monetary threshold
definition is too low resulting in it capturing construction works that present a low level of WHS risk
and do not warrant or require additional WHS planning or coordination efforts.

The reasons participants gave for holding this view were:

● inflationary changes have increased the price of construction work, increasing the proportion of
works that are captured by the current definition, and
● the current monetary threshold definition is below the point at which projects become
sufficiently risky (in terms of WHS) to warrant additional planning and coordination duties.

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However, the argument in relation to the impact of increasing costs of construction on the operation of
the monetary threshold definition was subject to regional variation. One member of an industry
association explained: “… that was another discussion that we had is that 250 thousand in Sydney is
a lot different to 250 thousand in Tasmania”. These regional variations were identified as a challenge
for the adoption of a nationally consistent monetary threshold definition for a construction project. This
is discussed further in the section of the report titled “Part 6: Scenario modelling”.

Some participants also perceived that the use of prefabricated construction materials/components
changed the operation of the definition. While such components may push the cost of a project above
the threshold, these materials/components are believed by some participants to have the potential to
reduce the level of WHS risk, making them preferable to more traditional construction methods.

A minority of participants also argued that, irrespective of cost, the requirement to appoint a principal
contractor should not apply to the construction of a single-storey domestic house.

Participant views regarding the appropriateness of the monetary threshold definition are shown in
Table 5.11.

Table 5.11: Indicative quotations relating to participants’ perceptions that the monetary
threshold definition is too low/captures low risk works

Ineffectiveness Quotations

Too low/ “I don't think that there’s a hell of a lot at that end of the market. I mean
captures low risk $250,000 really these days won’t get you a hell of a lot of work.” (Industry
works association)
“I think everybody agrees that it’s too low.” (Industry association)
“I’m sure from our regulator’s perspective one of the things that we do want is if
whatever happens we believe that at the very least the monetary value should
be increased and I think for $450,000 is bare minimum.” (Industry association)
“When I first looked at the threshold of $250,000 especially here in New South
Wales .... I thought that was very low. You’d be flat out building a garage for
that, based on the Sydney property market and how much, you know sort of all
that what they’re worth and all that these days … so my initial response for that
was very low.” (Industry association)
“I don't think a lot of research went into picking that figure, I think at the time it
was … quite a controversial discussion at the time and I’m not sure how they
came to $250,000. It’s not a problem for the Commonwealth but if I was given
the opportunity to rethink I would be trying to put a bit more methodology
around the dollar figure. It seems low to me but that’s only a personal opinion.”
(Regulator)
“I think that the information I’ve got that the amount was first described in New
South Wales in 2001, $250,000 for introducing similar requirements to these
and obviously hasn’t changed since.” (Regulator)
“Now since 2001 with inflation and then increasing in building costs ... the
average new house at the time costs $145,000. It’s clearly not the case now… I
think there is a very good argument to say that the threshold is too low now, out
of date and too low and could be increased.” (Regulator)
“...the problem with the monetary project threshold is that it captures low risk
but high value projects.” (Regulator)
“You don’t really get much for your money, for $300,000. So it’s not a huge
amount. How valuable that is in defining construction work, I think it’s pretty
subjective.” (Union)

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“And most of their cabinetry in that walk-in robe was pre-made off site, pre-
manufactured and the risks are reduced because you’re taking it off site. I
mean you’re getting a bunch of guys in a truck bringing in a few boxes, they
may as well be delivering fruit for all intents and purposes. Get their cordless
drills out, screw it all together, make it look pretty and off they go.” (Industry
association)
“You know the cost of building a free-standing house in the ACT on a vacant
block of land, and I’m talking a house of maybe 25/26 squares around you're
talking upwards of $300,000 and that’s just a single storey, free standing
residential property.” (Regulator)
“...if you’re using building materials that are quite high value significantly high
costs but just to build a single-storey residential house, the project may very
well be covered.” (Regulator)
“So that encompasses a lot of domestic building and there are a lot of issues
related to domestic building that can't be managed by a WHS management
plan. It's more about, really hazard management is a keystone to many
construction sites.” (Union)
“I think the cost of builds in New South Wales has gone up astronomically, I
mean even things like the first home buyers, how that put up prices across the
state. There's a home shortage which is putting up prices, inflation has had a
part to do with that but you know, there's a heap of things that have resulted in
that being the case that are far greater than just inflation. Inflation is probably
the least problem that people have had in that space.” (Industry association)

Construction costing methods

Seventeen participants (34%) who believed that the current monetary threshold definition is
ineffective identified anomalies associated with construction costing methods as being a reason for
this.

Five sub-themes were related to the perceived problem of anomalies arising from construction costing
methods. These were:

● the impact of the contract procurement strategy adopted on project value (e.g. whether
engineering design/architectural design/building/landscaping and other services are procured
under a single or separate contracts),
● a prevailing or perceived lack of understanding of what is included/excluded in project costs
20
(e.g. tax, levies, land, transport costs ),
● variation in the demand for and supply of specific materials (e.g. steel), which is believed to
impact project costs, but is unrelated to the inherent level of WHS risk in construction works,
● market conditions and competition to win work, which is perceived to create downward
pressure on construction process, while also increasing WHS risk, and
● cost estimating uncertainty, error and price escalations after the award of a contract.

Indicative quotations relating to construction costing issues are presented in Table 5.12.

_____
20 Despite legislative guidance on costing practices provided within the Construction Code of Practice, this was identified as a point of confusion
for respondents.

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Table 5.12: Indicative quotations relating to participants’ perceptions of the impact of

construction costing methods on the operation of the monetary threshold

Construction Quotations
costing
considerations

Costing methods “Once you put a dollar threshold then you start to think about, well okay what is
and anomalies included in that dollar threshold? Or what is not? Because then you have got people
who get crafty about the contractual arrangement in order to contract themselves out
of higher order requirements and so it is, well the contract price, is it contract plus
preliminary contract price? Is it materials and labour? What labour may not be
included? What materials may not be included? … those types of things and then you
start to, really make it complex and again you’re really moving away from the risk
element and focusing on more the technical side of it.” (Industry association)
“Part of the issue… comes down to how do you actually cost the project? Is it the cost
that the owner is actually going to pay? Or is it that plus more? Or is it that but less?
Because of course the owner is going to be paying an amount on top of that. So that’s
been an issue in defining what actually determines the $250,000 or the $350,000 as
well. So I think that’s part of the complexity around it, is it’s not a straightforward cost
of project.” (Industry association)
“So, for example, we’re doing a renovation at the moment and we’ve said to the
architect ‘you manage it’. So does that mean that you add the architect’s fees on
because that’s a cost of the project? Whereas if we’d managed it ourselves you
wouldn’t have that amount and that might be the bit that takes you from above or
below a threshold, which becomes a bit of a nonsense about how you create those.”
(Industry association)
“Why we include things like taxes, levies and charges and I don't know whether that
adds any value to the overall aim of just making it a safe site. Certainly the building of
the building and the fittings and furnishings and so forth because workers are inside
buildings and workers are moving around the site and that sort of stuff, I think they are
quite valid. If you drop taxes would that then reduce the cost of the building and
therefore reduce whether or not ... the project meets the construction project
definition? I don't know.” (Regulator)
“So, so many of the major projects in Australia that I’ve had involvement in have had
an estimated contract value, not project value. And anecdotally I’d say less than five
per cent of them come in on budget or below.” (Union)
“And they chronically underestimate the lack of appropriate skills, things like, simple
things like project management.” (Union)
“But you know I’d be asking questions like if it’s a home and land package is the land
included? Whereas if you’re having the home built on your own land, it wouldn’t be
included.” (Industry association)
“If the consumer price goes up or the gross domestic product goes up … let’s take
one element for example the price of copper. So all your plumbing fittings and your
electrical or the cabling, just because that goes up doesn’t mean to Bill and Ben the
flowerpot men are going to unload a bunch of reels with copper off the back of a truck,
doesn’t mean it gets any lighter. Just because the product costs more means even
lifting that off the back of the truck, the inherent risk is still there. If they don't use a
proper lifting device they’re going to break their backs. You know or drop on their feet
they’re going to cut their toes off. Just because it’s more expensive you know.
Concrete can go up as well but the risk to place the concrete doesn’t change.”
(Industry association)

Regional variations and equity

Some participants (n = 7) expressed the belief that a harmonised monetary threshold definition is not
sensible in the Australian context due to variations in geographic and economic conditions in different
regional areas and jurisdictions that differentially impact the costs of labour, material and transport

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and therefore create substantial variation in construction costs. In this context, a single standardised
monetary threshold definition is perceived as being inappropriate and inequitable.

Table 5.13 provides some indicative quotations to illustrate participants’ arguments relating to the
issue of harmonisation and equity in relation to the monetary threshold definition.

Table 5.13: Indicative quotations relating to participants’ perceptions that a national monetary
threshold creates regional variations and can impact equity

Considerations relating Quotations

to regional variation
and equity

Jurisdictional differences “And part of the issue of $250,000 again is if you are looking at a national
in cost/inequitable harmonised approach, the difference in costs between jurisdictions is quite stark.”
(Regulator)
“I’m not sure what Western Australia’s costs are like but I dare say they are
probably a bit different, Tasmania would be different. So if you're talking about
harmonised $250,000 just does not work across all jurisdictions as well.”
(Regulator)
“So if you use Victoria as a model so as comparable to Perth you’re looking at
$350,000 whereas if you wanted to build a house in the Kimberly for example they
would be advocating for a $500,000 threshold.” (Regulator)
“It does cost more in remote areas to build the same structure or any construction
project. Perhaps, again, though, this is the reason why monetary thresholds aren’t
very useful.” (Regulator)
“Look, the only issue that ever comes up in terms of the differences would be the
lack of consistency amongst the jurisdictions.” (Industry association)
“... for a threshold of $250,000 it was always been seen as being particularly a
false threshold ... given the background in WA and the imposition transport costs
because of the expanse of WA.” (Construction company)

5.8 Ineffectiveness of the monetary definition: Perspectives by stakeholder

group

Table 5.14 shows the proportion of times a theme was mentioned by stakeholder group. Nearly half
(46%) of comments made in relation to the threshold being too low were made by representatives of
regulator or government agencies. To a lesser extend these views were expressed by unions and
employer/industry associations.

Private construction companies did not make comment on the monetary threshold definition being too
low or variability related to project costing methods. As only larger construction companies were able
to participate in the consultation and interview process, they may be unlikely to complete projects at
the $250,000 threshold and these factors may be less relevant for their organisations. Nearly half of
all comments regarding the threshold being too low were from regulators or government agencies
(46%). Regulators also commented proportionally more frequently than other stakeholders on the
issues arising from regional variations and equity (42%). Comments made about the arbitrary nature
of the monetary threshold definition were more evenly distributed between representatives of
employer/industry associations (29%), regulators (21%), private construction firms (25%) and unions
(17%).

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Table 5.14: Ineffectiveness of the monetary definition by stakeholder group

Stakeholder Project Regional

group Arbitrary Too low costing variation and
methods equity

Employer
/industry 29% 23% 22% 27%
association

Regulator or
government 21% 46% 33% 42%
agency

Private
construction 25% 0% 0% 4%
organisation

Union 17% 31% 0% 0%

Other 8% 0% 45% 27%

Total per cent 100% 100% 100% 100%

Note: Qualitative data is subject to interpretation. These percentages are indicative and understood to reflect the
researchers’ interpretation of interview data.

5.9 Overview of the potential problems associated with the monetary

definition

Overall, 69 points regarding potential problems associated with the monetary definition were
discussed during the interviews. Potential problems were broken up into three key themes and six
sub-themes. Sub-themes were further split into 12 content areas. This is shown hierarchically in
Figure 5.3.

Despite this data, six participants perceived that the potential problems associated with the operation
of the monetary threshold definition did not represent a substantial problem for the operation of the
model WHS Regulations. Fifty per cent of these participants (n = 3) stated that they did not believe
that it is ‘worth the trouble’ for construction companies to intentionally design or split works packages
to avoid their principal contractor duties.

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Figure 5.3: Overview of the themes and sub-themes related to potential problems associated with the monetary definition

Financial
definition: Potential
issues

Loopholes Capture failure Inadvertent capture

Accounting and cash May fail to capture Variability in the cost Geographically Extended duration of
Contract splitting
payment practices HRCW of materials remote works works

Small or low value

Subcontracting Cost cutting and Material selection
projects with specific Transportation costs
pieces of work cash payments decisions
risks

Incremental pricing Lack of association

Variable accounting
and awarding of Not a problem between material Labour costs
practices
work costs and WHS risks

Link between
materials costs and
Boundary spliting
the scope of
construction work

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5.10 Potential problems associated with the monetary definition

Participants were asked whether they could identify any problems or potential problems associated
with the current monetary threshold definition of a construction project. The problems identified were
coded into the following themes:

● loopholes (i.e. sources of ambiguity or inadequacy allowing people to deliberately avoid

triggering the threshold),
● capture failure (i.e. when construction worksites are excluded by the definition when they are
perceived to present a need for additional WHS planning/coordination), and
● inadvertent capture (i.e. when construction worksites are included under the threshold
definition, when they are perceived to not present a need for additional WHS
planning/coordination).

Participants’ viewpoints relating to potential or experienced unintended consequences of the use of

the current monetary threshold definition are also discussed. The frequencies with which participants
raised these themes are shown in Table 5.15 in descending order of frequency.

Table 5.15: Themes relating to the potential problems identified

Frequency Potential issues

31 Loopholes

19 Capture failure

19 Inadvertent capture

A post-hoc rating of the magnitude/seriousness of problems identified by participants was undertaken.

This rating was based upon the frequency with which each participant indicated they believe each of
the identified problems occur or could occur. According to these frequency statements, each problem
21
was rated using the verbal descriptors “none”, “rare”, “moderate” and “frequent” .

Examples of the keywords (based on interview data) linked to the magnitude/seriousness ratings are
provided in Table 5.16. Where these keywords were identified in the data in relation to a particular
problem the appropriate seriousness/magnitude rating was ascribed.

_____
21 The frequency of issue occurrence is estimated based on participant perceptions and may not be indicative of the actual frequency of
occurrence.

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Table 5.16: Keywords used for post-hoc rating of magnitude/seriousness of problems

Magnitude/seriousness rating

None Rare Moderate Frequently

“no” “they would be rare” “that needs to be “frequently”

“no-one has ever raised “an anomaly” considered” “yes absolutely”
that before” “that's a one off each “that is correct” “it definitely does”
“no, I have never heard time” “that has happened
“all the time”
of that” “there wouldn't be many before and it probably
will happen again”
of those”
“that may well happen”
“that could occur”

Loopholes

Thirty one participants (62%) identified problems associated with loopholes related to the operation of
the monetary threshold definition. A loophole is defined as an ambiguity or inadequacy in a set of
rules that may allow people to avoid the rule.

Specific loopholes (or more specifically practices of avoidance) that were identified by industry
participants as being related to the operation of the monetary threshold definition were:

● contract splitting, and

● accounting and cash payment practices.

Contract splitting

Contract splitting was the mostly commonly mentioned loophole in the identified by participants (n =
15) (see Table 5.17).

The practice of contract splitting was identified as taking three different forms:

● First, splitting a total project value into multiple, smaller subcontracted works packages occurs
in some contexts. Some participants indicated that this is sometimes purposefully done to avoid
the works falling within the monetary threshold definition. For example, a contractor may
separate out the cost of landscaping work into a separate package, despite the work occurring
simultaneously.
● Second, and related to subcontracting is the practice of incremental pricing and award of work
in discrete packages. This practice varies from the first as it concerns works related to the same
project being sequentially scheduled. One participant gave an example sequence of works,
whereby a demolition, soil remediation work, and building work could occur sequentially in
separate packages of work.
● Third, is the practice of splitting a large worksite area into smaller units or blocks, and arguing
that each is a separate unit of works. This practice was identified by a regulator who recalled a
construction firm seeking to avoid duties by arguing that each unit in a multi-storey building
represented a single contract.

Some participants suggested that these practices occur frequently in the construction industry.

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All of these practices were considered by the people who raised them to undermine the effectiveness
and intent of the current monetary threshold definition.

Table 5.17: Indicative quotations regarding participants’ perceptions of contract splitting,

identified as a potential problem related to monetary threshold definition

Loopholes Quotations

Contract “The second point is that it might be that you’re artificially saying a subcontractor is the
splitting principal contractor ... So, if a project is $1 million, but they say that they’re just a project
manager. They’re not the principal contract. They’re the project manager. The first time a
(sub-contracting
pieces of work) contract for building work arises, is with the civil works company that’s turning out
$220,000 projects. And then the supplier of precast bridge components, which is
$240,000. You see what I mean? So, you could artificially structure things so that what
most people would normally think of as the principal contractor probably seen the tactics
of, ‘oh, no we’re actually just the project manager’. And they turn what really you would
normally think of as subcontractors into head contractors, to circumvent the threshold.
(Regulator)
“So the main scenarios we see are contract splitting means the agency decides if there
are two contracts to build what is actually one hospital.” (Regulator)
“So let's say someone calls up with a $249,000 job. Is it fundamentally less risky?
Probably not. And they might even say, ‘You know what, the build. I'll do the build for 200
grand. And then we'll do the landscaping for 80. All right. Fine’. And they split it up and so
they've avoided the whole thing.” (Construction WHS expert)
“... people do try to do it particularly at the lower end so they might say ‘Well we are going
to do the labour for one thing and the tools for the other’ … our guys know they can’t do
that. It is against the law, you can’t split the contract just to get under the threshold. So,
you couldn’t say $125,000 for doing whatever and another $125,000 being to meet your
requirement.” (Industry association)
“...because you can hide people through contracting arrangements and really diminish the
duties that apply to that job, which could have an impact on safety standards.” (Regulator)
“It just goes up and up and up, and then they split the contract in three different projects ...
the demolition is worth two hundred, the construction’s worth three hundred, the
renovation’s worth two hundred, it’s three separate contracts...” (Construction company)
“I think it does happen, you know, I mean, you can have a contractor demolition and
excavation, you can have a contractor for building, and they’re both under 250.”
(Construction company)

Contract “So they do the roads, that’s why you often drive past and just see roads and nothing
splitting else. And then someone comes later a separate contractor builds houses.” (Union)
(incremental “Yeah, it’s occurring, of course it is. As I told you before, there’s villains everywhere ...
scheduling) they constantly do this sort of stuff. Developers as well will ghetto the whole site, so that’s
one contract. And then if they’ve got to say the site’s contaminated because it used to be
a petrol station, so they’ve got to rehabilitate the soil, that’s a separate contract. Then do
they build the development or they encapsulate the soil, they start doing that. It might cost
them. The whole job might cost them 40 mill but they split it up into four different
packages, you know, one for demo, one for soil remediation, one for removal etc. So that
happens all the time.” (Union)
“I think wherever you have a monetary threshold, as we do, we see for ourselves that
there is the risk of contract splitting and other ways of circumventing the threshold.”
(Regulator)

Contract “I mean if you had one small project, let’s say in Richmond and then you’ve got another
splitting one in Kew well they’re two projects. But if you’ve got two or three of them in Richmond
(boundary and they’re on the same block, it’s pretty hard to say that that’s not a construction project.”
splitting) (Regulator)

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“...we’ve had plenty of companies here try it and said, ‘Well this unit belongs to somebody
else and this unit belongs to another person. Or these units are going to be sold
individually so therefore they shouldn’t be classed as a construction project’ and we’ve
had to go in there and say it doesn’t matter who buys the thing or who it’s there for. You’re
building it as a one block, one block that’s over $450,000 so therefore you have to have a
management plan … it’s not about who you sell it to, it’s about the building of the thing,
you know like it’s how much the actual project costs, it’s not about who’s going to sell it
and because you’re selling it to individuals. That’s like building a high rise apartment and
then saying well the high rise is going to cost us $20,000,000 to build but because we’re
selling every individual one under $450,000 then it’s not a construction project, it doesn’t
make sense.” (Regulator)
“Well the health and safety duties is if they are individual blocks then you would have
them fenced off and you would have a toilet out in front of every individual unit. So let’s
say they’re courtyard homes or units and they’ve got their own little block and if you build
like four or five on one particular block then we’d be saying to them well if they’re all
individual you need to put a toilet out front of everyone because they’re all different
projects. And then they’d squeal up and down and then we’d say and then they need to
be fenced off so that they’re individual projects. Then you’d go and talk to the workers and
you’d say, ‘Now are you doing this unit as well as that unit?’, ‘Oh yes mate and I do the
other two units as well.’ ‘Oh thanks a lot.’ So you get a gist on that this all revolves around
one principal and they’ve got the same PCBUs working there and therefore then it’s a
construction project and it doesn’t matter who they sell it to later.” (Regulator)

Accounting and cash payment practices

Participants identified three practices concerning accounting and cash payment practices as being
related to potential problems in the operation of the monetary threshold definition. These were:

● increasing the contract price through issuing variations,

● cost cutting and paying subcontractors in cash, and
● variation in accounting practices, for example, sharing administrative costs across multiple sites
when calculating contract values.

Some participants suggested that these practices occur moderately often in the construction industry.

Participants suggested that the initial contract price is sometimes increased by construction
companies who negotiate additional payments for variations during the course of construction work.

One participant, who works for a volume home builder, described the practice of appointing a single
administrator who services multiple works packages, thereby reducing the cost of administration on
individual sites. While this is a legitimate cost-saving measure, it has potential implications for the
operation of the monetary threshold definition. The payment of workers and subcontractors in cash
can also create a situation in which official accounts may not always accurately reflect project value or
scope.

Table 5.18 provides some indicative quotations regarding the potential impact of accounting and cash
payment practices.

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Table 5.18: Indicative quotations relating to perceptions of accounting practices and cash
payments identified as a potential problem related to monetary threshold definition

Issue Quotations

Accounting and “But you might get that with some of the more unscrupulous end of the market where
cash payment they’ll value down and try to recoup ... down the project or they’ll add variations or
practices additional work or what have you.” (Industry association)
“... but there are many, many stories, of construction companies at all levels of
construction, civil construction or structural construction ... and many of them are quite
reasonable, but the lower down the food chain you go the less likely you are to find
people who cut corners and also some lower down the food chain, and in fact some
even at the higher end of the food chain who ... the cutting of corners is their bread and
butter, that’s what they do every day of the week.” (Union)
“Where there’s 20 contractors it’s not a problem as you come further down that ration
into the realms of the industry which is less regulated, which is more cash in hand and
… I mean these guys are less likely, I mean they’re more likely to pay their taxes than
they have to comply with health and safety law.” (Construction WHS expert)
“I know that the regulators tried some loopholes in trying to calculate the cost and value
of the house, trying to basically incorporate the administrative cost to design the house,
and the administrative expenses that might be [factored] into the house, and we can’t
calculate those, but they’ve tried to include those into the cost of the house … We had
one of the regulators ask us what would the value be for the administrative expense of
an individual job site … and for us, our designers are designing 10, 15 houses, and our
administrator’s probably working on 20 or 30 houses, so how do I cost that into one
individual job site? But as I say, for a smaller operator who might only do one house in
the course of the year, his administrative costs, they could be included into that value.
So that definition of what is actually included into the cost, the regulator may be able to
take those things into account. So it’s probably more of a regulator than a builder type
issue of what is defined, what’s the definition of the cost.” (Construction company)
“But commercial, they do account, they have a project cost and a project fee for which
some of those mystery costs are included into that project. It might have a dedicated
person just working on that one project, an administrative person that’s working on that
one project. It’s only on that project; that’s included in the cost. For residential it’s not
the case. You might be working on three, four, 10 individual job sites, but for
commercial, I mean they get blown out of the water so quickly, so it doesn’t really bother
us.” (Construction company)

“And a potential, which I think is quite silly, but for those who think that the obligations of
the construction project are so outrageously bureaucratic and red tape, that they’ll fiddle
things around and say ‘Well here’s the project cost but then there’s all these other costs
and we’ll treat them differently.’” (Industry association)
“Oh yeah they could downgrade the value of the work and then remunerate their sub-
contractors in cash. I’m not a trained criminal or forensic person but you know it’s not
very hard to get rid of large amounts, it’s not as easy as some think it is to get or move
around large quantities of cash.” (Industry association)

Capture failure

Nineteen participants (38%) identified problems associated with capture failure, identifying three
primary reasons that they believed are linked to the current monetary threshold definition’s failure to
capture some construction works that potentially warrant additional WHS planning and coordination.
By descending order of frequency, these reasons are presented in Table 5.19.

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Table 5.19: Sub-themes identified relating to capture failure (monetary definition)

Frequency Potential issue

9 Lack of reference to high risk construction work

8 Small or low value projects that involve specific risks to the public/workers

4 Not a problem

Lack of reference to high risk construction work

The definition’s lack of reference to high risk construction work (HRCW) was the most frequently
mentioned reason for the failure to capture construction works that warrant additional WHS planning
and coordination. Participants expressed the view that construction works could have a relatively low
contract value, yet still involve high risk work or be conducted in a high risk environment, for example
adjacent to public roads or in close proximity to members of the public considered to be vulnerable
(schools, hospitals, aged care facilities etc). Other examples of high risk work cited by participants
that may be low value but high risk were works that involve excavation, demolition, scaffolding or
abseiling. Further examples are provided in Table 5.20.

Table 5.20: Indicative quotations relating to participants’ perceptions of the monetary

threshold definition’s lack of reference to high risk construction work

Capture failure Quotations

High risk construction “If I had to punch a window out in a façade, it might be an $80,000 job but I’ve
works got people hanging off a building and we’re taking a window out and probably
using a crane to lift a window back in. Which is significantly very high risk type
activities around people, falling materials and so on.” (Construction company)
“Again... there’s a job, it’s $100,000. But it’s on the edge of a cliff. Which can
happen. Some coastal type work and coastal regions there is work there, it’s
construction work, but it’s only $100,000 … It’s going to involve a bit of
scaffolding hanging up but there’s certainly high risk there isn’t there?” (Industry
association)
“But it's reasonable to assume that there would be projects under that threshold
that would be of high risk or significant risk.” (Regulator)
“That’s why the old New South Wales one was actually pretty good, it was
$250,000 or high risk work because then you get some people like replacement
of a façade window in a multi-storey building 30 floors up is high risk and you
want detailed management of that. And all the hazards and activities that go on
with it, yes without a doubt that would miss some of the high risk stuff that’s
going on that’s below that threshold. That may involve a number of different
trades, different interfaces and activities that require better coordination than
what those trades are prepared to provide.” (Construction company)
“You can have a scenario where ... all it was, was removing the actual gutters
on the factory, and replacing them with bigger gutters. Now that job was eighty,
a hundred thousand, a hundred and fifty thousand dollars. But to me, there was
more risk involved in doing that, because we’re working at 10 metre heights and
walking on roofs, than actually doing a million dollar job, or a million dollar fit-out
job ... so there was more risk in that job that was a $100,000 [job] than we had
on a $1,000,000 job that we do in a fit-out…The $250,000 is just a guide, and
realistically it is just a guide, because you should be sort of doing whatever you
need to do to make it safe; you know, you shouldn’t just be sitting there going,
oh well, good luck, it’s $245,000 strictly I don’t have to do anything.”
(Construction company)

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“… and with abseiling type work, or what they call rope technicians these days,
that’s becoming a common feature in the industry. Because there are some
points of access where the only way to get it is from high using low technology.
Now that could be two or three people and you’d be asking yourself is that job
$250,000? No, it’s probably worth about $200,000 to do. Requires one, maybe
two people. Does it require [a] safety management system? No. But as we’ve
discussed it’s high risk therefore there has to be the higher risk arrangements
made as to risk analysis.” (Industry association)
“Again, it really depends on what is the level of risk posed by the activities on
site. I mean it could be that something escapes because we've dug a massive
excavation for an in-ground pool and they are not managing that risk very well.
Because issues with accessing the excavation, issues with putting
reinforcements in and then maybe, laying concrete eventually and then the
integrity of the exposure to excavation and persons getting into an excavation
that person ... collapse earthworks, those sorts of risks are very high risk and
well managed I guess. The value, the land level might actually fail in an example
like that.” (Industry association)
“...but I wonder how much value it adds really when you think about well, are
people working on, for example, someone’s [having] their air conditioning unit
placed into the roof, it’s probably not going to be $300,000, but if the
tradesperson who’s doing that are walking on a roof three or four storeys up,
and they don’t have any fall protection and many of them don’t, I mean you see
it …you can’t add the threshold and but you can say…you know you
should…someone should be looking at the task and the hazard if that person
falls.” (Union)

Small or low value projects with specific risks

Small or low value projects that involved specific risks to the public or workers were identified by
participants as potentially characteristic of capture failure. Examples included renovations/alterations,
small civil works, hazardous works (i.e. sites with hazardous substances or dangerous goods
present), and non-traditional construction worksites (i.e. construction work performed on private land
such as at farms or in nurseries). Due to the inconsistent nature of these types of works, participants
did not necessarily suggest that these sites should be consistently captured, rather that the definition
lacks the sensitivity to recognise when these small or low value projects present specific risks that
could be considered to be sufficiently significant as to warrant additional WHS planning and
coordination requirements.

Table 5.21provides indicative quotations of participants’ discussion of small or low value projects with
specific risks.

Table 5.21: Indicative quotations relating to participants’ perceptions of the monetary

threshold definition’s lack of sensitivity to works presenting specific WHS risks

Capture failure Quotations

Low value works (e.g. “Well perhaps not in housing construction but perhaps in civil construction
small civil) maybe there might be some roadwork that don't come close to that value but
you know they might involve working next to [a] major road. And it’s got pretty
high risks yeah.” (Industry association)
“But we’ve had a case where a retaining wall fell over and killed a mother and
child and the contractor was saying ‘Well all I was doing was building a wall’.
You know, doesn’t need any paperwork it’s just a wall. But it did fall over and kill
somebody. So you know you get into that nuanced discussion about what is
adequate.” (International industry association)

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Low value works (e.g. “They may potentially be missing risky projects that should be captured.”
specific hazards) (Regulator)
“… the Australian government had 90 per cent of I think its state schools had
asbestos in them. And so they would, the contractors would be working on a lot
of those sites. Some might be big jobs and some might be small… So then
that’s a good example yeah because that could be multiple contracts there.”
(Union)

Low value works (e.g. “If someone's changing their roof on their house and it’s only going to cost them
renovations/alterations) $100,000 to change their roof you’ve got falls from heights, you’ve got falling
objects, you’ve got all these types of risks so just because it’s under $450,000 is
sometimes people may see it as not going through their risk register as much as
they should.” (Regulator)
“Renovations is ... in civil, you're not going to get anything decent. You don't get
many pipes in the ground for that sort of money. Renovation there is. You get a
lot of renovations for 250, 350, so again you're excluding all that. But again,
renovation, you're excluding some of your major risks, because you're
renovating an existing house.” (Regulator)

Low value works (e.g. “Really rural projects are only going to be picked up if they’re used as an
non-traditional example because they’re flouting the law.” (Industry association)
construction works such
“But I think also if I can digress a little bit I’ve got a mate who own a nursery and
as at a farm or nursery) it’s a really big nursery ... He ticked the box that every, well not every but six or
seven high risk construction work activities on that property, and yet I don't know
where he’s picked up in that sort of, not so picked up. Where he would get,
where does he get some guidance ...” (Construction company)

Not a problem

Four participants perceived that failure to capture is not a problem in the operation of the current
monetary threshold definition in their respective jurisdictions (see Table 5.22). These participants
argued that the costs of construction are so high that very few works fall below the monetary
threshold.

Table 5.22: Indicative quotations from participants who believe that capture failure is not a
problem

Capture failure Quotations

Capture failure is not a “…with corruption in the industry and things like that I don't think that there’s a
problem hell of a lot at that end of the market. I mean $250,000 really these days won’t
get you a hell of a lot of work.” (Industry association)
“I think there will be many more instances where the current monetary threshold
captures projects that should not be captured rather than does not capture
projects that should be.” (Regulator)
“In New South Wales with the threshold of $250,000 I think it’s much, much
more likely that they’re capturing projects that shouldn’t be captured rather than
vice versa.” (Regulator)
“So things are always going to fall through the cracks in some cases I would
say. But there’s not a lot of projects that you can really build for under 250
thousand dollars unless you’re talking maybe a child’s playground somewhere
which may have some risks associated with it.” (Industry association)
“As I say, the $250,000 is, it’s conceivably reasonably low.” (Union)
“My experience is in electrical and plumbing, but the threshold is $350,000,
that’s not very much. So if someone was going around replacing switchboards
or air conditioning units, you’d make that $350,000 up pretty quick.” (Union)

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Inadvertent capture

Nineteen participants (38%) identified problems associated with inadvertent capture. These are
discussed below.

Participants cited various reasons to explain why and how the operation of the current monetary
threshold definition results in inadvertent capture of low WHS risk construction works. These reasons
were related to:

● variability in the cost of materials,

● cost variation linked to the geographical location of works, and
● the case of minor works carried out over an extended duration.

These reasons are divided into sub-themes and discussed in the following sections.

Variability in cost of materials

Inadvertent capture related to the variable cost of materials was explained in relation to three factors,
as follows:

● material selection decisions,

● the lack of association between material costs and WHS risk, and
● a purported link between material costs and the scope of construction work.

Participants explained that clients’ or designers’ specification of particular construction materials could
substantially impact the cost of construction works. Thus, expensive materials could be selected that
did not change the level of WHS risk inherent in a particular construction, erection or installation
process but which could push the value of work above the monetary threshold. Indicative quotations
related to this issue are presented in Table 5.23.

However, while the selection of expensive materials was believed to lead to inadvertent capture of
relatively simple and low risk construction works, participants conceded that expensive materials are
often a feature of larger or more complex works. For example, one participant noted: “you wouldn’t
put a $5,000 bathtub in a cubby house.”

Participants generally believed that inadvertent capture related to the variable cost of materials is a
moderately serious problem in the current construction environment.

Table 5.23: Indicative quotations relating to the influence of the cost of materials on potential
inadvertent capture

Inadvertent Quotations
capture

Cost of materials “... I think it would be reasonable to consider what sort of projects are intended to be
captured by these provisions, as well projects that are not intended to be captured.
And include some exclusions of projects that we’re not intended, low risk construction
projects that we’re really not intending to capture through these regulations but maybe
being captured at the moment just because of the nature of the particular projects that
they say for example the very high costs of the materials.” (Regulator)

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“Northern Territory's argument was that it was the cost of those materials.” (Regulator)
“They might be putting in a bathtub with gold taps or something, I don’t know. But you
know, that, you’d think ‘Oh do we really need a project management procedure and
protocols to do that?’ Because that could quite easily happen. I mean, some of their
bathrooms are bigger than our little shack.” (Union)
“Well based on the $250,000 threshold to do some small house renovations may cost
a bit of money depending on the suburb, depending on the construction company
you're using, that may push it above that threshold, thus requiring a Work Health and
Safety Management System, that arguably shouldn't be required because it's not a
significant high risk, when compared to a high rise construction build if you like. You're
talking about an extension, at a single level, or single-storey dwelling, refurbishing a
couple of old rooms, that pushes it up about $320,000.” (Regulator)
“… fixtures and fittings is another easy example to be considered.” (Industry
association)
“Well the simple domestic house that potentially is going to be in. And once again it
comes down to how that definition is applied. Does it include all of the internal fittings?
So a house with [imported European] appliances, as distinct from a house with the
cheapest appliances. There’s no extra risk but does that actually push the price of the
project up to the level that it falls into that category.” (Regulator)

Geographically remote works

Participants cited the impact of geographical location of works on the potential inadvertent capture of
works under the current monetary threshold definition (see Table 5.24). Sub-themes relating to the
impact of geographical location were:

● the increased transport costs in regional/remote locations, and

● the variation in labour costs by geographical location.

Participants commented that the costs of transporting equipment and materials contribute significantly
to total construction costs (and hence the contract sum). In regional/remote locations these costs are
higher, thereby increasing the likelihood that regional/remote construction works would fall within a
monetary threshold definition. Labour costs were also observed to vary by location and this can
increase or decrease the costs (and contract sum) of regional/remote works.

Some participants argued that regional/remote work has unique WHS challenges that require
particular planning and coordination, including more complex transport arrangements, workers’ living
away from home or commuting long distances, and distance from amenities, such as hospitals.

One participant identified a situation in which the provision of health and welfare provisions (such as a
clean running water supply) at a remote site, would increase the contract value and potentially push it
above the threshold value for a package of works.

Participants indicated inadvertent capture or unanticipated consequences associated with the variable
cost of geographically remote works is a moderately serious problem in the Australian construction
industry.

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Table 5.24: Indicative quotations relating to the influence of the geographical location of works
on potential inadvertent capture issues

Inadvertent Quotations
capture

Geographically “Well yeah because it would be more expensive in some locations to build. So…a
remote works $250,000 threshold captures a much lower build if you like.” (Industry association)
“I know that’s an issue, that’s an issue for example in the Northern Territory that’s why
they brought it up to $500,000. Because building is more expensive there because of
the distance, because of the location.” (Industry association)
“Possibly yes, I can see the regional and remote.” (Regulator)
“... price differentials between regional and city areas you could have for example a
project that is done in the city in Melbourne or Sydney particularly Sydney would be
captured but the same project out in Orange or another regional town in New South
Wales would not be captured because of the lower cost or the same cost of materials
but lower cost of labour for example. And then in remote areas, say for example where
if the labour force had to be imported, had to be brought in from somewhere else the
project could be captured just because of the cost of doing that.” (Regulator)
“Obviously by location is one of those.” (Industry association)
“... we have assumed that $250,000 is the magic number well in the Northern Territory
$250,000 equals $600,000.” (Industry association)
“But it is not because it is any more dangerous in rural areas or less dangerous, it is
about the cost.” (Industry association)

Extended duration of works

Several participants identified the fact that contracts for relatively simple, low risk, repetitive pieces of
construction work are sometimes let for an extended period. This has the potential to push them
above the threshold definition based on contract price and thus trigger principal contractor and
additional WHS planning and coordination duties. For example, one participant cited the example of a
road maintenance contract that runs over a long period of time. Participants perceived this to be an
undesirable outcome and cited it as an example of inadvertent capture.

Table 5.25 provides some indicative quotations regarding the monetary threshold definition
inadvertently capturing construction works that take place over an extended duration.

Table 5.25: Indicative quotations relating to participants’ perceptions of inadvertent capture as

a result of works over an extended duration

Inadvertent capture Quotations

Extended duration of “You take road maintenance contracts with councils and things. To do a couple of
works streets might be under the threshold but they often let their contracts on an annual
basis. So the amount of work I'm going to do on an annual basis now is over the
threshold. So that brings them in because they've signed a contract for $300,000
of road maintenance over the next year. So $400,000 under our new threshold. So
the threshold changes for them and that has an impact.” (Regulator)
“… you can get some very low risk projects that are captured because a contract
runs over a long period of time. Road maintenance being an example so you will
have a contractor road management that’s over a period of multiple years being
captured because of the cost of that contract is over $250,000 but the amount of
work actually being done at any one point in time, or at most points of time is often
quite small.” (Regulator)

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“… the Northern Territory… if you were sinking a well [you] might have two guys
there for six weeks and you might go over the threshold but actually it’s a very low
risk project.” (International industry association)

5.11 Indexation

Participants were asked whether they believed that the monetary threshold definition should be linked
to inflation through some form of indexation. Expressions of support for indexation of the monetary
22
threshold definition were a common theme in data analysis (being cited 36 times) .

Only three participants (6%) expressed the view that the monetary threshold definition should not be
subject to indexation. Reasons given for not supporting indexation were:

● because applying indexation infers that the original figure has an evidence-base from which to
increase it, and
● because WHS risks do not change as prices increase.

These arguments are both related to a fundamental disagreement with the use of a monetary
threshold definition. For example, one individual stated “If you doubled it [the threshold] the same
inherent risk of bringing a job out of the ground or framing up some walls and putting some top plates
on and a roof truss, and you’re walking around up there or you’ve got to get access, they’re still there
at 250 thousand dollars or 500 thousand dollars.”

Support for indexation

The most frequently cited reason for supporting indexation of the monetary threshold definition was so
that the definition (and the model WHS legislation) keeps pace with rising costs of construction. It was
acknowledged that, if a monetary threshold definition is to apply, to remain relevant and effective it
needs to be linked to the costs of construction at a given time. This reason was cited by 12 (24%)
participants. Table 5.26 presents some indicative quotations relating to participants’ support for
indexation.

_____
22 Some participants declined to comment on the issue of indexation, indicating that they did not feel qualified to comment on this issue or had
given it little thought.

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Table 5.26: Indicative quotations relating to participants’ support for indexation of the
monetary threshold definition

Reason Quotations

Need to keep pace “But I think out of fairness, there needs to be some level of indexation. I mean
with increasing costs inflation's inflation … I think any regulation dollar threshold needs to index.”
of construction (Regulator)
“Yes I think it’s well accepted across the country by all walks of life so I don't see
that that would be an issue.” (Industry association)
“What’s the average cost of a house? If it’s currently, I mean the laws were written
five years ago now. So if it was 250 thousand dollars five years ago what is it
now? And that becomes the threshold.” (Industry association)
“... our view is that there should be some form of indexing to keep up with inflation
and the consumer price index and all that. But I don't think we’re really, at this
stage we haven’t formed a view as to what it should be.” (Industry association)
“Yeah whatever threshold you have yeah definitely [you have] to have to be some
sort of indexing. You can’t keep it the same for 10 years.” (Industry association)
“... I don’t have firm views on whether that should be CPI or a building construction
index but I think it makes total sense that whatever figure is selected should be
subject to some sort of indexing to stop new projects being captured over time
solely as a result of increases in costs involved in the project. So, for example with
the $250,000 figure that’s currently used, that was used in 2001 in New South
Wales you would have projects that were not captured at that particular time but
now, 16 years later now the exact same project would be captured. Not because
the project involves any more inherent risks but because of the increased costs of
the building materials and labour involved.” (Regulator)
“I guess there's an argument there that with the increase in costs of construction it
probably makes sense. Or it would be something that will be reviewed every few
years. Because the cost of a project would typically go up. So if it's meant to kick
in at a particular type of project or a particular risk threshold it would probably
make sense for that to be indexed or reviewed regularly.” (Regulator)
“Indexation is really a mechanism for increasing, you know, regular review of a
figure. And I think given inflation and that prices change, that the trigger needs to
keep … If you don't index it, you end up capturing lower value products, or
building, that weren't intended to be captured.” (Regulator)
“Umm well yes. If you’re going to adopt it well unless it’s a cunning plan I mean it
might be a cunning plan. That in a 100 years’ time it applies to everybody. Subject
to things less than 250 thousand. But yeah if you’re going to use it as a measure
then there ought to be some indexation.” (International construction WHS expert)

Considerations relating to indexation

Participants also identified a number of considerations relating to the application of indexation to the
monetary threshold definition. These are shown in descending order of frequency in Table 5.27.

Table 5.27: Considerations relating to indexation

Frequency Considerations relating to indexation

10 Political environment and communicating with industry

5 Timeframe for changes

5 Increasing the subjectivity and complexity of the threshold

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These themes are discussed in relation to the sub-themes below.

Political forces and communication with industry

As the current monetary threshold is legislated, any modification would require an amendment passed
through government. This was seen as a barrier or challenge to indexation by participants as it would
require government agreement and could be influenced by broader political forces. For example, one
respondent commented “…we’ve got a great bill I’ve got it in front of me… but is it ever going to get
passed through parliament in its current format? I see it going back to parliamentary drafting, which
means them doing another regulatory impact statement, which is six months. I mean, we’ll probably
have another change of government by the time we get around to it? And that’s what kills me with
this process.”

Additionally, this process was perceived to place additional burden on the regulator/government
agencies responsible for calculating, administering, communicating and enforcing changes to the
23
legislation. For example, one participant asked the question, ‘who is going to calculate that?’

Some participants did not regard communicating changes to the monetary threshold to industry
participants difficult. However, it was noted by multiple stakeholder groups that it would be essential
for industry to be able to be “kept up to date”. Several participants, representing unions and regulators
and industry associations perceived that communicating changes to the monetary threshold to
change could potentially be disruptive and difficult, particularly with regard to small to medium sized
organisations.

Table 5.28 provides some indicative quotations from the interviews regarding participants’ evaluations
of the implementation of indexation. These quotations provide insight into the views of participants.

Table 5.28: Indicative quotations relating to participants’ perceptions that indexation of the
monetary threshold definition is influenced by political forces

Consideration Quotations
relating to
indexation

Political forces “…I know some of the jurisdictions can’t put CPI increases into their legislation so they
actually have to do a physical change of their Act whenever it needs to be done. So an
annual CPI mightn’t be appropriate but a five year review or something like that would
be. Because if we’re saying the monetary value is the threshold you can't say we’re not
going to change it. Because it just makes your monetary threshold a nonsense.”
(Industry association)
“Well you figured the consumer price index I think is annual I think isn’t it? You wouldn’t
like it to be changing annually because I think that just invokes a whole lot of issues for
regulators and people that formulate legislation and so on. But you would have thought
a lot can happen in five years, prices change and the industry change quite significantly.
I would have thought at maximum five year intervals, annually is crazy because you just
get settled down and you’ve got one thing in your mind and then all of a sudden it’s
gone again but five yearly intervals, you know a lot happens in five years from an
economy point of view.” (Construction company)
“I guess I probably would be inclined to say let's have a look at it on a five-year basis or
something like that. And change the regulation at that point in time rather than annually.
It might become too burdened, a much of a burden for our regulators to change it
annually.” (Construction company)

_____
23 This is paraphrased from interview data.

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“I’m sure from our regulators’ perspective one of the things that we do want is if
whatever happens we believe that at the very least the monetary value should be
increased and I think for $450,000 is bare minimum. And you know, if we got that it
would be a good step forward and it would improve the position from where we’re at the
moment and I think that if there was one of the values that we’ve been talking about
then the monetary value is better than any of the other ones however I think as I said for
me it’s around the level of risk.” (Industry association)
“So, because the problem is with legislation you don’t want to be going ahead and
amending every year and updating a figure with, you know, that ends in 33 cents, so we
want to see it rounded up to an appropriate figure and probably the more efficient way
of doing that would be, you know, reviewing it every three or five years and bringing it
up, basically.” (Regulator)
“I don’t think it would hurt to say five years if regulators can put in place. I know with
WHS regulations the model it’s been reviewed and if individual regulators have the
capacity to amend parts as those typically how statutory provisions are, we have
legislation for 10 years same as Sydney. If there is a mechanism to put in place a
review of that particular provisions at particular points in time yes, terrific.” (Industry
association)

Communication “In most cases it would be very easy, but there’s not that many major project
with industry construction companies around. And in terms of first and second tier contractors they
don’t operate on that basis anyway. Third and fourth tier contractors, you know, your
average sort of one and two person operation that might have come in to fix the taps or
to get these, fibro sheeting or something, in some offices, they’d be harder to get to.”
(Union)
“…from what little I do know of the housing sector, that getting those one and two
person operations engaged and involved and letting them know about what’s involved, I
think would be very difficult.” (Union)
“Well normally the regulators, whatever the regulators communicate you know we pass
it onto the members so the members get to know very quickly. Communicating the
changes is not really a problem.” (Industry association)
“Any change, industry struggles with change especially if we talk housing industry.
Commercials not too bad but housing industry, yeah they take a lot longer, they don’t
like the changes.” (Regulator)
“It’s sort of like in other types of law, for example, in workplace relations law you've got
thresholds based on yearly income, for people to bring certain claims before the
commission, they get adjusted each year, and it’s an absolute pain to try to keep up with
it, and every time it’s adjusted, there’s always three or four cases that end up at a
commission where there’s an argument about what day the claim was filed, whether it
was the date of dismissal, what’s included in the definition, and it’s just entirely
unhelpful.” (Industry association)
“It would be probably difficult to review, or I guess continually educate industry on what
that trigger is and who's involved. Because that kind of work is, because it's quite small
in nature it's often done by smaller contractors. And they're the ones that we find
challenging to engage with, with all the work that we do. So whether we could get that
message out to the industry that things have changed and this is what the impact of the
change is that would bring new challenges.” (Regulator)

Timeframe for changes

Participants discussed how frequently the threshold definition should be updated based on indexation,
the timing of changes and what should trigger a change.

Concerns were raised about the possibility of revising the threshold definition too frequently (for
example, annually). Too frequent change was perceived to have the potential to impact construction
projects that extend beyond a year and create an unnecessarily high burden for regulators and duty-
holders in relation to determining application and compliance.

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Most participants who commented on this issue suggested a five yearly review period may be
appropriate, or that a review of the monetary threshold definition could be triggered at particular
intervals by specific events or requests.

These considerations are discussed in the quotes in Table 5.29.

Table 5.29: Indicative quotations relating to participants’ additional considerations relating to

frequency of review of the monetary threshold definition

Considerations Quotations
relating to
frequency of
review of a
monetary
threshold

Timeframe for “…if you are looking at a construction project and the building of a house or the
changes building of a multi-storey building or civil construction, that work obviously goes
over, or can go over a number of years. So when you define what a construction
project is and you then introduce the principal contractor extra duties, you would
need to be able to do that at the beginning of a construction project rather than
change the requirements part way through. So if you then decided that you might
index every year if a construction project started in, I don't know, say May and went
through to October/November, you would need to ensure that any indexation
applied did not apply to a project that was already underway.” (Regulator)
“If the dollar figure stays there’s got to be some way that it can be increased. Now it
may not be practical to do it every year but you may need to say ‘okay we can’t do it
every year practically although that would be the best. But we will do a five-year
review of average housing costs to determine what that level should be.’” (Industry
association)
“I wouldn’t have thought it’s necessarily something that’s worth doing, given the
extent of compliance within the sector, and the concerns that have previously been
held are no longer held, so there’s no point indexing something which isn’t really
that relevant, and perhaps even bordering on redundant anyway, and secondly, in
terms of indexing more generally, there’s always that issue of how much it goes up
by, the date on which it goes up, what happens to projects that are established
before the date, what happens to projects which blow over that threshold?” (Industry
association)
“I guess I probably would be inclined to say let's have a look at it on a five year basis
or something like that. And change the regulation at that point in time rather than
annually. It might become too much of a burden for our regulators to change it
annually.” (Construction company)
“I think so yes. Because it's not a real thing. It's just an arbitrary line in the sand. So
adding two per cent to it doesn't mean much. So I wouldn't do it annually.”
(Construction WHS expert)
“…I just remember from some of our earlier discussions here that our preference is
more for it not to be based … not for it to be done annually but for it to be done
periodically.” (Regulator)
“Yeah. And the costs and those sorts of things. Look there was general agreement
around the table from all the stakeholders that it’s not a lot of money, probably
should be reviewed more than every 10 years. That’s a long time. I mean, if you
went for a wage increase every 10 years people would probably go nuts at you. I’m
sure business would like it.” (Union)
“In the Canadian regulation I found stuff that, it talks about a tiered approach to
thresholds. And in more or less for the rest of the research that I did it was
consistent with the method used in the model regs here. But it kind of confounds me
that a dollar figure is the trigger. And that the dollar figure is essentially in place for
the life of the legislation unless it’s reviewed.” (Union)

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“…the education is there and it’s well known what the threshold changes will be
ahead of time as well. Sort of planning on that. As long as that part of it is managed
I don't think we’ll come up against real confusion. For that reason again yearly is far
too regularly for that to be reviewed. It would need to be, have a little bit of stability
in it but also some flexibility there to allow for changes in the market to be reflected
in that definition … the thing we want to avoid is uncertainty in that understanding of
it in the industry.” (Industry association)
“…it’s lovely to have all these thoughts but I always look at how’s that actually going
to work in practice and I think that’s where all this stuff gets very difficult.”
(Regulator)

Subjectivity and complexity

Five respondents expressed the view that indexation of the monetary threshold would increase the
subjectivity and complexity of the operation of the definition. Particular issues identified related to the
choice of indexation mechanism and the potential for capture failure (see also the discussion of
capture failure in section 5.10). Indicative quotations relating to the issues of subjectivity and
complexity are presented in Table 5.30.

Table 5.30: Indicative quotations relating to participants’ perceptions that indexation of the
monetary threshold definition may add subjectivity and complexity to operation of the
definition

Perception of Quotations
increased
subjectivity/
complexity

Subjectivity/ “You could get into some arcane debates about whether it's CPI or whether it's
complexity building industry and you know, inflation, or whatever. You know, it's one of the
debates they have in the health sector about what is the index factor, but the
principle about it should be increased...” (Regulator)
“I guess industry would probably view it as a positive thing because … we’re
keeping pace with the change in industry and activity but I guess the downside of
that is that if it’s automatic you might be not capturing things that you might want to
capture that fall below that new threshold or just under that threshold that would be
captured.” (Regulator)
“I think it is appropriate every now and then to have a look at it, but … one thing
about indexing is you would have to come up with a rationale for the figure. You
know, why $250,000?, is it because that is the average cost of building a house? Do
you know what I mean? And I think there is no answer it will be some, the vibe,
someone has said $500,000 is too much and $50,000 is too little, let’s pick
$250,000 and the moment you start indexing it you are assuming that where you
started had some sensible reason for picking the number and I bet there isn’t one.
So, no I don’t think you should index it but you should review it every few years.”
(Industry association)
“That seems logical but the danger of that is that it adds complexity. And I do not
like complexity, I like simplicity. And so what we would do about that in the UK is
because our high level Act is an enabling Act we can make motions underneath it
quite easily. What we would do about that is we would have amendment regulations
to change the price if there was an economic change … But I would think you could
do something like write in that there was a, I do not know, an annual review or
something like that. You could look at the fluctuation in prices for labour and
materials and you could see what was a reasonable time period to review that
bearing in mind the lag time of letting everybody know.” (International construction
WHS expert)

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“...well I think as a minimum that we probably need to have a look at all those other
factors I spoke about you know like materials cost, like the housing market, you
know the average dwelling and what that would cost and you know of course it
depends where you live in Sydney, that’s the other thing.” (Union)
“...look if it can be an indexation could get in there I’d want it to be consistent around
Australia. I wouldn't see that why in Adelaide is different than Melbourne is different
than Queensland.” (Regulator)

Indexation methods identified in the interview data

Participants identified various methods of indexation as being potentially appropriate for use in review
of the monetary threshold definition. These are listed in Table 5.31 in the order of frequency with
which they were mentioned. Participants did not agree on a single ‘best’ method of indexation for this
purpose.

Table 5.31: Indexation methods suggested by participants

Indexation method Quotations

Consumer price index “... maybe just something like CPI or you know, I think that sort of thing, I don't
think there's anyone that’s going to measure it properly but I guess you’ve got to
put some figure to it so …” (Industry association)
“...and as I said before $250,000 in the ACT will buy you virtually nothing and
the indexing if you for example, had a CPI or a similar sort of indexing. Or if the
housing industry itself has an indexing formula it would at least then give you a
feel which is relevant to what is a construction site/project.” (Regulator)
“It’s probably the CPI, you’d have to do it that way. That’s an accepted
methodology. I don’t see any reason why you’d have to move away from that, at
this point anyway.” (Union)
“Okay we’ll go for CPI. But PPI is not, it wouldn't be just wages in construction it
would be general wages presumably.” (Union)
“Wage index, PPI? Not really. But I think CPI probably is a better way.” (Industry
association)
“Well, I’ll say CPI, just off the top of my head, but I really have no position on it.”
(Union)

Wage index “The wage index, I mean, we’ve just gone through our EBA and we try to get an
increase. Great for people who have got the EBA but there’s a lot of people who
haven’t got an EBA and then how do you put the price index to say, the
domestic industry because there’s lots of variances in contracts and wages and
those sorts of things … You’d probably have to have a couple of different wage
indexation base or commencement points. I mean you’d have to have one for
commercial, you’d have to have one for EBA, you’d have to have one for the
award.” (Union)
“…a wage index would have its usefulness because I imagine a significant cost
in the building industry would be labour related costs. So it would help account
for increases in costs of building projects over time solely as a result of labour
cost increases. But yes it wouldn’t account for building, say increases in building
products.” (Regulator)
“Well the same thing applies they [wage costs] don't necessarily relate to
construction costs. It may well vary depending upon their own circumstances.
WA is far more dramatically when there was a high demand for labour from
mining during the mining boom. Even construction itself wasn’t necessarily
booming. Because mining was they were sucking in all of the skilled labour that
reduced the labour market core for construction work. Which meant that they
could then charge on demand higher prices.” (Regulator)

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“Possibly yes, because wages is a major component of it.” (Construction

company)
“The wage index wouldn’t be because whilst construction values, construction
wages have deteriorated significantly in the last couple of years and so I think
it’s the cost of construction they’re after, rather than cost of wages.” (Union)

Independent review “So if there was a framework that was analogous to a CPI or some sort of
specific to the arrangement that, you know, appreciated today’s value on a construction
construction industry project, but then made account for the possibility that, inevitability that
construction value projects will grow in cost. At the same time we can’t, my
observation of the object of the Act may or may not be relevant for projects
below the current $250,000 threshold.” (Union)

Housing-based i.e. “We will do a five year review of average housing costs to determine what that
related to the cost of a level should be.” (Industry association)
single storey house “So if you're going to do it nationally, you'd link it to the median cost of an ex-
three bedroom house or something. And use that as your index trigger.”
(Regulator)

Producer price index “I think it’s more, the PPI, what’s that again, I know I remember that from
university economics.” (Regulator)

Workers’ compensation “Link it to the CPI, link it to wages, link it to a contribution of the Workers’
premiums Compensation premiums.” (Regulator)

Penalty units “Fee units. So they increase every year. Now that would be potentially one
mechanism for doing this.” (Regulator)
“So that's one of those things like, if you think of fees are expressed in, what are
they called? Fee units. So they increase every year. Now that would be
potentially one mechanism for doing this.” (Regulator)

5.12 Overview of indexation impact

Participants were asked to indicate what they thought the impact of indexation of the monetary
threshold definition would be. Thirty three comments were coded as relating to the impact of
indexation. These comments were spread across three key themes, as illustrated in Figure 5.4.

Figure 5.4: Overview of the key themes relating to indexation impact

indexation
impact

Capture fewer
Negligible Create conflict
sites/people

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5.13 Indexation impact

Participants were asked what they believed the impact would be on the operation of the monetary
threshold definition should a form of index-linking be introduced.

Table 5.32 lists participants’ perceived impacts associated with index-linking of the definition in
descending order of frequency with which they were mentioned.

Participants expressed the view that the needs for additional planning and coordination in relation to
WHS apply in projects that are complicated and/or present a higher risk than minor works, such that,
indexation would create a threshold more consistent with needs for WHS planning/coordination. This
view was related to participants’ support for a monetary threshold definition and the presumption that
cost is a sensible proxy for WHS risk and overall support for index-linking the threshold. For example,
one union official stated, “well so long as the indexation wasn’t simply based on the approved
measure CPI, it would give an active measure of the level of involvement in a construction project and
what the likely outcome would be in both duration and numbers of people employed on a particular
project.”

Table 5.32: Perceived impact of index-linking on the operation of the monetary threshold
definition

Frequency Perceived impact on the operation of the monetary threshold definition

15 Negligible impact (in terms of capture)

14 Capture fewer sites/people

4 Create conflict

These themes are discussed below.

Negligible impact

Fifteen participants (30%) believed that the impact of linking the monetary threshold definition would
be negligible. These participants suggested that, if the increase aligned with the costs of construction,
then the type of construction works captured should remain the same over time. However, this would
likely depend upon the careful selection of an appropriate method of indexation. As discussed above,
there was no agreement about a single best method of indexation for the purposes of reviewing and
modifying the monetary threshold definition.

Indicative quotations relating to the theme of negligible impact are presented in Table 5.33.

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Table 5.33: Indicative quotations relating to participants’ perceptions that the impact of
indexation of the monetary threshold definition would be negligible

Negligible impact Quotations

No impact “I think it’s the same as it is now, I don't think ... by itself is going to really have a
huge impact.” (Industry association)
“Well it should be very little. If it's in line with what the prices are, then the small guy
still would not have to do it. Presumably.” (Construction company)
“Well obviously it would increase but then I think it would, the intention of it would be
that the same projects, the similar projects would be captured over a period of time.
Similar projects would need to be captured or not captured and you wouldn’t be over
time projects being captured that weren’t captured in the past just because of
increases in costs, which is very much the intended effect.” (Construction company)
“I think it would be, in terms of compliance and triggering who's in and who's out, I
think it would be probably minimal. But I think largely most, again most projects
would probably be above that current threshold. So if it was just sticking with the
current threshold and then reviewing it and increasing it in line with CPI I don't think
would probably have a big effect.” (Regulator)

Capture fewer worksites

Eleven participants (22%) suggested that index-linking the monetary threshold definition would result
in the definition capturing fewer construction projects. In particular, participants indicated that the
number of domestic (residential) works captured by the monetary threshold definition would be
reduced. This was not regarded as an undesirable consequence as the participants’ who raised this
point indicated that single dwelling domestic projects were not intended to be included under the
original monetary threshold definition. Other participants described reducing the incidence of
inadvertent capture as a logical (and desirable) consequence associated with linking the monetary
threshold definition to some form of price index.

Three respondents stated that increasing the threshold would result in continuous increases (i.e. a
‘snowball effect’ to the threshold. Participants who identified this potential issue perceived this could
potentially negatively impact WHS performance in the construction industry as fewer sites would be
captured over time.

Table 5.34 provides indicative quotations reflecting these views.

Table 5.34: Indicative quotations relating to participants’ perceptions that indexation of the
monetary threshold definition would result in fewer worksites being captured

Capture of fewer Quotations

worksites

Capture fewer “If you don't index it, you end up capturing lower value projects, or buildings, that
worksites weren't intended to be captured when you initially set the trigger 10 years ago.”
(Regulator)
“And of course the other effect is that it will…the more you raise the threshold the
more domestic housing that will be excluded.” (Industry association)
“And so our own thinking was pretty sound at the time but while we’re talking small
business construction, Mum and Dad housing builders which is a big percentage of
the housing market we needed to keep the compliance costs down and make
compliance easy.” (Industry association)

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“Well certainly it’s going to have dropped some people out.” (Industry association)
“I think people are basically saying now that OHS management plans and those
sorts of things are the domains of some of these people who are doing multiple
builds in multiple locations going up multiple levels.” (Industry association)
“...that is largely the reason to push those thresholds up because there is such an
influx ... as soon as you add a management plan to a person’s world, that is a huge
level of complexity for a business.” (Industry association)
“All that it’s going to do is exclude people who may have otherwise been included.
So people aren’t going to be non-compliant because of the change, they might just
be doing more than they need to do because of the change. So that in itself is not a
big issue.” (Industry association)
“I think if you went from 250 to 500 all that is, it gives small to medium enterprises
not a loophole but it gives them a bit more flexibility to not have a safe system of
work in place. And this is what the, this is what people don't get about the threshold.
The threshold is that that triggers you to need to actually conform and give a stuff
about your workers and yourselves I mean it’s the law.” (Industry association)

Capture fewer “I can see it happening, that that’s an opportunity to up the threshold again and up
people/sites the threshold again and next minute you’re, you know [lots of people] advocating
(snowball effect) that the threshold should be upped again because it’s not realistic, and you know
you’re going to find a spike in fatalities and serious injuries in that sector.” (Union)
“I reckon you’d end up finding it might be a ‘free for all’ because what happens is it
gets quickly promoted in that sector you know. That you’re not, you don’t have to do
all this sort of stuff.” (Union)

Conflict between stakeholders and/or jurisdictions

Participants representing state/territory WHS regulators expressed concern about the lack of
uniformity in the rate of price rises across different jurisdictions. They perceived that linking the
monetary threshold definition to price indices could require regional variations in order to produce an
appropriate outcome in different jurisdictions. This would potentially hinder harmonisation efforts and
create confusion and conflict. These participants also indicated that different industry stakeholder
groups may have preferences for different forms of indexation, due to different interests and/or
perceived impacts.

Table 5.35 provides some indicative quotations regarding index-linking the monetary threshold
definition having a potentially negative impact on the national harmonisation of WHS legislation.

Table 5.35: Indicative quotations relating to participants’ perceptions of the potential impact of
indexation on harmonisation of WHS legislation

Impact on Quotations
harmonisation

Regional variation “You’re going to have to use state and even regional based CPIs…house prices rise
and administrative dramatically, they don't rise dramatically all the way across Australia at the same
burden time. But there’s a substantial disconnect between house prices, cost of
construction and CPI itself not related … well they are related to a degree. But I
think you’ll find that there’s going to be substantial differences even on a house by
house basis as to what the cost of construction will be.” (Regulator)
“I don’t know what formula they use to increase it, but I suspect that the formula is
probably antiquated and outdated. I don’t even know the original concept of how
they came to the amount but, anything that is sort of a bit better than what they
currently have.” (Union)

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“…if you do apply indexation either Australia wide or state based, even if you apply
it on a regional basis you’re going to end up with different numbers for your
thresholds regardless.” (Regulator)
“…the more you try and customise the indexation to local circumstances you’re
going to end up with potentially 20 to 30 different thresholds depending on where
you are.” (Regulator)
“No question, the cost of building the same structure in the Torres Strait is going to
be more than in a Brisbane suburb. We’ve looked into that question ... And came to
the conclusion it would be just rough justice. There was no way you could possibly
balance all the different price indices in different parts of Australia in a way that was
administratively practical … But there are numerous different ones. And our view
was the extent of the difference is not so concerning as to warrant trying to
administer an approach of a whole table of different thresholds. More trouble for
industry and for us.” (Regulator)

5.14 Overview of participants’ comments relating to the association between

WHS risk and contract sum of construction works

Participants made 46 comments relating to the association between the contract sum for a package of
construction works and WHS risk. Thirty participants expressed the belief there is no association,
while others (n = 16) thought an association exists, i.e. as the contract sum increases, so does the
level of WHS risk. Few participants expressed the belief that there is a clear, linear or direct
association between contract sum and WHS risk. Rather, participants identified an indirect and
imperfect association. Figure 5.5 provides an overview of the key themes and sub-themes raised in
relation to the link between contract sum and WHS risk.

Figure 5.5: Overview of the key themes and sub-themes relating to the association between
WHS risk and contract sum of construction works

Contract sum and

risk

No association Indirect association

Features of
construction/site

Labour costs

Lower value = high

WHS risk

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5.15 The association between WHS risk and contract sum of construction
works

The monetary threshold definition was considered ineffective by 19 participants (38%) because it is
perceived to be arbitrary and not associated in any way with the level of WHS risk in a construction
works package. However, during the interviews, participants were directly asked to comment on the
extent to which they believe the contract price of construction works to be indicative of the level of
WHS risk inherent in these works. Table 5.36 shows responses by theme/sub-theme in decreasing
order of the frequency with which they were mentioned.

Table 5.36: Participants’ beliefs related to the relationship between contract sum and WHS risk

Frequency Beliefs about contract sum and WHS risk

30 No association

7 Indirectly linked via features of the construction site or work

6 Lower priced projects have higher risk

3 Indirectly linked via labour costs

No association

Thirty participants (60%) indicated they believe that the contract sum is not directly or indirectly
associated with WHS risk in construction works. This view was shared by participants in different
stakeholder groups (see Table 5.37 for discussion by participants). For example, regulators perceived
the need for WHS planning and coordination to be more strongly related to the WHS risks associated
with activities being conducted at a particular worksite than the contract sum. Similarly, construction
contracting organisations indicated that they would assess the need for planning and coordination
based on project characteristics irrespective of the contract sum.

Table 5.37: Indicative quotations regarding the perceived lack of association between WHS
risk and contract sum

Lack of Quotations
association
between price
and risk

Little or no “... the same inherent risks are associated with $250,000 worth or say half a million
association dollars’ worth.” (Industry association)
“So the higher the cost of the materials and labour that doesn’t remove the risks, the
inherent risks involved.” (Industry association)
“... and this is where risk is a very sore point with me, you know, risk is always based
on a lot of variables and some of those variables are, from personal experience, your
professional experience, your political ideology, your monetary capability, all those
sorts of things. So in their eyes, it’s no risk. In my eyes, what we’ve seen and the
fatalities we’ve been to, it is a risk.” (Union)
“I would expect that there are probably things like very large sheds for warehousing,
that really have not much more risk than putting up a backyard shed.” (Industry
association)

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“Take into account the cost to mobilise and set up before you actually do any activity
and work. That may be taking a first bucket out of the ground, where a bucket of an
excavator could turn around and kill you. So you know and that doesn’t have to be 10
thousand dollars, which can be a couple of thousand dollars.” (Industry association)
“Because they’re not very expensive to achieve to dig the hole or to actually get that
amount of work done where you could fall over off a height.” (Industry association)
“A lot of our shop fitting jobs are a bit like that. You know, it's on the one level, yes
you've got electrical work perhaps. So, you need to set up temporary power boards
but often you don't have working at heights. Often you don't have dealing with things
like asbestos. Because you're not doing a lot of demolition. So, it's quite possible. So,
the [food shop] at the new terminal at Melbourne airport for example, [we] might have
had to do about three or four of them and you'll get…and that might be worth
$400,000 for example, but the level of high risk work is fairly minimal. So, you
therefore haven't, you know, because I think your question was, right.” (Construction
company)
“...renovation work on a house and that might be simply things like replacing a roof or
building an alfresco pergola out the back of the house or doing a whole range of
things on an established house. The cost of 250 could bring that sort of work into the
definition of a construction project and you would say to yourself it’s on an already
established house and there’s a chap out the back and if there's not [a] large number
of trucks going in and out and if there's not large numbers of workers on the site at the
one time or maybe less. That sort of thing should not be included and I think in some
circumstances that cost level as it is at the moment could capture those
environments.” (Regulator)
“...for example, you could be just having a concrete pad put down but it’s a very large
concrete pad. Consequently, everything’s underground. What’s the risk to it? Because
it’s just formwork, concrete trucks showing up and what would be happening? Is
someone maybe tripping over the petrol driven trowelling machine? So they’re the
sorts of things where very low risk, it could be $300,000 and it has to have a safety
management plan.” (Industry association)
“So I don't think [cost] has got any relationship to risk at all.” (Construction WHS
expert)
“They still come back to us and say, that’s quite, quite an arbitrary number, whereby it
doesn’t really respect the risks involved in a construction project.” (Industry
association)
“...well see to me a risk is a risk regardless whether its $450[k], $250[k] or, you know
$10, it doesn’t matter. I believe you should be looking at risk and basing everything on
risk not on a monetary value.” (Regulator)
“...makes no difference what the value is, I would say that sites should be, as I said
based on risk and statistical data is saying what are the high risks out there in the
construction industry.” (Regulator)
“...you can say it only costs, the building project only cost $100,000 but you’re still
going to have three to four high risk activities going on there in the regulation. You’ve
got to have people in there installing electrical services and commissioning them and
lining it all up so it’ll be working in and around an electrical installation so you know
there's some risk. You can almost say there should not be a monetary threshold there
should be what construction activities, high risk construction activities are you
exposed to.” (Construction company)
“... from our point of view we really don’t look at the dollar value in terms of the
systems we’ve put in place, so we don’t worry about what cost value it is. The same
sort of information that you’re required to do for a $250,000 home, or $350,000 home
we do anyhow, so whether the project’s going to cost us $20,000 versus $1 million,
it’s the same stuff that’s in place. So in terms of risk it really doesn’t have a bearing,
as such, for us.” (Construction company)
“…Because, it’s just a number. It doesn’t reflect the complexity and the risks involved
in a construction project.” (Industry association)
“And so if you start with that proposition, we don’t even need the nonsense around
250, 500, a million[dollars] whatever. We don’t really need it because the dollar figure
doesn’t make a damn bit of difference. It’s the risk.” (Construction WHS expert)

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“…there seems to be this view that the more expensive the job the higher complexity
or the risk…if you really think about it, you can have as much risk and complexity in a
$50,000 job as you could in a $500,000 job. Quite easily depending on the type of
project you are undertaking.” (Industry association)

Features of a construction worksite

Notwithstanding this view, other participants (n = 16) perceived there is a degree of correlation
between the contract sum and WHS risk. For example one participant commented: “…there’s a good
correlation between the money. Actually whoever came up with the original threshold of $250,000, it’s
actually a very good correlation to the risk involved.”

Seven of these participants indicated that the link between the contract sum and WHS risk relates to
specific cost elements in a project that are potentially WHS risk-related. These cost elements were
associated with features of work, including multi-level construction, difficult worksite topography etc.

Several participants also commented that expensive building materials are often associated with
larger and more complicated worksites.

Some indicative quotations reflecting these views are presented in Table 5.38.

Table 5.38: Features of construction sites which potentially increase both contract sum and
WHS risk

Risk association Quotations

Features of work “For example [if] you were building on the side of a hill and you had to put some
that potentially foundations into the hill. That might be a real expensive aspect whereas the rest of the
increase cost and build might be not nearly as expensive.” (Regulator)
WHS risk
“... generally, the higher the value the more high risk activities there are involved.”
(Industry association)
“... and so there's a trade-off between the dollar value, how closely aligned is the
dollar value with the complexity of the building? For example, a two-storey house has
greater risks of fall from heights than a one-storey house.” (Regulator)
“Yeah. Especially heights. I mean you're going to get asbestos in both but … I think
when you get higher levels of expenditure, you're going to be more likely to have more
high risk construction work activities.” (Construction company)
“...when those risk factors are in place to do the extra work, it does require an
additional cost. So, if you were to select a house on a main road with overhead power
lines out front of your building, to do the things that we need to do on that particular
house, yes, there’s going to be increased cost, so you’re averaging ... another
$20,000 or $30,000 to your cost to house.” (Industry association)

Lower value projects have higher levels of risk

Six participants (12%) commented that lower value projects may present greater WHS risk than
larger/more expensive projects. Reasons given included that low value projects are more likely to be
run by smaller contractors who may have less mature WHS systems than larger contractors, and due
to the reduced value, contractors may see less need for formalised WHS management processes.
The literature review also revealed competitive pressures can encourage cost minimisation with the
potential to have a negative impact on WHS. International construction WHS experts also commented

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on the higher frequency of safety incidents and injuries occurring at smaller construction worksites
relative to larger ones.

These views are reflected by quotations presented in Table 5.39.

Table 5.39: Indicative quotations relating to participants’ perceptions of the association

between WHS risk and smaller (less costly) works

Smaller (less Quotations

costly) contracts
can have
increased WHS
risk

Lower cost projects “Because it's tough for the construction industry at the lower levels. I get that. But it
may present greater doesn't relate to risk. Because I reckon that plumber doing his $10,000, $50,000
WHS risk trenching work is probably far more at risk than a worker working on the [tier one
contractors] building in the city.” (Construction WHS expert)
“I’m tipping jobs that are worth $350,000, they don’t have toolbox meetings every
morning to discuss what’s going on and the likely hazards that would present
themselves.” (Union)
“Well for smaller sites I see this, and I’ve seen it historically, if a large construction
organisation has one large site that’s several million pounds worth of work. And then
on the other hand they have a 100 small sites with you know worth 100 thousand
each…I’ve seen evidence that those 100 small sites will have more accidents right?
And it’s difficult to pin down why but it would seem that there’s more going on, it’s
more difficult to manage 100 small sites. The economies of scale don't kick in
because you’ve got smaller sites. And the budget is probably not there to
systematically manage… with small sites there’s a lot happening simultaneously
and possibly less resources to manage it.” (International construction WHS expert)
“A lot of the smaller organisations just don't have the same systems…you do notice
the difference in views of the world between those small players and some of the
bigger players. Albeit, you know, there's a lot more resources in the bigger players
to put these things in place. Whereas a smaller guy is going to have to go, he's been
working all day and he goes home in the evening and he has to take all these phone
calls and then manage all the other stuff.” (Industry association)
“Yes and that’s the reality of it, I know with our smaller projects division, we don’t
have a permanent on site safety person or site manager.” (Construction company)
“I don’t think you get too many project managers at $300,000. I mean, in reality that
kind of approach only applies when you’re moving up to the kind of, you know,
million dollars, those sort of jobs.” (Regulator)

Labour costs

Three participants indicated that labour costs are likely to be related – albeit indirectly – to the level of
WHS risk and need for additional planning and coordination of WHS in construction works. The
reasons for this were explained in terms of labour costs reflecting the number of workers (and/or
contractors) engaged at a construction worksite either simultaneously or sequentially over the project
duration. This was also reflected in increased costs of supervising work that would contribute to the
total labour cost. For example, one participant commented,“...Yes, and if you have a look at a
structure going up in the commercial sector about 50% of it is labour costs, 50% will be bricks, mortar
and all the electromechanical type stuff going on. So it’s again being mindful of the nature of the
project itself, and dollar value is not necessarily an adequate descriptor as to what the risk is attached
to that particular project.”

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However, some participants also noted that, in the residential construction sector, works that involve
only a small number of workers at any given time could still have a contract sum in excess of the
monetary threshold definition. One participant explained: “I don't think it [the monetary threshold]
really works very well at all. And it's from discussions with smaller builders. As an example, one
builder was undertaking a $1.2 million renovation, now that entailed probably having a grand total of
three people on site at any one time.”

5.16 Overview of the perceived effectiveness of the ‘five or more persons’

threshold

Overall, participants cited 29 reasons for the effectiveness of the ‘five or more persons’ threshold
definition. These reasons represent two key themes containing four sub-themes. An overview of these
relationships is illustrated in Figure 5.6.

Figure 5.6: Overview of the key themes and sub-themes for the perceived effectiveness of the
‘five or more persons’ threshold definition

Five or more
persons:
Effectiveness

Overcomes
perceived
Simple and clear
limitations of
financial definition

Better indicator of
WHS risk

Unrelated to price
changes

Fewer loopholes/
potential issues

Consistent across
geographical
locations

5.17 Participants’ reasons for believing that a ‘five or more persons’

threshold definition would be effective

The threshold definition that WA has in place was derived from the National Standard for Construction
Work (2005), which required that ‘a person with control of a construction project where ‘five or more
persons’ are working, or are likely to be working, simultaneously on a construction site must ensure
that: (a) a site-specific occupational health and safety management plan is prepared before the work

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commences; and (b) the plan is monitored, maintained and kept up to date during the course of the
work.’

Table 5.40 presents the reasons given for the perceived effectiveness of a ‘five or more persons’
threshold definition. These reasons are presented in descending order of the frequency with which
they were mentioned.

Table 5.40: Reasons given for the perceived effectiveness of a ‘five or more persons’ threshold
definition

Frequency Effective

22 It overcomes the perceived limitations of a monetary threshold

7 It is simple and clear

These reasons are discussed below.

Overcomes the perceived limitations of the monetary threshold

Participants indicated that they perceived that the ‘five or more persons’ threshold definition was able
to overcome some of the limitations that they identified in relation to the use of a monetary threshold
definition, such that it:

● is a better indicator of WHS risk,

● is unrelated to price increases and its operation will not be impacted by inflation or
clients’/designers’ selection of expensive materials, fixtures or fittings,
● is less easy to avoid duties through practices such as splitting contracts, and
● will operate consistently across regions and jurisdictions (unlike contract sum).

Better indicator of WHS risk (13 participants)

Of the total number (n = 29) of participants who indicated they believe a ‘five or more persons’
definition is or would be effective, 13 (45%) expressed the view that this definition is a better indicator
of the level of WHS risk than a monetary threshold definition. Participants believed WHS risk (in terms
of both hazards and persons exposed) increase with the number of people working at a worksite.
Participants thus believed that a threshold based upon a minimum number of workers was not as
arbitrary in its application as a monetary threshold definition.

Participants stated that, as the number of workers increases, there is a greater need for planning and
scheduling construction work and ensuring effective communication between workers. One participant
commented that increased numbers of people resulted in increased likelihood of “knocking each other
over”.

The data showed that participants compared the monetary and the ‘five or more persons’ threshold
definitions on the basis of their likely correlation with WHS risk. Participants believed that there was
no association between the two definitions, such that the contract sum for construction works could
fall below the monetary threshold value but involve over five workers on site simultaneously.
Conversely, the contract sum for construction works could be above the monetary threshold value yet

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have fewer than five workers on site at any given time. When appraising these differences, the
participants who favoured a ‘five or more persons’ threshold did so because they believed it to be
more reflective of WHS risk and the need for coordination planning than the contract sum for a
package of works.

Table 5.41 provides some indicative quotations from the interviews regarding participants’ perceptions
of how the ‘five or more persons’ definition is a better indicator of WHS risk (and the need for a
coordination plan) contributing to the effectiveness this threshold definition.

Table 5.41: Indicative quotations relating to participants’ perceptions of association between

WHS risk and the number of people on site

Effectiveness Quotations

Overcomes the “WA and their regulations, they do these on the basis of the number of people on site
perceived which is obviously much more closely aligned to why you need a coordination plan.”
limitations of the (Regulator)
monetary “You know, why not go for numbers of people? Because that is more closely aligned
threshold (better
to the risk you're wanting to address through the coordination plan.” (Regulator)
indicator of WHS
risk). “If you were then going to say well what’s the better approach there was in place, prior
to the harmonised work health and safety laws a construction standard and that
construction standard spoke about. I think from memory, a construction project where
there were more than five persons on the site at the same time which then goes back
to my original comments about the need for scheduling, and the need for timetabling,
in terms of different steps in a construction project.” (Regulator)
“So it’s all those sorts of things I think that lead me to still believe that it is better to talk
about the hazards on the site and I think those hazards are exacerbated by the
number of workers on the site. And if there is some way of going back probably in
better words, in better explanation to the old construction standard, that to me would
be a better approach.” (Regulator)
“If you’ve got uh, five people at a construction site clearly there is some need for
coordination of their activities at the construction site. You could choose four or six or
10 or whatever number you want.” (Regulator)
“But in some respects, the number of persons, because that is what it is about, well if
it is about that then how many people are going to be knocking over each other?”
(Industry association)
“… if you’ve got a number of people on site as a minimum before you call it a
construction project then you’re going to be managing risk a whole lot earlier than you
are with a dollar figure.” (Industry association)
“I’d agree that [the number of people on site increases the WHS risk]. I’d agree with
that statement, that’s a very fair statement, yep.” (Union)
“The larger project you have, the more contractors you have and each of those
contractor or companies, organisations, employers whatever you want to call them
has to consult and cooperate with the other. So the minute you’ve got four or five
people there you’ve got more chance of that being necessary or being required. When
you’ve got larger construction projects you’re not only going to have to do it but you’re
also probably going to have to have somebody there to coordinate all of that as well.”
(Industry association)
“I think it's a much better approximation of risk. Because, as I said, number of people,
gives frequency of exposure. So it's applying risk management principles. I think it's a
much better idea. And then coupled with high risk activities, high risk activities on site,
number of people over five, yeah definitely. Much better idea.” (Industry association)
“So, I'm going to, in terms of the coordination needs, I would say that the coordination
needs are greater … Say you've got 10 people, if they are all employed by the one
person, then the coordination needs are not as great as if there are 10 people and
there are four subcontractors, whatever.” (Regulator)

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“I suspect it was a bit of ‘suck it and see’ or something. Through all the processes but
the answer if five, why not four? Why not six? Why not ten? And so it was all done
before my time. So clearly various stakeholders said well that’s a reasonable
indicator.” (Regulator)
“It’s a case of you’ve got a whole range of arguable hazardous activities at a
workplace, if you’ve got five people to work say, at the workplace someone has
concluded that there needs to be some coordination of their activities.” (Regulator)
“So the more people and trades and interaction you have, you need someone to bring
it together.” (Regulator)
“So is there an incentive then to organise your work in such a way that you have less
people on site and therefore less risk would be…” (Industry association)
“…if you compare a construction site to a manufacturing plant, the construction site
changes day to day. So that's one of the [ways the] workplace is changing. Around it.
There is the number of people and different coordination on it. So I think it's those two
factors which make construction hazardous.” (Regulator)
“Well there is the number of activities, the number of activities involved, the number of
people that you’re going to have on site, the number of contractors. That’s what
makes the difference for a more supervised and coordinated approach.” (Industry
association)
“Whereas in the larger project because you’ve got larger numbers of people, there is
that need for you know greater levels of sort of scrutiny, supervision in fact most of
these larger projects have full time supervision. Some sites have you know several
supervisors and a safety person to look after safety and inductions and all that sort of
stuff. So it’s that greater level of complexity by virtue of the fact that you’ve got more
trades, more contractors involved is what makes the difference.” (Industry
Association)
“…generally you need a management plan to plan out a scope of works that involves
a lot of different people on a larger site so that everybody understands what they are
doing and why they are doing it.” (Regulator)
“… there could be projects in Victoria that have 10 people on them but are less than
350 thousand dollars. But in Western Australia they would be caught, they could have
20 people on the project but it would be under 350 thousand dollars. In that case you
would have the Western Australia criteria is a better one.” (Union)
“For example you can’t have form work done without scaffolding being erected, if
you're talking about a multi-storey building. You would have situations where you
wouldn't have concreters on the ground when you've got work going on above them,
you wouldn't be bringing in your sparkies until you've got all the work done about
establishing actual building.” (Regulator)
“I think a single principal contractor on a site that had numerous people for different
labour hire firms, for example, as employees, can have the same sort of risk as the
use of a subcontractor.” (Regulator)
“Bigger jobs, more people, more trades, presumably more complexity of risk or higher
degrees of risk and it's just, what's the easiest way to put a rough measure on that?”
(Regulator)
“I suppose you've also got to look at the risk of the work that's being undertaken as
opposed to the risk of people interacting with each other as well.” (Regulator)
“The more contractors there are involved the more of a need for coordinating those
contractors. So there are more activities involved in higher risks.” (Industry
association)
“Because you have increased the complexity and you significantly increase the likely
number of people, workers, on a site that need those things done for them.”
(Regulator)
“I understand the logic behind it, that if you do have a number of people, someone has
to be in charge. And if that threshold’s five, and five works, that’s one thing, yeah,
that’s good.” (Union)

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Unrelated to price increases and its operation will not be impacted by inflation or clients’/designers’
selection of expensive materials, fixtures or fittings

Three participants stated that a ‘five or more persons’ threshold would not be sensitive to factors (i.e.
inflation, materials, fixtures or fittings) which were identified as contributing to the ineffectiveness of a
monetary threshold definition. For example, a ‘five or more persons’ threshold would apply equally
irrespective of market conditions which could potentially influence the cost of materials or by regional
variations in construction prices. Participants cited this consistency of application as a reason for
considering the ‘five or more persons’ threshold effective (see Table 5.42).

Table 5.42: Indicative quotations relating to participants’ perceptions of the effectiveness of

the ‘five or more persons’ threshold definition (unrelated to price)

Effectiveness Quotations

Overcomes some “The fixtures and fittings, there might be regional variations which account for increased or
perceived decreased costs. So there is no perfect system. If you’ve got uh, five people at a construction
limitations of the site clearly there is some need for coordination of their activities at the construction site. You
monetary could choose four or six or 10 or whatever number you want.” (Regulator)
threshold
“… let’s take one element for example the price of copper. So all your plumbing fittings and your
definition electrical or the cabling, just because that goes up doesn’t mean to Bill and Ben the flowerpot
(unrelated to men are going to unload a bunch of reels with copper off the back of a truck, doesn’t mean it
price) gets any lighter. Just because the product costs more means even lifting that off the back of the
truck, the inherent risk is still there. If they don't use a proper lifting device they’re going to break
their backs. You know or drop on their feet they’re going to cut their toes off. Just because it’s
more expensive you know.” (Industry association)

Less easy to avoid duties through practices such as splitting contracts

Another reason given by three participants for the effectiveness of the ‘five or more persons’ threshold
definition was that, under a ‘five or more persons’ threshold it is more difficult to avoid duties through
the practice of contract splitting than under a monetary threshold definition. For example, contractors
interested in maximising production efficiency are unlikely to limit the number of workers engaged at
their sites. This view is evidenced by indicative quotations shown in Table 5.43.

Table 5.43: Indicative quotations relating to participants’ perceptions of the effectiveness of

the ‘five or more persons’ threshold definition (less easy to avoid)

Effectiveness Quotations

Overcomes some “So it’s funny that threshold of up to five or more because you can’t split contracts and
perceived you wouldn’t be able to build a decent sized job with only two men on site a day. It
limitations of the would go on for ages. So … on that particular issue it’s not a bad definition.” (Industry
monetary association)
threshold “Well it’s written in such a way that you can’t flout the law. Because if you try and have
definition less men on site and you only go four or you know 3 ½ umm that’s one guy in the Ute
(fewer loopholes/ and three guys on site, it’s going to cost you more because you’re going to lose it in
potential issues) productivity.” (Industry association)

Operates consistently across regions and jurisdictions (unlike contract sum)

The monetary threshold definition was perceived by three participants to be less effective as it is
subject to regional and jurisdictional price variations. Conversely, the ‘five or more persons’ threshold

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definition can be applied consistently across all states and territories of Australia, as well as in
regional and metropolitan areas. Participants commented that this consistency is an advantage.
Indicative quotations are provided in Table 5.44.

Table 5.44: Indicative quotations relating to participants’ perceptions of the effectiveness of

the ‘five or more persons’ threshold definition (consistent operation)

Effectiveness Quotations

Overcomes some “People on site will never change. The numbers of people on site to do a job, unless all of a
perceived sudden everything’s automated, people on site will never change. So that’s where I think the
limitations of the definition could be broadened to include a headcount number as well? At any one stage. So
monetary threshold let’s just say it’s five people on a site at any one time performing the same tasks or different,
definition you know? So that could encompass plasterers, painters, electricians, whatever it might be.”
(consistent across (Union)
jurisdictions) “Because you're going to need a certain number of people. So, for instance, if you're laying a
large concrete slab, it increases the number of people that are going to be on site.” (Industry
association)
“But if you’re in the Pilbara they might be looking at a 450 thousand threshold and Kalgoorlie
might be looking at 300 thousand dollars….and at this stage for us, five people seems to be
working.” (Regulator)

Simple and clear

Seven participants perceived that the ‘five or more persons’ threshold is simple and clear for industry
participants to understand. Participants who held this view argued that that it would be easy for a
principal contractor to manage the number of people engaged at a worksite, and simple for a
regulator to determine whether the number was below or above a specified threshold number.

Participants also stated that the definition was simple and clear as it was based on the now
superseded National Standard for Construction Work (2005), with which industry representatives are
familiar. Table 5.45 provides indicative quotations regarding participants’ perceptions of the simplicity
and clarity of the ‘five or more persons’ threshold definition.

Table 5.45: Indicative quotations relating to participants’ perceptions of the effectiveness of a

‘five or more persons’ threshold definition (simple and clear)

Effectiveness Quotation

Simple and clear “They need to be able to be read by the guy who’s standing in the main bar of the
Criterion Hotel who’s just had two pots of beer for lunch and who’s about to walk out
and do some work on his construction site. So the simpler the definition can be, and
dare I say where five or more workers on the site at one time, is a fairly simplistic but
easy to understand approach.” (Regulator)
“…likely to be five people working on site at a given time, but yes I think that’d actually
be more realistic quite honestly.” (Construction company)
“I mean you’ve got to find a threshold somehow … for whatever reason the number of
persons threshold was the one that was decided in the construction standard. And
having gone through all those consultations picked up that element of the construction
standard.” (Regulator)
“Well it’s been around since the last decade in WA and it’s, well it’s accepted
generally in commercial and residential sectors. Bear in mind it was introduced into
the commercial sector first then phased into the residential sector about 2005.”
(Industry association)

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“From [our] perspective that decision was made a decade ago by WorkSafe. It’s been
imposed, it’s accepted now by industry, so there is no real difficulty with acceptance of
that five is great.” (Industry association)
“It should be easy, it should be easy. In my experience even as a union official coming
onto a construction site that, the headcount data is readily available … I can find that
information very quickly. I can’t imagine the inspector would be any different.” (Union)
“We use the five threshold for our Act, so you have to have written documentation of
policy, organisational arrangements under our Health and Safety at Work Act if you
have got five more people. So we have used that since the 1970s and we see no
reason to change that. So there is a good history with all that.” (International
construction WHS expert)
“I think the previous [per person] definition in some respects would make it easier for
a principal contractor.” (Regulator)

5.18 Effectiveness of the ‘five or more persons’ threshold definition:

Perspectives by stakeholder group

Reasons given for the effectiveness of the ‘five or more persons’ threshold were analysed by
stakeholder group. Table 5.46 shows the proportion of participants responding in relation to each sub-
theme (reason for effectiveness) by stakeholder group.

Of the participants who expressed the view that the five or more person threshold overcomes
limitations inherent in a monetary threshold definition, the majority were regulators or representatives
of government agencies (33%). This view was also held by employer/industry associations (22%),
and to a lesser extent by unions and other construction organisations. Regulators and other
government agents also accounted for the largest portion of comments that the five or more person
threshold is simple and clear (40%), followed by employer/industry associations and unions
(accounting for 30% of the comments each).

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Table 5.46: Effectiveness of the ‘five or more persons’ threshold definition by stakeholder
group

Stakeholder Overcomes
Simple/clear
group limitations

Employer
/industry 22% 30%
association

Regulator or
government 33% 40%
agency

Private
construction 11% 0%
organisation

Union 17% 30%

Other 17% 0%

Total per cent 100% 100%

Note: Qualitative data is subject to interpretation. These percentages are indicative and understood to reflect the
researchers’ interpretation of interview data.

5.19 Overview of the perceived ineffectiveness of the ‘five or more persons’

threshold definition

Overall, participants cited 34 reasons that they believed the ‘five or more persons’ threshold is/would
be ineffective. Three key themes and seven sub-themes relating to these reasons are shown in
Figure 5.7.

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Figure 5.7: Overview of the key themes and sub-themes relating to the ineffectiveness of the
‘five or more persons’ threshold definition

Five or more persons:

Ineffectiveness

May capture low risk May fail to capture high

Low reliability
work risk construction work

Fluctuating numbers of
workers is a feature of Capture more SMEs
construction

Difficult for a regulator

to determine the Five people of the same
inclusion across the life trade
of the works

Number of
subcontracted workers
varies according to Constuction context
schedule/task
requirements

Questions remain about

who is counted

5.20 Ineffectiveness of the ‘five or more persons’ threshold definition

Of those who perceived the ‘five or more persons’ threshold definition to be ineffective, a number of
reasons were given.

These reasons are presented in Table 5.47 in descending order of the frequency with which they
were mentioned.

Table 5.47: Sub-themes relating to the ineffectiveness of the ‘five or more persons’ threshold
definition

Frequency Cited reason for ineffectiveness

22 Low level of reliability

9 May capture low risk work

3 May fail to capture high risk construction work

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Each of these themes is discussed below.

Low level of reliability

Twenty two participants who expressed the view that a ‘five or more persons’ threshold is or would be
ineffective indicated they perceive this definition to be unreliable.

Reasons for the perceived low level of reliability were as follows:

● because the dynamic nature of construction work means that the number of people working at
a worksite will change on a daily basis,
● because it is difficult for inspectors to know the numbers of workers engaged at a worksite at
any given time,
● because a general builder may not be aware of fluctuations in numbers of sub-contracted
workers as sub-contractors work in semi-autonomous work crews, and
● because it is unclear who should be counted in the number of persons. For example, should an
architect or building surveyor be counted when they are visiting a worksite to inspect the
works?

Some participants believed that construction firms would be able to avoid the application of the duties
by deliberately scheduling work to ensure no more than five persons would be on a site at a given
time. Although, as noted earlier, industry association representatives perceived this is unlikely to
occur as it could disrupt production efficiency.

Despite this assertion, the practice of splitting work was identified to be a potential problem presented
by the ‘five or more persons’ threshold by interview participants from Western Australia where a ‘five
or more persons’ threshold currently applies. These participants suggested that some construction
firms organise work such that different work packages are undertaken by groups of fewer than five
workers, even though they may be working on the construction of a single facility/structure. It is
possible that participants in other jurisdictions may have less experience with operation of the ‘five or
more persons’ threshold definition and may be unaware of potential loopholes (leading them to hold
the view that the five or more person threshold resolves the problem of companies seeking to avoid
the application of duties through monetary contract splitting).

These themes are illustrated by the quotations presented in Table 5.48.

Table 5.48: Reasons provided by participants for the perception that the ‘five or more persons’
threshold definition has low reliability

Reason Example quotation

Low reliability “There's only five people today, but there were seven people yesterday and there
might be eight people next week. It's difficult.” (Regulator)
“If you simply said number of subbies, you'd have to say when. Because any given
day there might be more or less subbies. If you said over the life of the project,
that doesn't really answer the question of risk. Because if you had one subbie one
week and another subbie another week, there's only ever one subbie there.”
(Regulator)
“I mean numbers of contractors and workers on site fluctuate over a day so you’re
obviously banking that in terms of identifying numbers and construction costs
again, well that takes time to force that information as well. They’re equally
problematic, I don’t think either option is ideal.” (Regulator)

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“The problem with that is it is difficult, there is no visibility of it … The builder may
not know, the builder goes ‘I want this done, this is how much I am paying, get on
and do it’. So, whether the person comes on their own or has two people or three
people it is just not the builder issue. So, the problem with the number of people is
that again it is arbitrary, when do we need to be coordinating and there is no
visibility on it.” (Industry association)
“WA has a five person threshold which is what was originally in the national
standard, and every other state really moved away from that for that very reason.
It’s a lot easier to be able to determine whether you’re doing work that exists X
value as opposed to whether you’re going to have more than five people working
on it at any one time. Because on a worksite say people come and go all the
time.” (Industry association)
“I think [it is] incredibly hard to be enforced. You could have somebody you could
have a regulator go out and say oh, ‘…there’s only two people on site, how many
are usually here? Yes two and then tomorrow there’s 20’. Or, as I said before,
there’s an inadvertent overlap where there’s seven people on site for a really short
period of time and therefore you’re not compliant because you thought there’d
only be five but someone arrived early. Or left half an hour late or whatever … so
how you would actually.” (Industry association)
“Practical wise numbers of workers change throughout the day on a construction
site so, I mean you’d always being going to the lowest common denominator. I
think the regulator would possibly fall to that sort of mode of operating I would
think, it’s open to obviously challenge that … it may be a better indicator of the risk
of a project compared to a monetary figure but it [number of people] won’t be a
perfect indicator of the risk level of a project.” (Regulator)
“Certainly for a larger construction project you’re always going to have more than
five involved but with the small housing ones the builder has just got no idea how
many people are going to be there at any one time. And he’s got very little control
over it because he’s not always on site. You know a subbie might bring as many
people as he want[s] to get the job done. So it’s a bit of a nightmare even if the
subbie tells the builder, ‘Hey I haven’t got three people like I told you, I’ve got five
or I’ve got 10’, there’s a bit of a nightmare for the builder to go and have to
prepare a plan and you know to do that and to be changing all the time.” (Industry
association)
“…it is hard for the builder to know at all times whether the project is going to
involve more than five people or less. See most domestic housing you’ll probably
have three, four, five, six, or seven people at any one time, it can fluctuate. It can
fluctuate throughout the length of the project. You know one day you could have
three and another one you might have seven, and as I said earlier it’s hard for the
builder to actually control the number or to know the number of people at any one
time.” (Industry association)
“With multiple trades or with multiple workers, and again with housing people will
come and go, much more transient and some contractors, builders won’t even see
them.” (Industry association)
“…a building site even in the commercial sector is a moving environment,
changing environment right. So you can have anywhere from five people on a site
to begin with, directing sort of plant around the place, and then you can have
thousands of workers…So depending on the stage of the project you can have
different levels of populated workers on the site. So I think you can’t really use
that.” (Union)
“Even if there [were] 20 people but they were all, really of those 20 people there
was only two really at a time across a week.” (Union)
“What happens if the WorkSafe inspector turns up and two blokes are off on
RDOs that day? Because we don't need the roof done. We're only doing the
electricity today. Again back to ordinary residential construction. On that particular
day there's only one of them there. Does that create regulatory uncertainty about
whether you need to have a principal contractor that day? Or do you only need
them on Tuesday?” (Construction WHS expert)
“… while your risk is the number of subbies, that's the number of subbies on site
at a particular point in time. And that would be difficult information to know from
both an enforcement perspective…” (Regulator)

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“Is it when the inspector turns up and takes a photo, or is it at any one time in the
life of the build? Five isn’t a lot. You know, you’ve got the driver coming to pour the
foundations, so that’s one and maybe two if he’s got an offsider…it’s very easy to
get five people on a build at any time. And then once the finishing trades, tiling,
painting, plumbing, yeah, you can have easily [on a] small-scale build, you know,
15 people in there.” (Industry association)
“I think it probably would be safe to say is at the beginning of a housing project
there won’t be too many people all boots on the ground because it’s just not the
nature of it. So whether towards the end of the project you start to get the finishing
trades like the plumbers and the sparkies, then you get overlap of painters,
plasterers and the sparkies and the plumbers finishing off, and tilers for example,
that’s where you will get an overlap and invariably there will be from time to time
five or more bodies on the site at any one given time.” (Industry association)
“Five workers on our job site? [pause] Just trying to think. There may be three or
four occasions where we’d have five workers on a job site; that would mean that
we would have, in terms of versus the threshold for those five workers, we’d be
required, well, the problem would be is… for the five workers I would need
SWMSs for those individual five workers. I may not necessarily know when those
five workers are going to be there at any one time because I might have four
bricklayers and two electricians turn up; that takes me over the six. I would then
have to do a whole range of different things. So I would probably manage it much
the same way as I manage it now. I can’t predict when that six is going to occur,
so I’d have the same processes in place that I currently do, which is a safety
coordination plan, I’d attain the SWMSs from all those workers, or the generic
SWMSs for all those workers, I’d have a coordination plan in place, because I
can’t predict when I’m going to have that sixth worker turn up on site at any given
point in time. So it’d really not change anything for me.” (Industry association)
“..that is anybody, so that might be if the engineer turns up on site or an architect
or something they would be counted. I mean you could, again I think you are
always going to have the very small projects where you have got one guy who is
on his own and something goes wrong and there is nobody there to report it. The
problem is with those small end projects, they are usually somebody trying to save
money… that is where they start reaching from the ladder instead of using access
equipment that would be more appropriate or something. You have got to have
some line somewhere but I think that having a measure of five is quite hard to
police.” (International construction WHS expert)

Low reliability “Yes. Once again, the manipulation of that, you know, they’re separate
(splitting works) contractors, separate entities on site? You know where you may have a plumber
or a bricklayer … a plumber, an electrician and a painter on site? And they’re both
two-man operations so they’d have six. But, the principal contractor or builder,
person responsible says well no, they’re all individual stand-alone people, so they
can’t be counted in total. And it really does affect the cottage industry so… they’re
individual contractors … they have their own scope of work which they bid for
within the project.” (Union)
“Because then you could play around with that, you could stagger the people etc
and there’s never a construction project in the project planning.” (Regulator)
“But again why wouldn't it lend itself then to a whole kind of debate about, ‘Well
maybe this job we can get away with four people’.” (Construction WHS expert)
“Once again it can be manipulated. So is there an incentive then to organise your
work in such a way that you have less people on site and therefore less risk would
be, maybe that was a good thing.” (Industry association)
“Well it’s on the same foundations, it’s on the same place. So, but it’s, it’s because
the builder can tender for different scopes of the work?...The tender is broken
down, well who’s going to do the painting component? Who’s going to do the
electrical component? The carpentry component?” (Union)

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May capture low risk work

Some participants (n = 9) also perceived that a minimum number of persons threshold definition could
potentially capture works at which construction activities present a low level of WHS risk.

These participants perceived that, compared to an appropriately set monetary threshold definition, a
minimum number of persons definition could capture more construction works. Some of these
participants argued that the simultaneous presence of multiple trades at a worksite increases WHS
risk and the need for additional planning and coordination, whereas the presence of five workers from
a single trade at a worksite presents considerably lower WHS risk (and therefore need for
planning/coordination).

As illustrated in the quotes presented in Table 5.49, participants perceived that the capture of low risk
construction work by a ‘five or more persons’ threshold would disproportionately and negatively
impact small- to medium-sized construction firms. Participants also described a situation in which,
close to the end of a small domestic construction project, a builder might bring in more finishing or
other tradespeople to complete the work. This could potentially mean that the principal contractor
duties may suddenly become applicable in works in which they had previously not applied. This was
perceived to be an undesirable consequence of the ‘five or more persons’ definition.

Table 5.49: Indicative quotations relating to participants’ perceptions that the ‘five or more
persons’ threshold definition may capture low risk work or sites

Reason Example quotation

Captures low risk “I don’t think it does, I think it’s silly, I mean you could have five people on site and
works/sites the management of those five people is very easy. You might have five brickies on
site and they’re doing the same job and then why do they need an OH&S
management plan as oppose[d] to you know. You might have five different trades
doing five different things which again is different. I mean five people is not very
many either. So again it’s more about why do you need an OH&S management
plan to manage five people.” (Regulator)
“I just look at the case where you had five brickies on site because you wanted to
get the bricks laid pretty quickly and all of a sudden you need an OH&S
management plan, that doesn’t make sense.” (Industry association)
“Not very well. It's more about what the nature of the work is… most of our shop
fitting work is low risk. But you might have 10 people on site. So it really doesn't
define the risk that is generated out of the project.” (Regulator)
“Yeah hard to mention by the time you have a labourer or two and the electrician
and the plumber or carpenter or supervisor or foreperson or something I would
have thought it wouldn’t take much to get to five people.” (Union)
“I couldn’t imagine a project where there’d be less than five people. Unless they
were sort of a plumber just going in to change a tap washer or something.” (Union)
“I don’t think it works very well because if you look at the situation, particularly in
domestic it’s very easy to have five or more people on a site and that could be a
really small site. You might have a couple of landscapers out the back, someone
in there doing electrical, someone finishing the kitchen and there’s your five. So
that sort of requirement pulls up very small projects as well and question how well
that is implemented and enforced. I don’t believe it’s enforced to any great extent
in WA.” (International construction company)
“And those guys are…maintenance guys, small reno guys who will have more
than five people. They don’t have the ability; a 25 page document is just not going
to happen. Any day of the week, we are flat out getting some of our larger
commercial builders to do things.” (Industry association)
“Five, yeah, I don’t know. I think it could be too low.” (Industry association)

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“Well, I don’t know, you can get five painters to paint the outside of a house.”
(Construction company)
“There will be some concerns by employers about the additional costs of looking
at the coordination and cooperation roles. Yeah there would be some complaints I
think because I think those additional costs would come in a whole lot earlier than
they would if you left that dollar figure there.” (Industry association)
“Yeah, I think that’s taking it to the other degree. That’s taking it to the point
where we’re going to have small domestic sort[s] of builders or painters or
renovators or handy people, you know, going broke every five minutes because
they’re just not going to be able to…and who’s going to mandate this? You know,
who polices this? I mean, the regulator’s flat out regulating 300 projects that are
happening in Sydney at the moment; how are they going to get down to the small
domestic pulp?” (Construction company)
“Five or more, well yes but no different to the monetary value either, I just think
five or more is a ridiculous number...it’ll pick up everything; you know I can have
five or more people in the street digging a hole, two watching, one on the jack
hammer and one at the truck and one with the lollypop. So arguably there are
substantial risks associated with that but they’re required to control those anyway,
you know traffic control, permit, what’s below the ground before we dig, all those
sorts of things. I think five or more is ridiculous.” (International construction
company)
“…with that maintenance problem and there is three of them on the job…I could
imagine that takes four hours, then you bringing your digger guy and then you
bringing your sparkies to help do some work on one job that takes maybe three
hours, that’s ridiculous.” (Industry association)
“Think about, redoing someone’s sewer works and you have got some operative
plant to dig it, you are going to maybe set off a table and turn off the electrical
work so you’ve got the person there. Then you have got three plumbers working
on it, that is five people and you are digging a trench?” (Industry association)

Failure to capture activities posing a high degree of WHS risk

Some participants (n = 3) expressed the view that a minimum number of persons definition could
potentially fail to capture high WHS risk activities in construction works. This criticism was also made
by participants in relation to the monetary threshold definition.

However, participants also identified one potential undesirable consequence of applying a minimum
number of persons definition as encouraging builders to reduce the numbers of people at a worksite.
Depending upon the circumstances of the works this could have negative WHS impacts in terms of
increasing pressure to complete works with fewer resources and/or reducing the availability of more
experienced workers who are engaged in supervision of younger workers and/or apprentices.

Indicative quotations reflecting this sub-theme are presented in Table 5.50.

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Table 5.50: Reasons provided by participants for the perception that the ‘five or more persons’
threshold definition may fail to capture high risk construction work activities

Reason Example quotations

Failures to capture “…the influencers would be more about the number of trades and number of
high risk activities different activities happening on site and whether people are at height or
underneath or around whatever you know. That’s not the number of people that’s
the number of trades or the number of different activities or the number of different
high risk work activities happening on site.” (Regulator)
“So I think to exclude, to say no less than five I think that opens up some
problems, especially if you’ve got young people. Because what happens in the
domestic sector is you can have the builder and he might only have one
apprentice on site with him, and it’s very important that you know, and apprentices
can be young in our industry and probably the most vulnerable in a high risk
environment.” (Union)
“You may only have three or four people involved on site at a particular point in
time but some or all of those three or four people may be doing high risk activities.
So working at significant heights for example.” (Regulator)
“If you leave that to a number of people plus if you link it to when there is high risk
construction work going on, you don't know on any given day whether the sparkie
today, in his scope of work doing the bit that's high risk or he's doing work that's
not high risk. He's not working at heights or he's not doing other things. So, it just
becomes impossible and confusing for everybody.” (Regulator)

5.21 Ineffectiveness of the ‘five or more persons’ threshold definition:

Perspectives by stakeholder group

Reasons given for the ineffectiveness of the ‘five or more persons’ threshold were analysed by
stakeholder group. Table 5.51 shows the proportion of participants responding in relation to each sub-
theme (reason for ineffectiveness) by stakeholder group.

Of the participants who expressed the view that the five or more person threshold has low reliability,
37% were employer/industry associations and 31.5% were regulators or government agencies. This
view was also held equally by all other groups (10.5%). Employer/industry associations accounted for
the largest portion of comments that the five or more person threshold may capture low risk work
(34%), yet did not comment that it may fail to capture HRCW (0%). Half of the total comments that the
‘five or more persons’ definition may fail to capture HRCW were from regulators or government
agencies. This group also accounted for the second largest portion of comments that the definition
may capture low risk work (25%).

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Table 5.51: Ineffectiveness of the ‘five or more persons’ threshold definition by stakeholder
group

Stakeholder
Low reliability Low risk HRCW
group

Employer
/industry 37% 34% 0%
association

Regulator or
government 31.5% 25% 50%
agency

Private
construction 10.5% 16% 25%
organisation

Union 10.5% 16% 25%

Other 10.5% 9% 0%

Note: Qualitative data is subject to interpretation. These percentages are indicative and understood to reflect the
researchers’ interpretation of interview data.

5.22 Overview of the alternative methods for defining a construction project

section

Participants identified four alternative methods for defining a construction project. These themes and
sub-themes relating to participants’ perceptions of the likely performance of these alternative
threshold mechanisms are presented in Figure 5.8.

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Figure 5.8: Overview of participants’ commentary about alternative definitions or threshold mechanisms

Alternative
definitions

Construction activity- Number of contractors

Multifactorial Risk matrix framework
based definition engaged

Concerns/ Concerns/ Concerns/

High risk construction Construction methods considerations about considerations about considerations about
Use of plant Considered effective Considered effective Considered effective
work or technologies the use of a the use of multiple the use of a risk matrix/
multifactorial definiton contractor definition framework

Concerns/
Increased subjectivity/ Associated with Aministration and
Considered effective considerations about Simple/clear Capture failure
complexity complexity/WHS risk enforcement
the use of HRCW

Concerns/
considerations about
Clear/well defined Not clear/well defined Previous legislation Potential loopholes Simple/clear Loopholes
the use of a
multifactorial definiton

Insufficiently
Easy to Consensus on number
Legislated comprehensive/ Easy to regulate
educate/communicate of contractors
jurisdictional variations

Statistically more
Difficult to quantify Broader capture
incidents

Proportionately related Efficient enforcement

to risk

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5.23 Alternative methods or threshold mechanisms for defining a

construction project

Participants identified a number of alternative methods or threshold mechanisms that could potentially
be used to define a construction project for the purposes of triggering the principal contractor duties
under the model WHS Regulations. These are presented in Table 5.52 in descending order of the
frequency with which they were mentioned.

Table 5.52: Potential alternative methods or threshold mechanisms for defining a construction
project

Frequency Alternative type of threshold or definition

35 A definition based on construction activities

32 Multifactorial approaches combining more than one definitional ‘trigger’

12 The use of a risk matrix framework

12 The number of contractors engaged simultaneously

NB: Some participants identified more than alternative threshold definition.

These alternative methods are discussed below.

Construction activity-based definition

Thirty five participants (75%) expressed the view that additional WHS planning and coordination
duties should apply when certain construction activities are involved in construction works. Key
features of construction activity that could trigger these duties were:

● high risk construction work (HRCW),

● the use of plant, and
● the use of particular construction methods or technologies.

Each construction activity is further discussed below.

High risk construction work

Twenty-two participants (44%) expressed the view that the presence of HRCW should trigger the
application of the principal contractor duties. Reasons given for this were that HRCW is:

● well-defined,
● statistically responsible for the most injuries and deaths,
● already referred to in current WHS legislation, and
● proportionately related to WHS risk.

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Despite these suggestions, some participants also raised concerns regarding use of HRCW to trigger
the application of the principal contractor duties. These concerns reflect these participants’ views that
HRCW is:

● not as well-defined as others suggest,

● insufficiently comprehensive and inconsistent across jurisdictions, and
● difficult to quantify (i.e. how many activities are required?).

Several participants perceived a threshold definition based on the presence of HRCW would also
make the legislation more complicated and difficult to enforce.

High risk construction work is considered well-defined

Many participants believed that high risk construction work activities are clear and well-defined.
Participants stated that what is classed as HRCW is objective and that there is industry consensus as
to what constitutes high risk work. For example, one construction company representative
commented that any construction company that did not understand the definition of HRCW should not
be in operation. Indicative quotations illustrating this view are presented in Table 5.53.

Table 5.53: Indicative quotations regarding participants’ perceptions of the objectivity and
clarity of high risk construction work

HRCW Quotations

Clear/well- “I think to me we’ve worked really hard to have the definition of what high risk work is. I
defined think generally speaking those are the things that people need to concentrate on and
while there are other risks in place on any job sites, quantifying the level of risk is going
to be different again depending on the type of construction you are doing.” (Regulator)
“We all are very clear on what high risk work activities are and what that constitutes and
we all very well understand how to control some of those risks on site so I don’t see how
it would be a hard thing to…” (Regulator)
“…the two metre threshold working with asbestos, trenching at 1.5 metres…I think that’s
good, it [the definition of high risk activity] gives a lot of certainty and consistency.”
(Union)
“It is objective…So, if you look at the higher risk activities it is very clear as to what type
of work is high risk or not. You have got working at heights, there are particular
thresholds around that, you have got working with electrics, I mean they are all very
easy to establish and they have to because they have obligations attached to them as
well.” (Regulator)
“By and large most people do. Yes. There's no confusion about what high risk means.
There is sometimes a bit of, you know, it's about working at heights with, you know, it's
just to make them acknowledge more than anything. What is the height that is unsafe to
work at? And then to explain to them, it doesn't matter what height you're working at, it's
to prevent injuries caused by a fall. So, it's more about how you manage hazards.”
(Industry association)
“Well, yes, I certainly think that the sector understands what constitutes high risk
work...” (Industry association)

Statistically responsible for the most injuries and deaths and already referred to in current WHS
legislation

A number of participants suggested using statistical records of injuries and fatalities to identify
particular worksite-based activities that could be incorporated into a definition to trigger additional

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WHS planning and coordination duties. These participants saw a relationship between using
statistical data to inform the definition and reducing injuries/fatalities. Additionally, these participants
argued that high risk activities are ‘prescribed’ in legislation which mandates the use of safe work
method statements. Table 5.54 provides indicative quotations from participants who expressed these
views.

Table 5.54: Indicative quotations regarding participants’ perceptions of how data and existing
legislation should inform the definition of a construction project

HRCW Quotations

Statistically “If you’re performing one of the 17 or 18 prescribed activities that [are] classified as high
responsible for risk activities, so why can’t we link it somehow to that? (Construction company)
the most injuries
“An alternative approach might be any construction work that involves high risk activity,
and deaths/ for argument’s sake. So, yeah, look, I don’t know what the correct definition should be,
already
but I guess my starting point is that if we’ve already ascertained what the high risk
legislated activities are, construction work, perhaps a better approach is to base the definition
around those. ” (Regulator)
“So we have information available about where and all the hazards lie and the risks
have manifested themselves in, in terms of injury and fatality and others. Can they
reasonably be used to correlate the probability of the likelihood? And then mapped over
a project description? I think that’s entirely possible.” (Union)
“I would take out the monetary value and reword it, you go by industry statistical data, if
that’s what we based it on and looked on where the key issues are and you know even
itemising that sort of criteria.” (Regulator)
“… the easiest way to identify what is high risk construction work and put control
measures in place, is in the planning, before the task has started. And they’ll do a safe
work method statement, the SWMS. And by doing that they’ll identify, oh, geez, I’m
using pneumatic air tools, the likelihood of musculoskeletal vibration type impact
injuries, well that’s high risk. Or, the noise exceeds 95dB, that’s high risk.” (Union)

Proportionately related to WHS risk

Participants commented that the presence of HRCW is directly associated with increased WHS risk,
arguing that the work activities being completed on a construction site act as the best indicator of the
need for planning and coordination.

In many cases, participants believed that the presence of a single HRCW activity should trigger the
duties, while other participants believed that the number of high risk work activities present should be
taken into consideration when determining whether the duties should apply. That is, some believed
that the more high risk work activities present at a worksite, the greater the need for WHS planning
and coordination. Two of these participants even suggested that duties could increase, as the number
of high risk activities increased. One participant stated, “It really depends on the nature of the work.
And by definition, those being high risk activities, I think, even if you've got one of them, employ a
WHS Management Plan. Now that management plan might be smaller because there's only one
activity.” The other commented, “I would query whether or not there’s scope to include a, how do I
call it, a prioritised threshold…that specifies a certain level of application of enforcement activity or
regulatory engagement according to the size of the work.” This approach was also supported by an
international expert, “…we were looking at that for the meaning of high risk structure work. So there’s
a proxy for or a measure of risk, we were suggesting that you might have three bands. Some of the
European countries have got A, B, C and there are A, B and C coordinators …those three bands, so
the low risk ones would be where there were none of the high risks specified in one, and then medium

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risk would be where there is one risk and then high risk would be where there was two or more risks,
high risk on a project. So I think it kind of [moves] way from value being a proxy for risk.”

However, this ‘sliding scale’ approach was not widely favoured. Moreover, participants in our
interviews commented that specifying a certain number of high risk work activities as a threshold
would be an arbitrary approach (see Table 5.58).

Table 5.55 provides indicative quotations regarding participants’ perceptions of the relationship
between HRCW and the need for WHS planning and coordination.

Table 5.55: Indicative quotations regarding participants’ perceptions of the association

between high risk construction work and the need for WHS planning and coordination

HRCW Quotations

The benefits of “I think it’s more about the risk that you’re facing when you’re on those jobs so
using HRCW as a talking about when there's a number of high risk work activities occurring. So as
threshold you start going up in levels like two storeys and three storeys, the types of high risk
mechanism work that’s happening is greater and there's risks to people below as well as above.”
(Regulator)
“What this is about is making sure that people are planning and appropriately
dealing with that high risk work that’s happening at those sites that have those risks
in place. So the type of work is probably to me a bit more than a place to identify
what’s going on that site than a monetary value.” (Regulator)
“You're starting then actually to get towards a bit of a risk management framework
with a slightly blunter way to enforce or activate [it].” (Regulator)
“I'd probably be looking at the actual activities on site. Bearing in mind, to try and
keep it simple without creating huge red tape. Risk is determined by what are we
doing for this project? I believe that the monetary definition is one that's perhaps
reasonably useful because it defines when you're more likely to have a higher risk
work. But if I was to have a preference it's probably the amount of high risk
construction work for each project. Would be a more appropriate one.” (Construction
company)
“So it’s really the type of work which is being undertaken as far as the construction
project itself is concerned, that determines the level of complexity and therefore the
potential risk which goes with it, as opposed to it’s $250,000.00, or is it five
persons.” (Industry association)
“I have always had the view that if we are really talking to health and safety
legislation, we are really talking about safety risk and just because you have got two
or three or four contractors on site to coordinate doesn’t make that any higher risk
than having three or four or five employees or one contractor or 10 contractors. It
really comes down to the type of work that you are undertaking.” (Regulator)
“…you know that construction projects shouldn’t actually be about the cost of it. It’s
about what’s happening, is it construction, what you can do, do you have high risk
construction work activity being unsafe and on your project?” (Construction
company)
“…for electricians and plumbers, most have done an apprenticeship and they
understand the risks associated with it, for their own personal tasks. But a
construction site is a constantly changing dynamic environment, whereas one day
there might be a wall there, the next day it’s gone and there’s a pit, you know, 10ft
deep there.” (Union)
“I think you should probably trigger them with high risk stuff. So high risk manual
handling, falls from heights that sort of…look at the level of hazard and risk and put
it on that rather you know yeah I think you could do that.” (Industry association)
“Depending on the nature of the activity being undertaken would determine the
appropriate risk controls and the development of the safety management system.
So that may be another way of looking at it.” (Regulator)

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“Well, it needs to be framed around the risks that are on the site. So because they’re
fairly clearly defined in what high risk construction work is, and the complexity of the
site, so it’s become, so there’s a number of risks that you can have on there, and
the number of activities that’s occurring at that time.” (Industry association)

The duties should “I just think one [high risk activity].” (Union)
be triggered where
“No just need to be one [high risk activity]. Because if you’ve got …you know
one of more HRCW potential for things for people to fall from height then it’s going to be various
activity exists
contractors that have the possibility of doing that you know.” (Industry association)
“I think if you were going to base it around high risk work you’d have to … any of
those triggers, any single one...They’re all nominated as being high risk for obvious
reasons, that’s where all the problems stem and the deaths and so on. So I think
you’d have to, if it triggered one that would be it.” (International construction
company)
“No. One activity’s enough. One activity is enough. If you’re got someone working at
two, and high risk construction work is two metres or above, on a
telecommunications tower, involving the demolition of a load-bearing or related
physical structure, likelihood of disturbance of asbestos… well that’s a no-brainer.
Structural alteration or repairs, in or confined space, well that’s covered by the
Australian standard so that needs to be in there. Trenching, yep. Use of explosives.
I’d have to have a good read of it, see if there’s anything that isn’t covered. But at
first blush it seems to be very comprehensive.” (Union)

The duties should “Four high risk activities would be an indicator of the level of risk involved in that
be triggered when particular site and again for me that’s the issue around why a site needs an OH&S
multiple HRCW management plan, not about any monetary value or about the number of people
activities will occur who are on site.” (Regulator)
“Number of high risk work activities on site. Five or more. Or perhaps three or more.
Three might be a bit low. Because if you're talking about a domestic dwelling, you're
probably … Sorry … You're probably going to be talking about electrical, you're
probably going to be talking about heights. You might be talking about asbestos so
there's three already. You'd perhaps more like go to five. Having a look at it at the
beginning of the project and looking at the definitions and coming up with some
‘Okay, yes we do have high work, higher than two metres. Yes, we're going to have
some asbestos work here. Yes. We will have electrical installations.’” (Union)
“…if you're defining in respect of at the very beginning to say, well “what activities
have we got? And here we have six. Therefore that's a construction project so we
need to put all those other bits and pieces in place in terms of a safety management
plan, the principal contractor being responsible for A, B, C and D.” (Construction
company)

Participants’ concerns regarding the use of HRCW to trigger principal contractor duties for WHS
planning and coordination are presented below.

High risk construction work is not comprehensively or clearly defined

While many participants believed that HRCW is well-defined and therefore would present a clear
threshold definition (see above), five participants expressed concern that whether or not HRCW will
occur at a worksite is not always clear (see indicative quotations in Table 5.56). These participants
also raised concerns about regulators’ ability to determine the likely presence of HRCW in advance of
visiting a construction worksite.

This included the capacity of the regulator to assess HRCW. Regulator representatives who
participated in the interviews raised concerns about the practical enforcement of WHS legislation
were HRCW used as a threshold definition: “I mean the reason is to ensure the scope is not so broad
that they regulate, can’t actually allocate sufficient resources to do it…I’m interested in exploring,

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thinking further about [how] high risk activity might be somehow roped into the [definition] in a way
that doesn’t [broaden it] so far that regulators can’t actually [enforce].” Moreover, other participants
questioned whether it is feasible to identify all instances of HRCW at the planning stage of a
construction project, for example, the disturbance of asbestos.

Table 5.56: Indicative quotations regarding participants’ perceptions that high risk
construction work is not well-defined

HRCW Quotations

Not well-defined “…I’m not sure that an inspector could walk into the room and understand whether
that’s an asbestos contained wall, they could tell by the age of the building but you
sort of start to get into that realm of it’s up to the contractors to work out what’s the
risk related to the works and do adequate investigation and scrutiny to determine
whether they are dealing with any hazardous materials.” (International
construction company)
“I think some definitions of high risk work [could be] tidied up so they could be
simpler.” (Construction company)
“…there is a lot of confusion surrounding what is high risk construction work as
well. So again we get into interpretive difficulties here. Particularly surrounding the
use of different kinds of plant for instance anything involving a crane is considered
high risk. And we have to have high risk work licenses in some situations for other
pieces of plant. But you can have a variation of a crane such as a trailer [crane]
which is not considered high risk even though it’s doing the same job really as a
crane. So there’s a big grey area there of what is actually, what is actually high
risk.” (Industry association)
“It needs to be pointed out. With… the easiest way to identify what is high risk
construction work and put control measures in place, is in the planning, before the
task has started. We can’t just say, well go and do that. Well that’s high-risk
construction work.” (Union)
“So there’s a big grey area there of what is actually, what is actually high risk. And
in a lot of circumstances that’s left up for the contractor to define themselves. So
again if you integrate that into the system…it would require a solid definition and
threshold which the industry could know for sure what is high risk construction
work. And it would be a pig of a job to get industry to agree on exactly what
constituted high risk construction work.” (Industry association)

Incomplete list which may fail to capture high risk activities present on and around sites and is
inconsistent across jurisdictions

Several participants suggested that the current list of activities included in the list of HRCW does not
include all construction work processes and activities that warrant additional WHS planning and
coordination duties (see Table 5.57). For example, participants identified that the current list does not
adequately capture work that will take place in close proximity to the public that may require the
redirection and protection of pedestrians.

One participant representing a regulator observed that: “There's more people getting killed below
three metres than above and so it’s still a risk when it’s below three metres so it’s every facet that
could be there that can be a risk out on site.” (Regulator)

Participants also identified inconsistencies in the definitions of HRCW across Australian jurisdictions,
suggesting that the use of HRCW as a harmonised definition may require some additional
administration and industry stakeholder consultation.

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Table 5.57: Indicative quotations regarding participants’ perceptions of the current list of high
risk construction work activities

HRCW Quotations

Insufficiently “…you’d have to have a book upon a book to put it all in there to capture all risk and
comprehensive then you’d still miss some.” (Regulator)
“…if you’re talking about those designated high risk activities, it leaves an awful lot of
grey…I’ll give you an example and that’ll be the use of a quick cut saw. Now what that
is it’s like a chain saw type motor but it has a big cutting disc around it because they’re
cutting discs about eighteen inches around and the amount of significant injuries that
we get with those things...” (Construction company)
“So there [are] a lot of activities that do occur that are really high risk that aren’t picked
up there. For example we find it difficult, we do our auditing and risk assessments I
suppose on the high risk activities and like the incidents like with plumbers using
oxyacetylene…where does that live under the high risk activities, you know?...the
definitions could certainly be tidied up a little bit to pick up some of these high risk
activities that don’t really live anywhere.” (Construction company)
“I'm reasonably fine with the content of the high risk activities except one of them,
[traffic] management, doesn't look at people, doesn't look at pedestrians. And I
struggle with that one.” (Construction company)
“Really what we should be looking at is what the activities are, how they’re being
conducted and really, who’s at risk. Generally workers are at risk, the public will be at
risk and that to me is appalling. You’ve got kids who walk past some of these sites
and they’re forced onto the road and you’ve got, you know, a witches hat to be
protected from some errant vehicle, it’s appalling. They’re the type of works, they’re
the type of projects which really need a bit cleaned out. And it’s become accepted in
our industry for that kind of process to occur…because everyone’s trying to save a
dollar, it ends up being a real mess. It’ll only take one person to end up getting hit by a
car and it’ll all be a disaster.” (Union)
“It really does come down to activity. That activity doesn’t necessarily [have to] meet
the definition of high risk construction work for it to cause problems. For we use
chasing saws a lot in Western Australia to cut conduits for electrical cables and so
on… Those chasing saws put out a lot of dust. Now it only takes one person to not tell
everyone else, the bricklayers for example or people coming to do the roof that that
activity is going to be happening. So this is one of the issues of saying it has to be X
number of construction activities. I’m pretty sure chasing saw is not a high risk activity
on that list but it can pose a significant and unexpected hazard to other workers at the
site. So it really is the level of activity and the different competing tasks that those
activities are going to be doing that requires a higher level of coordination…But that
the essential philosophical issue is how many activities are going on that are going to
require a higher level of coordination.” (Regulator)
“If any of the following high risk activities are being undertaken on site…and if they
affect others, i.e. the public or the neighbour. That's what I would put.” (Construction
company)

Inconsistent “There is a difference in heights between jurisdictions. I don’t think there are that
across many variations…But that certainly is one.” (Regulator)
jurisdictions
“Legislation is a little bit different in Victoria versus Queensland; if you’re parking your
vehicle on the side of the road and you’re getting out of that vehicle and you’re getting
some tools, you’re working on or near a roadway, so that’s high risk work. That needs
a SWMS. So people doing high risk work without them realising they’ve got high risk
work, as soon as you get out of your car and you grab your tools out of the car you’re
doing high risk work which is one of the reasons why it’s near on impossible for us to
get a SWMS for each and every time for each worker…because we’re not going to be
at that site when that bricklayer gets out of his vehicle and decides to get his piece of
equipment out of the vehicle; we’re just not going to be there.” (Industry association)

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Lack of agreement as to appropriate threshold for HRCW

As previously discussed, there was a lack of consensus among participants about the number of
HRCW activities present at a site to warrant the requirement for principal contractor WHS planning
and coordination duties. Several participants expressed the view that specifying a particular number
of HRCW activities as a threshold mechanism would be arbitrary.

These views are illustrated in Table 5.58.

Table 5.58: Indicative quotations regarding participants’ perceptions that specifying a number
of HRCW activities would create an arbitrary threshold

HRCW Quotations

Potentially “I think that would make it a bit difficult, and the only reason why I say that is that
arbitrary number there’s so much variance in the quality of those out there in the industry but are you
of activities sort of saying if you have to have a safe work method statement well that’s a trigger
for a construction project? I guess that’s a bit arbitrary though because even just
saying three that could be a bit arbitrary. I guess, I mean, it’s potentially another
trigger but…yeah I’m just not sure how that would work in practice. It might not be as
robust as some of those other ones around, the number of contractors or the value of
the construction work.” (International construction company)
“…because identifying whether you have got two or three high risk activities would be
easy. You have either got two or three high risk activities for the purpose of the Safe
Work Method Statement. That already happens. That identification already happens
without difficulty. There’s usually very little argument over whether something is high
risk or not. The argument here is…how many of those high-risk activities create a
higher risk or complexity? And I think again you’re going to be testing the air with
those because it is going to be an arbitrary figure.” (Regulator)
“Is something along the lines of where there is two or more higher risk activity or three
or more even, pick a number if you like, but we talked about high risk activities being
so important in other parts of legislation for I think like Safe Work Method Statements
and picking up within the regulatory elements of the legislation that why wouldn’t you
impose that as a threshold?” (Regulator)

Construction methodologies and technologies

Four participants, all of whom were from industry associations, believed the duties should be linked to
the use of particular construction methods or technologies and one participant suggested that a list of
these methods/technologies could be developed for the purposes of determining whether the duties
should apply. However, this participant conceded that this would be difficult to implement and would
require regulators with specific knowledge of construction methods and technologies.

Table 5.59 provides indicative quotations from participants regarding the development of a threshold
definition based on specified construction methods or technologies.

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Table 5.59: Indicative quotations regarding the development of a threshold definition based on
specified construction methods or technologies

Methods or Quotations
technologies

Construction “Another way to do it would be to look at the complexity of the build.” (Industry
technology/ association)
methodology “Well the level of risk is determined by the process of building… So anything that's
going to be multiple levels is obviously going to be higher risk than something that is
single storey construction. So other construction technologies that are high risk are the
tilt up construction. Anything involving cranes. Anything involving scaffolding over four
metres in height.” (Industry association)
“But again, it's that risk assessment process. So where do we draw the line? I don't
think monetary is the way to go. It's about the level of risk. So assess the level of risk, if
there are several higher risk activities involved in the construction process then you
need to apply a WHS Management Plan. But having said that, certain high risk
activities, really require a good management plan and I'm thinking along the lines of
anything to do with tilt-up construction, it needs to be well overseen and monitored.”
(Industry association)
“I think it would be quite simple [to prepare a list of methodologies] actually.” (Industry
association)
“So it's about the construction methodology.” (Industry association)

Presence or use of plant

When discussing the type of activities that warrant project-level WHS planning and coordination and
could usefully be incorporated into the definition of a construction project as applied in the model
WHS Regulations, several participants referenced the presence or use of plant. Indicative quotations
referencing the presence or use of plant are presented in Table 5.60.

Table 5.60: Indicative quotations regarding the development of a threshold definition based on
the presence or use of plant

Plant present Quotations

or in use

Plant as a “…whether or not there’s plant, mobile plant at the workplace any of those things. But
feature of work once again you could go out and negotiate all of those elements. There’s a certain level
requiring WHS of complexity in all of those things.” (Regulator)
planning and “…there’s a big difference between a domestic site where you might have a scissor lift
coordination
and some scaffolding to a major build where you’ve got tower cranes and you’ve got
bulldozers going around on a site and all those sorts of things. That was another thing
that was considered in relation to looking at determining a construction project, being
the plant that was being utilised.” (Industry association)
“Then you’ve got plant, you’ve got so much if you look at the different high level risks
that for example are in the Victorian regulations you pretty well have all of them on
many construction sites. So I don't think it would be hard to define and get people [to]
follow. I think pretty much most of them are doing it now.” (Industry association)
“…it just seems to me to be that the type of work being undertaken determines the risk.
Not the people, not the value. The type of work…predominantly single storey buildings
with nobody working particularly high, limited amount of movement, mobile plant, you
know, high risk site than having even a small number of workers with a heavy
concentration of mobile plant at the same time, taking electrical or excavation, project
height or asbestos demolition.” (Regulator)

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A multifactorial approach

Thirty two participants (64%) discussed whether a more sophisticated threshold definition, combining
multiple criteria, could be a more effective way to define a construction project for the purpose of
triggering the principal contractor duties under the model WHS Regulations.

In descending order of frequency, the following combinations of criteria were suggested:

● a monetary threshold combined with the presence of high risk construction work (five
participants),
● a combination of the number of contractors engaged at a worksite and high risk construction
work activities (three participants),
● a monetary threshold combined with a minimum number of persons engaged at a worksite (two
participants),
● a minimum number of persons threshold combined with the presence of high risk construction
work (two participants),
● a minimum number of persons threshold combined with high risk construction work and
interdependent work activities requiring coordination and planning (two participants),
● a monetary threshold definition combined with the number of contractors engaged at a worksite
(one participant),
● a monetary threshold combined with a minimum number of persons at a worksite and the
presence of high risk construction work (one participant),
● a minimum number of persons threshold combined with the number of contractors (one
participant), and
● a minimum number of persons threshold combined with the presence of high risk construction
work activities and particular construction activities (one participant).

Participants who favoured the use of a multifactorial definition did not indicate whether the
grammatical conjunction ‘and’ or ‘or’ would be used. Thus it is unclear whether they were suggesting
that it would be sufficient for one of the criteria to be satisfied for the duties to be triggered, or whether
both or all of the criteria would need to be satisfied. One union representative reflected: “Well,
whether it would be an ‘and’ or an ‘or’ would have to be decided.”

Several reasons for supporting a multifactorial definition were provided by participants.

● First, some participants’ believed that legislation using a multifactorial definition prior to the
introduction of the model WHS Regulations had worked well in practice.
● Second, some participants believed that a multifactorial definition could provide a more flexible
approach to cope with different project characteristics linked to WHS risk.
● Third, some participants believed a multifactorial approach would be less susceptible to
loopholes.

Other participants expressed the view that the presence of asbestos should be incorporated into the
definition that triggers additional WHS duties for principal contractors, irrespective of the contract sum
for the construction works.

Table 5.61 provides indicative quotations from participants who perceived that a multifactorial
definition could be effective.

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Table 5.61: Indicative quotations relating to participants’ positive comments about the
application/usefulness of a multifactorial threshold definition

Multifactorial Quotations

Positive “…arguably it [monetary and high risk work as the definition] also creates another layer
evaluations/ of planning and management control over what is essentially high risk work and would
suggested give clients comfort that it’s being managed appropriately.” (International construction
threshold company)
examples
“So I think the trigger is really, should be perhaps both some sort of complexity
threshold whether monetary or otherwise and the question of whether or not there
should be more than one contractor on site.” (Construction WHS expert)
“You just have to put down that and/or you know risk factors within the regulations or
something like that which would incorporate all the regulations which would then bring
them all into the field.” (Regulator)
“I think it’s probably more appropriate [to] also look at the nature of the work and the
hazards involved. I think if they do that you then get a triangular approach. You get the
hazards, you get the risks, i.e. the exposure and you also get a threshold of monetary
so you kind of…you’re able to grab different sections of those three different
approaches, which might be even more beneficial.” (Union)
“So, why couldn’t you have a combination of cost and persons and the hazards which
are being looked at, you know what kind of work processes you’re doing. If we look at a
$350,000 threshold and working at heights, for example if you’re doing a two-storey or
above, if you’re adding an extra level so if you go up one level over two metres, and you
had five or more on site. Well, whether it would be an “and” or an “or” would have to be
decided.” (Union)
“In the construction regulations there’s a list of hazards, 20 odd or whatever there is, 24.
I should know. So it’s already there. It would just be a matter of just applying that and
saying if you’re doing any of these tasks and the work is whatever then you should have
some type of project…and if there’s more than three people…I think it…I don’t think it
should be limited to monetary cost. I think you need a combination of different things to
make it more workable. It would be far easier to do that than worry about a monetary
cost on its own.” (Union)
“Yes it [the number of people, the nature of the work and the interconnected nature of
their work] could work but you are still some way operating in the dark, unless you
understand what risks you’re trying to treat between various monetary figures…I mean if
you wanted to do something like that I’d prefer aligning it to the definition in higher risk
construction work.” (Regulator)
“It would be possible to make a list of those things. So I think, it needs to be a
combination of things. I think it needs to be risk based, it needs to be construction
methodology based, and it also needs to be based on the number of people involved.”
(Industry association)
“…so it could stick to the $250,000 or more, or under $250,000, where high risk activity
is involved or is likely to, you know, become involved. That’s the hybrid option. So, you
know, normally, when you start a project, by the time you started you should already
know if there’s an asbestos risk present, already know from your plan the depth of the
trench you’re building. You should already know whether you’re going to be working at
[height]. You should already know whether there’s going to be electrical hazards.”
(Regulator)
“…we are of the view that the definition probably shouldn’t change, and it’s not causing
any problems at the moment, and it should be left where it is. That said, if we were
winding the clock back 10 years, if we were starting with a brand new piece of
legislation from the ground up, and we were talking about what a definition might be,
then we might look at other factors, including the different types of high-risk work, for
example, that might be going on, number of employees, things like that… by and large,
they would be, perhaps, more appropriate and more useable.” (Industry association)
“… And I say well by altering, diminishing, removing or enhancing the meaning, what
impact does it have for our members? So on that basis I would put to you that this, that
a review or the possibility of a series of thresholds may serve to improve the benefits to
workers and our members.” (Union)

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“Yep. And the regional argument can also come into play for that as well. Due to the
very nature of it, the limited accommodation, maybe camp-type accommodation…So
there may be limited numbers of people being up there, but it’s well over the 250,000
threshold. But the project is planned out over a longer period of time. You know, they
bring in their trades over a staggered pace that would by virtue escape it. It’s over the
250,000 but it’s under the numbers, so… So that’s where I think the multifaceted
approach may be beneficial.” (Union)
“And that’s [$250,000 or containing asbestos] a really good idea.” (Union)

Previously in “Well that definition is used all the time, look go back one before harmonisation it was
place in NSW $250,000 in New South Wales and/or high risk construction work whatever that meant. I
did prefer the previous legislation in New South Wales which looked at high risk work
which invoked a plan and other things and a principal contractor requirement. Therein
lies the issue about well what’s high risk work and that’s articulated in legislation but it
still gets confused and some might argue that every activity on a project is high risk.”
(International construction company)
“Oh possibly, yes, I mean that’s why the old New South Wales one was actually pretty
good, it was $250,000 or high risk work because then you get some people like
replacement of a façade window in a multi-storey building 30 floors up is high risk and
you want detailed management of that. And all the hazards and activities that go on with
it, yes without a doubt that would miss some of the high risk stuff that’s going on that’s
below that threshold. That may involve a number of different trades, different interfaces
and activities that require better coordination than what those trades are prepared to
provide.” (International construction company)

Flexible “It’s easy. And it’s really…the only people who would really need to understand the
approach that multi-faceted definition would be people like, I mean, our self, because again we don’t
could be get into that kind of low-end market, but, would be the regulators and people such as
practically the Master Builders and HIA whose members they would have to explain and educate
implemented and articulate that if you do X, Y and Z, or if you do X, Y or Z, or X or Y or Z, whatever it
is, whatever combination you’re going to have, it will mean that you have to follow this
protocol and you need these kind of processes in place. That’s all.” (Union)
“Yeah so if there are high risk activities going to be performed on site, it's going to be
over five or 10 people on site, whatever the number might be, you must employ a WHS
Management Plan. [In terms of practicality], it's more about the information being, how
it's conveyed to industry and anyway a transitional phase, I think Safe Work Australia
and the various state regulators a very experienced in bringing about changes in
legislation. [In terms of operation], not a problem whatsoever for the regulator.” (Industry
association)

However, one participant (a regulator) commented that, although a dual-faceted threshold could be
effective, he perceived the problem to lie in the nature of the principal contractor’s duties, which are,
in his opinion, onerous for smaller companies and projects. This participant suggested that a dual
faceted-threshold definition could usefully be accompanied by a dual-faceted set of duties: “What if
the actual process or obligation that they would then have to undertake and I don’t think that our
obligations are quite right yet either. I think we ask too much for that bottom end, do you know what I
mean? I think there has almost got to be…I think if you are going to dual- facet anything, I think you
dual-facet the obligation. If you have two or three high risk activities you might do this, or if you have
three or four or five you might do this, if you have five or six or seven you might do this, and those
things might be a progression of just that type of thing. But certainly I think the obligations [are] what
has brought about this argument over, or debate over what is appropriate for the threshold.”

Two international participants and one domestic Australian participant commented that ‘person hours’
could be a useful exposure indicator to consider integrating with the monetary definition. This idea is
also discussed in the discussion of notifiable activities in section 5.25. Some indicative quotations are
provided below in Table 5.62.

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Table 5.62: Indicative quotations relating to participants’ comments about the

application/usefulness of integrating person hours into a multifactorial threshold definition

Multifactorial Quotations

Person hours “…in the UK I think under the CDM 2007 I think what they were doing in there
is that if the number of I think it was the…I'm trying to remember this time. I
think it was the number of days people will be on the site. Either the number
of days or the number of man days.” (International construction WHS expert)
“…because the longer people are exposed to hazards on site the more likely
you know there could be an accident. And so I think if you use perhaps
duration of using the number of man days okay? …I think that would probably
be a useful indicator. So maybe on….in addition to value they may want to
you know think about that as well.” (International construction WHS expert)
“…perhaps $250,000 describing perhaps you know, so many people working
for a week, maybe that’s another criteria that could be applied, because
you’re not really going out with much less than $250,000 in the first place for
the week. Yeah, man hours, maybe that’s another criterion which could be
applied.” (Union)

Several concerns were also raised by participants in relation to implementing a multifactorial threshold
definition to trigger the principal contractor WHS planning and coordination duties. These included
that a multifactorial approach would potentially:

● increase subjectivity and make compliance and enforcement more complicated, and
● increase the potential for loopholes and capture failure.

Increased subjectivity and complication for compliance and enforcement

Six participants expressed the belief that a multifactorial threshold definition would be challenging to
administer and could create new loopholes or practical difficulties for compliance and enforcement
(see Table 5.63).

Table 5.63: Indicative quotations relating to the potential for a multifactorial definition to
increase subjectivity and make compliance and enforcement more complicated

Multifactorial Quotations

Increase subjectivity “…well you can come up with any definition you want I guess but you need to
and make compliance make sure that it’s enforceable and well understood. So what you’ve got now
and enforcement more with the five persons or the 250 is a fairly simple definition and you can
complicated introduce as many elements as you want. But each time you introduce a new
element or exception or however you want to word it, there is an increased
level of the complexity which makes it harder for everybody to comply.”
(Regulator)
“My view is that to have a threshold of determining how many workers are on
the site, what types of work they're doing, whether they are overlapping in
terms of the work they are doing. I don't think that you need to go to that level
of detail when you are looking to define what a construction project is. And
without being unfair you need to think of the audience that you're dealing with
in the construction industry and I think you need to have a definition and
hence why we’ve got $250,000, I think any definition needs to be simplistic.”
(Regulator)

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“If we look at other combinations of various factors that could define

something as a construction project or otherwise, then, all of a sudden, the
more elements that get discussed and added in, the more the potential for
debate, and confusion, complexity, misunderstanding, and then in our
sector…we are always very conscious of making certain that any law that
applies to the building construction sector is clear, as in so far as it can be,
and minimises the extent for disputation on the ground because you are
talking to people in a sector who will go to the Fair Work Commission, and
argue an entire case over the position of a comma in a sentence.” (Industry
association)
“I’m always a fan of hybrids, mix and match, so you could have a hybrid
system perhaps. Then you end up getting complicated…” (Industry
association)
“You know if it starts referring to ‘oh then in this section refer to another
section’ and they refer to you know part A, B and C. Then it becomes
[complicated].” (Industry association)

Increased likelihood of loopholes

A small number of participants expressed a concern that a multifactorial definition could potentially
make the definition more susceptible to loopholes (see Table 5.64).

Table 5.64: Indicative quotations relating to the potential for a multifactorial definition to
increase loopholes

Multifactorial Quotations

Potentially “If we go for a multi-faceted approach then I think that's going to... because then too many
increased holes in which people could manoeuvre through.” (Regulator)
loopholes
“And / or. And / or, yeah. You could opt-in saying there [are] two triggers, there’s the
monetary threshold, and then there’s the people threshold. You’re never going to stop
dishonest people trying to game the system.” (Union)

The use of a WHS risk matrix framework

The use of a WHS risk-based approach to defining a construction project was raised 34 times by
interview participants.

Twelve participants (24%) suggested the development of a WHS risk matrix framework which could
be applied to construction works to determine if the principal contractor duties should apply.
Participants perceived that this approach could assist duty-holders to understand and address the
WHS risk factors present in a package of construction works in their planning and management
activities. However, participants also acknowledged the subjectivity involved in making an
assessment of WHS risk factors, and expressed the concern that unscrupulous construction firms
could manipulate such risk assessments.

Participants’ comments relating to the development and use of a risk matrix framework mechanism to
trigger principal contractor WHS planning and coordination duties are provided in Table 5.65 and
Table 5.66.

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Table 5.65: Indicative quotations relating to the perceived benefits of a risk matrix framework

Alternative definition Quotations

Risk matrix framework “At least that'll demonstrate that risks have been identified, they've been at a
gross level, various controls have been applied, that arrived at a net risk, and it's
a net risk scoring matrix that'll be used to determine whether it's high risk or
major construction, or otherwise…'cause we're finite resources, like
everyone…we look at [organisation’s] safety management systems, looking at
how they've analysed their risks. We do our own comparative analysis against
what we've identified. And we then determine where we apply our resources...”
(Regulator)
“I think ideally we would have a risk based framework where the additional
requirements come into play on projects where there is a significant additional
risk of the workplace safety issue.” (Regulator)
“I suppose you could incorporate other parts of the ranks into the meaning of
construction project…where the cost or something of a construction project if
more than blah, blah, blah you could be able to put down and/or risk based or
high risk based.” (Regulator)

Two potential concerns relating to the use of a risk matrix/framework were identified by participants.
First, that risk assessment is highly subjective and ratings depend heavily upon the person doing the
rating. Second, that the administrative work involved in creating and managing a risk matrix
framework for the purposes of deciding when the principal contractor duties should apply would be
very challenging.

Table 5.66: Indicative quotations regarding the perceived challenges inherent in using a risk
matrix framework

Risk matrix/ Quotations

framework

Subjective nature of “Yes there’s a fair amount of risk everywhere that you look. But it just depends
WHS risk assessment on if you’re going to integrate that into a definition you need to be very clear
and potential for about what kind of risk you’re talking about. So the risks, so many risks driving
manipulation around 10 tons of rock from one point to another point is that included? Is the
logistics risks included in your definition for a project? Well we don't know we
have to analyse that so that’s an uncertainty there that you’d need to be clear if
you’re going to have that risk conversation. Integrated into that definition.”
(Industry association)
“But the psychology of risk, a lot of it is to do, in fact it’s probably 90% or plus, to
do with perceptions of risk. And when people find something, if they perceive
something to be overly complicated, it really puts them off and it gets them really
annoyed. Because what they’re reacting against isn’t the reality; it’s their
perception of the reality and what it means for them in terms of having to think,
having to think through complexity, having to pay someone to come in and
explain the complexity to them.” (Industry association)
“…so some of the ways we've dealt with this over the last few years is actually
to create a trade matrix. And say, ‘alright, out of the 95 trades or processes that
happen on site, if I select...’ he's going to be using multiple power tools, air
compressor… he will require probably five high risk safe work method
statements. So you can actually [see] through [the matrix], already built in,
things that apply to those trades. So therefore it becomes optional, it's actually a
process load to get to why compliance matters, versus opt in to opt out. Where
it's all too hard. It comes down to, you know, what are they're driven by? Are
they're driven by compliance? No. They want to know when they're going to get
their paperwork done to get to the next pay check. That is the nature of the
beast.” (Construction company)

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“Yeah see that would be a difficulty because, well a lot of people assess risk
differently and sees risks differently. So there would have to be some sort of
matrix on top of that to identify, you know you’ve got to use this one and if this
one say that well then you know you go down that pathway, and whether its
foreseeable etc.” (Regulator)
“We deal with collecting our compliance paperwork from our trades, we give a
range of options that our trades can select... have you got any electrical tools,
have you got any plant equipment, any hazardous chemicals, any … ‘No, not
applicable’. Because if they complete the form 'yes' and then a form comes up
and they have to fill out the relevant information in that form to submit, they'll go
the easy option. 'Not applicable', 'no' constantly.” (Construction company)
“What we find is that if we leave it to work safe inspectors or building inspectors
their interpretation and their replication of whatever it is they’re applying can be
quite different. Another inspector, or whoever…I think you do need some type of
objective measurement if you like, this is what it is and it will apply or it won’t
apply.” (Union)
“So as soon as you start down that road, risk is a subjective thing, consequence
is a subjective thing. It’s never happened to me, it’s never happened to anyone I
know so I’m not thinking about that particular consequence. So you get into a bit
of bother around making this really simple, so if you were going to do it from a
risk based point of view you’d really have to articulate it… in the act. Nobody has
to go away and go well is that a high risk or low risk or what sort of risk is that?”
(International construction company)
“…then you don’t get into the argument about what’s high risk and people have
different perceptions of risk and some people determine risk being untreated
risk, others determine it as being treated risk so you get into all this argument
about what is risk and how is risk determined and is it high, low, medium and so
on, whereas if you use a dollar figure, bang, it just triggers it automatically.”
(International construction company)

Administrative “…a risk based framework would be best but obviously there's a lot of work that
challenges would be involved in developing such a framework.” (Regulator)
“In an ideal world the risk based framework is what we’ve had but I completely
acknowledge that a lot of work would be involved in developing that and it’s not
as simple for people on the ground to implement as a rather blunt monetary or
number of people on the job instrument where it’s very clear to all involved to
see whether a project is covered or not.” (Regulator)
“The problem would be is you’d end up with an exhaustive list of different
activities and it depends on … each project in itself is unique, the designs are
usually if you need bespoke type things most of the time. So it goes to that level
of detail to consider quantifying all those and nominating those up front and
trying to work out what all that looks like. I mean you can do it and people would
use it as a resource but it’s always different, every project is different.”
(International construction company)
“It’s certainly not as easy for regulators to regulate as well because you would
need to have a lot of support and guidance around the risk framework to let the
regulators the comfort that they could satisfactorily regulate as well.” (Regulator)

Number of contractors engaged at a worksite

Participants provided comments in relation to the likely impact of establishing a threshold definition
triggering principal contractor duties for WHS planning and coordination wherever more than one
contractor (PCBU) is engaged at a construction worksite.

Twelve participants (24%) suggested that a threshold definition based upon the presence of more
than one contractor at a site could potentially be more appropriate than a monetary threshold

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definition. In descending order of frequency, the reasons cited by these participants for favouring a
multiple contractor (PCBU) threshold were that:

● the number of contractors is a good reflection of a need for additional WHS coordination and
planning at a worksite and so such a definition would adequately capture the types of sites at
which the principal contractor duties should apply, and
● a definition based on the presence of more than one contractor would be easy to understand
and administer.

Associated with complexity, WHS risk and a need for WHS planning/coordination

Twelve participants (24%) expressed the view that the total number of contractors simultaneously
engaged on site could provide an appropriate basis for the threshold as it is perceived to be directly
related to the need for project WHS planning and coordination. Respondents argued that the more
contractors (PCBUs) engaged at a project, the larger and more complex it is likely to be, with
increased WHS risk and a need for WHS planning and coordination. This view was associated with
the fact that different contractors bring different levels of competency, work processes and cultures to
a project creating the need for the establishment of responsibility for the over-arching coordination of
activity to ensure that these contractors work together in an effective and compatible way. As one
participant who represented an industry association explained: “…because 10 individuals employed
by the one business is a lot different to 10 individual businesses.”

Participants also believed that a definition based on the presence of more than one contactor (PCBU)
is compatible with the intent of the model WHS Regulations, in ensuring that WHS is systematically
managed across larger, construction projects, at which work is undertaken by multiple trade-based
subcontractors.

See Table 5.67 for indicative quotations from participants.

Table 5.67: Indicative quotations linking a threshold based on the presence of more than one
contractor (PCBU) at a worksite with the need for WHS planning and coordination

Number of Quotations
contractors

More than one “The trigger is when do you need coordination right? So when you need
contractor present at a coordination is when you have more than one contractor on the site. So to me
worksite increases risk that makes practical sense that as soon as there’s more than one contractor
and creates the need there is a need at that point for one of them to coordinate the both contractor’s
for WHS planning and pieces of work.” (International construction WHS expert)
coordination
“I mean you have to assume that the risk was up the more contractors were
involved. If there was a lack of coordination then there’s a lack then you know
chaos will be the result. And uncertainty will lead to [negative effects] on their
health.” (International construction WHS expert)
“I'm doing an extension on my house and I need an electrician. I've got a
plumber and a builder. I'd probably no matter what it costs need those guys to
talk to each other and coordinate and cooperate and consult with each other
about what they're going to do. I'd be happy I think with just the multiple
contractor idea.” (Construction WHS expert)
“The more contractors there are involved the more of a need for coordinating
those contractors. So there are more activities involved in higher risks.”
(Industry association)

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“Yes I think it's, I think that aligns in the intent of the definition…which is
someone is kind of responsible for overall safety in that cooperation,
coordination, consultation role.” (Regulator)
“The role of a principal contractor [is] to coordinate and [that] goes to your
question about coordinating trades but also fits well with consultant operate
coordinate too [sic]. And so yes, okay when you have a builder and
subcontractor you’ve got more than one duty holder more than one employer
and yes the principal contractor needs to ensure that the subcontractor is going
to work safely. So I would not have any anxiety for this based on more than one
trade.” (Industry association)
“Yes it could. It might be more effective from the point of view of that
coordination, that word coordination. I like actually, being the open minded
again, they would actually prefer the words OHS coordination plan and
management plan. Just by what it infers.” (Industry association)
“Off the top of my head I suppose I don’t think it’s an unreasonable value,
obviously the risks become greater if you have more contractors involved doing
different types of work and depending on each other to achieve safety at the
site.” (Regulator)

Associated with “So if you just got a dollar threshold and people don’t think then they go ‘Why we
complexity, WHS risk doing this? Why do we have to do all this other stuff? … because we are
and the need for building something that is worth more than $250,000’ …That, if it is about …
planning and that’s the beauty of saying whether it is five people or two contractors, someone
coordination needs to be there to take responsibility to make sure we don’t have any
accidents.” (Industry association)
“…you can set five guys to work, they’ve worked with each other for the last 20
years, they all know what they’re doing and they’re working as a team. And it’s
when you bring the other team alongside, over the top, underneath that you get
the risk. So it would be multi-contractor that would tend to take you towards a
multi-contractor definition rather than the number of bodies on site definition.”
(International construction WHS expert)
“I think the trigger should be whether or not there is more than one contractor on
a site. If there is then the senior contractor should be the principal contractor. So
let's say I'm building a house. I'm a builder. It's going to cost 300 grand to build a
house. So I'm in. I am going to do this primarily through my own people. My own
workers. It makes no sense for me to have to do a health and safety
coordination plan where I'm the employer and it's just my people anyway. But if
I'm going to engage a different plumber and a different sparky and a different
carpenter to that work it makes sense for me to have an obligation to coordinate
them. For somebody to do the induction and all that stuff.” (Construction WHS
expert)
“I think that [the multiple contractor threshold] has probably got a lot of merit to it.
Especially when you’re looking at the responsibility of a project management
group and I think that wouldn’t be a bad thing. And let’s face it, the UK have got
some really good legislation.” (Union)
“So rather than treating them all like units that have just dropped out of the
militia and woke up and found themselves working on a construction site with a
bunch of people they don’t know, it should be relevant.” (Industry association)

Easy for industry to comprehend

Four participants expressed the view that a threshold based on the presence of more than one
contractor (PCBU) at a worksite would be easy for industry members to comprehend. This is
illustrated by the indicative quotations presented in Table 5.68.

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Table 5.68: Indicative quotations relating to the perceived ease of comprehension of a

threshold based on the presence of more than one contractor (PCBU) at a worksite

Number of Quotations
contractors is
easy to define
and understand

Simplicity and “Now everything has been made separate, that is simpler, the world is simpler, no
ease of argument with the project called construction. You know I like that. It is simple and I
understanding like know I am good no argument.” (International construction WHS expert)
“Yes, I wasn’t aware of that but that is a possibility and is probably quite a simple
definition for people to understand, yes, that could be one that you could put forward.
Again each of the contractors have their PCBU responsibilities for their own workers,
yes as I say I wasn’t aware of that but that is a possibility, I think that could well work.”
(Regulator)

Easy to enforce

Four participants stated that the multiple contractor definition would be easy for regulators to enforce
as it was perceived that it would be easy to determine the number of contractors (PCBUs) engaged at
a particular worksite. Indicative quotations representing this view are presented in Table 5.69.

Table 5.69: Indicative quotations relating to the perceived ease of enforcement of a threshold
based on the presence of more than one contractor (PCBU) at a worksite

Number of Quotations
contractors is easy to
define and enforce

Simplicity and ease of “Yeah, yeah easier to measure because you always know how many contractors
enforcement you’ve engaged but you don't know how many workers those contractors are
going to bring.” (Industry association)
“Yeah that wouldn't be too hard [for a regulator to ascertain how many
contractors were on site].” (Industry association)
“No, no, I don't think so, they’d just add another facet to their [the regulators’]
work which would, that is something that they’d have to be looking into when
they get on the job.” (Regulator)
“Well I think it would be, well it would be easy to enforce.” (International
construction company)
“I don’t think it would be hard to spot or work out who’s a contractor and who’s
an employee on site?” (Union)

Other participants (n = 29) perceived that a threshold based upon the presence of more than one
contractor at a worksite could produce negative consequences. These included consequences
associated with:

● broader capture of works, including minor works,

● capture failure, and
● the creation of new loopholes.

Participants also expressed different views about the number of contractors that could or should be
used to trigger principle contractor duties.

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These concerns are discussed below.

Broader capture of construction works

Fourteen participants (28%) suggested that a threshold based on the presence of more than one
contractor (PCBU) would create a threshold that is too low to be meaningful or effective. These
participants suggested that a multiple contractor definition would include almost all instances of
domestic/residential construction, as it is typical for multiple trade-based contractors to work at single-
dwelling house-building sites. One international expert we interviewed described the impact of a
threshold based on the number of contractors present in the UK construction environment: “…that’s a
massive change in the UK because lots of you know tier five and six contractors are now working on
multi-contractor projects. So the kind of example that we keep using at the lower end is you know if
you were refurbishing let’s say a set of toilets in an office block. You’d have an electrician, a plumber
and a general builder. So it would be a multi-contractor project … they’ve now got you know the
coordination duties, principal contractor, construction base plan which we now have on every project.”
(International construction WHS expert)

Indicative quotations of this perceived disadvantage are presented in Table 5.70.

Table 5.70: Indicative quotations relating to the perception that a threshold based on the
presence of more than one contractor (PCBU) at a worksite would be too broad in its capture

Perceived Quotations
disadvantage

A threshold based “But there wouldn’t be too many construction projects where you own in case just one
on the presence trade.” (Industry association)
of more than one
“Possibly. It probably increases the burden on the industry too…across small
contractor (PCBU) projects…I'm not sure if it's necessary. We'd have to run the numbers on that. But that
would be too
would probably be the downside I suppose is that there's probably going to be more
broad projects that are triggered as being a project and would need to comply.” (Regulator)
“Even on a renovation there would very rarely be only one contractor on site. I mean
every renovation you're going to need an electrician and you're going to need a
builder, minimum.” (Regulator)
“Look I don’t think it would work well at all, that’s obvious…Okay, so my assessment
of that definition is that it is a cynical way of trying to capture everything. And I’ve
assumed that more than one contractor on site means a contracting company, not a,
like for example subcontractor, one person, an electrician comes on site.” (Union)

Too low “…more than one? That would be a very low threshold that would capture every
domestic job.” (Industry association)
“Well that’s every site in Australia.” (Regulator)
“…where there is more than one [contractor] engaged at a particular point or for the
whole project. Because on a typical house you would engage probably some 20 to 25
contractors. You know you have a person on the carpet, another one doing the tiling,
another one doing you know from the very beginning to the end yeah you’ve probably
got 20 to 30 contractors.” (Industry association)
“Now if I’m thinking about projects [like a] small extension renovation job, a kitchen or
a bathroom, a builder and we’ve got lots of those, will have maybe one or two or three
blokes with him and he’ll do it all okay and he’s not going to have any other trades.
But the vast majority of construction projects are going to be typically one or two other
of the trades.” (Industry association)
“…[work with a] painter and a plumber doing renovations [would be included] despite
the $1,000 [value].” (Industry association)

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“The only thing that it wouldn’t pick up is the really minor type of work or the very
minor renovation that is happening, or a painter - which is good and they do need to
be removed from it.” (Regulator)
“So what that will mean is that every housing construction in Western Australia will
have to have a principal contractor reporting all of those duties. Now I can’t even
fathom wearing that.” (Regulator)
“On site. I think more than one would end up capturing every domestic build because
you get a builder who brings in his brickies and everything else. So it’s going to, even
though it is on site, that’s going to capture more than your 250 potentially. That you
could have somebody there, you could have a plumber there and somebody on a
digger digging the trench for the plumber and you’ve got to have a coordination plan
because you’ve got two contractors on site. I think that would be worse than the 250
thousand.” (Industry association)
“Yeah I mean we’ve just had a shed built and we had, that’s why I was using the
example… And it was a seven thousand dollar shed. But yes we had two contractors
on site at the same time.” (Industry association)
“Given the nature of the construction industry in Australia where there is very little
integration between businesses. Businesses do their own specialist bit of work so
there may be a large number of contractors on site, even in really small construction
projects. Two may be a bit of a small number for Australia…There would need to be a
lot of research involved in terms of all the different construction projects, different type
of construction projects in Australia generally, how many contractors are used and
determine the type of projects that we want to be captured. With the high risk projects
how many contractors you have on site on those compared to the low risk projects to
try and minimise the potential for whatever we come up with to capture what are really
low risk projects.” (Regulator)

Capture failure

In contrast to this view, six participants (2%) suggested that a threshold based on the number of
contractors present at a worksite may fail to capture large projects being undertaken by a large single
contractor (see Table 5.71).

Table 5.71: Indicative quotations relating to the perception that a threshold based on the
presence of more than one contractor (PCBU) at a worksite would fail to capture certain works

Perceived Quotations
disadvantage

A threshold based “…the job’s worth $10 million, the only contractor doing it is a plumbing contractor,
on the presence of an air conditioning contractor, you would be saying that that doesn’t meet the
more than one threshold of a construction job because there’s only one contractor. I think that’s a
contractor (PCBU) terrible idea because it all depends on the task at hand. Because it could be a $10
would fail to capture million contract and it’s just been won by an air conditioning contractor and he’s the
some relevant only one doing the work, but it’s still high risk work involving gas, involving
works electricity, involving working off the ground.” (Union)
“Well I guess I could have a contractor that employs two people and I could have a
contractor that employs 300. Which is not uncommon with formwork companies
and other big organisations, particularly on bigger jobs, so I’d have issues with that
in terms of 300 people, one contractor running around a project doing all manner of
different works.” (International construction company)
“So you’ll avoid capturing small guys, but you’ll also probably avoid capturing the big
guys as well…” (Industry association)
“You can have 10 people working for the one contractor, you can have two
contractors and 40 people working there so, no.” (Regulator)
“I could have one subcontractor on site with 10 guys.” (Industry association)

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Loopholes

Several participants suggested that a threshold based on the presence of more than one contractor
(PCBU) at a worksite would potentially create new loopholes through which construction
organisations may avoid capture. Potential issues identified were:

● the practice of hiring contractors as employees on a temporary (project-by-project) basis,

● temporary consolidation of businesses, and
● incremental scheduling of contractors such that multiple contractors are not present
simultaneously at a worksite.

Table 5.72 provides some indicative quotations relating to these perceived loopholes.

Table 5.72: Indicative quotations relating to potential loopholes associated with a threshold
based on the presence of more than one contractor (PCBU) at a worksite

Perceived loophole Quotations

Engaging contractors “One way to get around is to…just recruit all these people yourself...'cause then
as employees on a we fall outside the definition.” (Regulator)
project-by-project “I mean if they want to get round that then what they have to do is employ
basis employees. And that’s fine because then that’s the only way to get round that. Or I
mean the other way is illegal which would be to pretend that sub-contractors are in
fact employees. And let me tell you that does happen as well. You’ll get
contractors that will tell their, usually it’s because the contractor is overstretched
and they want the client to believe that they are employing their own employees.
So they’ll get sub-contractors to wear the main contractor’s overalls and hard hats
to pretend that they’re working for them. When in actual fact they’re sub-
contractors so that goes on…” (International construction WHS expert)
“Yeah that would be a potential consequence of taking or adopting that model.
You would find the self-employed subbie, the bricklayer or the carpenter, or the
welder coming on site, may then all of a sudden for the period of that project
become an employee of the builder?” (Union)

Consolidation of “I know they’re not employees but being managed as though they were
businesses employees and probably told what time of day. So you would need possibly a
bona fide sub-contractor test to say are they just a few guys working as labour
only contractors? Or are they bona fide sub-contractor[s] being given a package of
the work to do? So that could be the [test].” (International construction WHS
expert)
…identifying the PCBU is critical when there’s failures. And it needs to happen
quickly and easily and I just wonder if the adoption of a UK-like leaning might
confound that possibility.” (Union)
“I guess industry could try and consolidate lots of different businesses into one
business to avoid being a principal contractor. So what? What would that matter?
Because then they would bring it under the one tent anyway. And that one person
would have direct employment responsibilities for everyone else. So it would be a
good thing.” (Construction WHS expert)

Incremental “More than one contractor. I wouldn't do that. Because some builders just program
scheduling the one contractor at a site at one time. Hypothetical. They call, ‘Right it's your turn
to go on site and build a trench, your turn to go on site and do the brick, your time
to go on site, do the plumbing.’ But in truth it doesn't work like that, you have
multiple trades on site. So my fall back is I only have one trade on site
occasionally … then that's not true. Because you'll have somebody who's putting
up a scaffold while something else is going on internally or on site. Yeah.”
(Construction company)

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“If you simply said number of subbies, you'd have to say when. Because any given
day there might be more or less subbies. If you said over the life of the project,
that doesn't really answer the question of risk. Because if you had one subbie one
week and another subbie another week, there's only ever one subbie there, so...”
(Regulator)
“I would think that again, when there's two contractors on site…if you're scheduled
to work, you could easily just have the trades come in and do excavation work.
And then get the steel fixer in, he puts the steel in. Then the concreters come in,
they pour the footings. Then they go away. Then the carpenters come in or the
frame makers come in, put up the framework. Yes. Still, you know for domestic
building, it's going to be how you manage it well, construction work. Because we
only have one trade on the site at any one time.” (Industry association)
“Oh yes, it's an easy definition to understand. But I think it's also an easy definition
to manipulate… because you can, if you've got multiple contractors, you can say,
‘Well don't come on site today, I only want one contractor on site at the time.
Because I don't want to be defined as doing construction work.’ So it would be
easier to manage in scheduling. Schedule the work to get done in the
construction…on a domestic site, then you can [control] the number of contractors
on site.” (Industry association)

The number of contractors required to trigger the principal contractor duties

Participants expressed different viewpoints about how many contractors should be present at a
worksite before the principal contractor duties should apply. Two participants suggested that the
duties should apply where there are three or more contractors engaged at a worksite. Another two
participants suggested that the threshold number of contractors should be six.

Table 5.73 provides example quotations relating to these arguments.

Table 5.73: Indicative quotations relating to the perceived number of contractors at which the
threshold should be set

Number of Quotations
contractors at a
worksite above
which the
principal
contractor duties
should apply

Number of “It might make more sense to have more than two … three you might be right.”
contractors (Construction WHS expert)
(PCBUs) “Yes, [three trades]. And I think the nature of what the trades are. Particularly if they're
working at a similar time where they're engaged at similar times in the project. And the
work that they do affects or can affect the work of the others.” (Regulator)
“They've got that six idea in model laws …if there's more than six PCBUs doing all
your maintenance works then they require it. So that's kind of, by all accounts you can
hit six pretty quickly on some of these major fit out projects.” (Construction WHS
expert)
“If you’ve got five different, if you’ve got six different subcontractors on a workplace,
you probably need some level of coordination to make sure that they are all operating
safely. Because some of the things that need to be done on a construction site. Yeah
there’s nothing worse than having someone taking your scaffold apart while you’re still
on top of it.” (Regulator)

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Equivalent performance of the threshold

Table 5.74 presents participants’ perceptions relating to the question of whether a threshold based on
the presence of more than one contractor would be more effective than a monetary threshold for the
purposes of triggering the principal contractor duties under the model WHS Regulations.

The majority of participants (n = 4) who provided comment in relation to this question expressed the
view that a ‘more than one contractor’ threshold would not perform any better than a monetary
threshold definition for these purposes.

Table 5.74: Indicative quotations relating to participants’ perceptions of the equivalence of the
multiple contractor definition to the monetary threshold definition

Comparative Quotations
performance of a
‘more than one
contractor’ with
a monetary
threshold
definition

No better in terms “You're trying to deal with something based on upon another value than what you're
of performance trying, than what your outcome is so if your value is reducing the risk and that there's
than a monetary these sites you’re saying are high risk which is why they need management plans
threshold then you need to measure that by the level of risk and you can't do that by a monetary
value or [contractors]…” (Regulator)
“I mean it kind of aligns with that idea the principal contractor should be someone
who's got responsibility for managing different types of work. But what would the
monetary pressure of and the number of duty holders or persons probably 'effectively’
give the same thing.” (Regulator)
“I really don’t see it as any better than having a monetary figure.” (Regulator)
“I can think of a number of ways to frame the definition but I don't know whether it’s
any more effective than the two that you have at present.” (Regulator)
“So you might have 10 people there they might all be working for the one contractor.
…you’re more likely to find they’re all different contractors so, it seems an added level
of complexity. And I can't really see it’s any more or any less efficient than what we
have. Sorry should say if the advantages are the same, one counting mechanism for
another you still have the changeover cost and all they’re really doing is trying to
maintain parity. So why would we do it?” (Regulator)

5.24 Other mechanisms that could augment a threshold definition

In addition to the alternative methods of framing a threshold definition, several participants suggested
additional mechanisms that they believed could potentially improve the operation of the threshold
definition of a construction project.

These mechanisms are shown in Table 5.75 and discussed below.

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Table 5.75: Other mechanisms suggested by participants to augment the operation of the
threshold definition

Frequency Other mechanisms

11 Exclusion list

8 Notifiable works

3 Requirement to appoint a ‘WHS supervisor/coordinator’

Exclusion list

Seven participants suggested that an exclusion list could potentially improve the operation of the
current monetary threshold definition. These participants believed that the development of a list of
construction works categories, to which the WHS planning and coordination duties would not apply,
irrespective of the contract sum would help to overcome the issue of inadvertent capture of
construction works deemed to be low risk in WHS risk.

An exclusion list establishes criteria that would exempt specified sites or activities from the application
of particular legislation, or specified sections or duties.

For example, in the UK, the Construction (Design and Management) Regulations (2015) exclude ‘pre-
construction archaeological investigations’. This exemption does not include archaeological
investigation that takes place once other construction activities have begun.

Participants in the research identified the construction of a single storey house as an example of
works that could be excluded from the principal contractor planning and coordination duties.

However, four participants suggested that the development and implementation of an exclusion list
would complicate the interpretation and application of the principal contractors’ duties. Practical
challenges in deciding what to exclude, and then maintaining a list of appropriate exclusions were
also identified by participants.

Table 5.76 provides some indicative quotations reflecting comments made in relation to the
feasibility/usefulness of an exclusion list.

Table 5.76: Indicative quotations relating to the perceived usefulness/feasibility of an

exclusion list

Exclusion list Quotations

Support for an “But the list we’ve got at the moment isn’t that big and I think what would be great
exclusion list is some further clarification and guidance around what regulators think is in and is
out…when we implemented the construction work code of practice, the national
occupational health and safety construction work code of practice in Queensland,
we developed an interpretive guideline around what stuff was in and what stuff
was out and we had like a matrix that kind of said ‘Yes, this is in but this is out’
and it had some good scenarios and examples in. We used that as our key
document to give people advice on whether things were considered construction
work or whether they weren’t.” (Regulator)

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Support for an “…if you were to introduce a specific list of exclusions. So for example the HSE on
exclusion list their websites they have a list of CDM questions and answer questions and one of
them they put out in relation to maintenance work. And what they said was it
seems that people were applying the maintenance work as construction work a bit
too literally. And HSE at the time tended to say well we shouldn’t really apply
routine maintenance work that’s low risk, that’s short duration. That we shouldn’t
really classify as construction work. So they gave some examples of maintenance
work which they were happy for it not to be classified as construction work…I
would say it would be worthwhile sitting down with you know a team of suitably
experienced individuals in a focus group to go through this kind of idea. And try
and come to a consensus as to where should the threshold be. But not only that
what specific exemptions, for what sort of low risk work do you want to take out
the equation?” (Construction WHS expert)
“My preference would be to take the obligations that are probably being
implemented irrespective of the statutory obligation mandatory and then just make
the additional obligations much more limited. Therefore less onerous.” (Regulator)
“You probably have to do it by exclusion. It would probably be easier to define
what's not in. Single-storey residential construction is not in. Multiple storeys is in.
Maybe that's a better way of doing it.” (Construction WHS expert)
“What we're talking about really is, where is there more likelihood that somebody
is going to be injured seriously? Or in fact killed. Where is it more likely and
therefore where does, therefore where's more protection required…you'd have to
have a look at the monetary with some exemptions, and whether that would work.”
(Construction company)
“I would quite like that idea [of an exclusion list], I was thinking that earlier, you
could have an either/or, you could start with a monetary figure and then depending
on the risk profile you could relax some of the additional obligations.” (Regulator)

Concerns about an “…I think that’s overcomplicating it. And I think it’s probably was done to placate
exclusion list various lobby groups… I don't think that’s a good idea. Why have exemptions?
What are you going to have an exemption for? Somebody can fall from a height,
you can have an exemption on a certain site what’s the point? I don't see that it’s
good. They’ll still kill themselves if they fall.” (Industry association)
“As long as you didn't have a lot of additions or exclusions that you know made
the definition three paragraphs long. It wouldn’t get followed so I’d be wary of it.”
(Industry association)
“I wouldn't support an exclusion of an archaeological dig.” (Union)
“You could say blah, blah, blah dollar threshold, except works over four metres. Or
add in some dot points on other risks. But they become more complex for the duty
holder to understand. When do you estimate those?” (Regulator)
“So I think more clarification around that…and I know from a drafting point of view
it’s very difficult and sometimes clumsy and clunky to have a definition that says
this in but then all these things are out. But in saying that, I think it does provide
for clarity. I think the only problem is then that you kind of have to keep on adding
to that list and that list becomes quite big.” (Regulator)

5.25 Notifiable works

Eight participants identified the implementation of a requirement relating to notifiable works as being
potentially helpful for focusing enforcement effort on construction works of a particular scope, duration
or nature.

This was discussed with particular reference to the UK legislation. The Construction (Design and
Management) Regulations (2015) establish a requirement for construction works that will take longer
than 30 business days and involve more than 20 workers, or are more than 500 person days in
duration to be notified.

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Some participants observed that notification based on construction-related activities that are deemed
to be high risk could provide a mechanism for alerting regulators to construction works requiring
additional WHS planning or coordination and potentially trigger inspection/oversight of the WHS
management activities at notifiable worksites.

The adoption of notifiable works would not change the operation of principal contractors’ duties as
they are currently framed, but participants perceived that it could enable a more targeted enforcement
approach. There was also discussion regarding the involvement of local government to assist with
additional administration/enforcement efforts.

It is important to note that the international construction WHS experts we interviewed indicated that
the concept of notifiable works is considered complicated to apply in practice in the UK.

Table 5.77 provides some indicative quotations related to the concept of notifiable works.

Table 5.77: Indicative quotations relating to participants’ perceptions of notifiable works

Notifiable activities Quotations

Requirement to notify “We used to have a requirement of notifiable activity. So those notifiable activities
the regulator of were; demolition of structures over eight metres, demolition of structures that
construction works require supporting machinery on the slab, any crane work, any scaffolding work,
prior to any excavation work over one point five metres. So again it's encapsulating those
commencement high risk construction activities. They used to be notifiable construction work. So
why don't we go back to doing something like that? Saying, ‘Well, all of these high
risk activities need to be … well they don't need to be notified … well maybe they
do need to be notified actually’. And you need to also have your WHS
Management Plan in place.” (Industry association)
“… [after notification to the regulator], the principal contractor is to furnish the
regulator with a copy of their Work Health and Safety Management System. And
that's more about a heads up, and also to increase the intelligence gathering
capabilities for the regulator. So we can then utilise that as part of an ongoing
compliance inspection program relevant to that particular project.” (Regulator)
“Maybe we should be going towards a site specific management plan to the
regulator, they approved it and then you apply a safety case to it so that you know
you’re held accountable to enforcing that.” (Construction WHS expert)
“Another thing we did have in place in Queensland was a requirement for a
principal contractor to notify us of construction work, where there was a
construction project and we used some of that as intelligence to target our
interventions and auditing program in Queensland. We found that quite useful,
and while there was, I guess, a red tape benefit when the model laws came into
place, that notification was a pretty useful tool for us.” (Regulator)
“I think in the first instance it needs to be notified to the local authority, the local
government [who have the resources].” (Union)
“In the UK under the European Directive we have to notify the HSE when certain
criteria apply. So the criteria is very convoluted… you might be aware that it’s for
notification to HSE the criteria is over 30 days of construction work plus more than
20 workers working simultaneously or over 500 person days.” (International
construction WHS expert)

5.26 WHS supervisor/coordinator

Three participants suggested that requiring the appointment of a WHS supervisor/coordinator could
also augment the effectiveness of the principal contractor duties under the model WHS Regulations. It

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was suggested that this requirement should relate to a minimum number of persons engaged at a
worksite.

Table 5.78 provides some indicative quotations relating to the appointment of a WHS
supervisor/coordinator. Limited commentary on the effectiveness/ineffectiveness of the WHS
24
supervisor/coordinator in practice was derived from the interview data .

Table 5.78: Indicative quotations relating to participants’ perceptions of the appointment of a

WHS supervisor/coordinator

WHS Quotations
Supervisor/coordina
tor

Support for the “…it used to be a requirement in South Australian regulations, that once you had
appointment of a 19 people or over, you must employ a safety supervisor. If you had 19 people
WHS supervisor or going around on site, it means there's more risk involved because there are more
coordinator support people doing more activities. That means it requires more coordination of safety.
That would therefore be a better indicator of risk. Because people are exposed.
Frequency of exposure is a good parameter to apply.” (Industry association)

_____
24 There is a parallel between this role in the previous South Australian regulations and legislation in the UK which formerly required the
appointment of a Planning Supervisor and then a CDM Coordinator. These requirements have since been revoked. This was not discussed
during the interviews.

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Part 6: Scenario modelling

6.1 Introduction

In Part 6 of this report we present the analysis of the scenario modelling. The aim of the scenario
modelling was to:

● examine the operation of the current monetary threshold in relation to different types of
construction works,
● consider the likely impact of indexation on the operation of the monetary threshold, and
● consider issues of consistency and effectiveness arising in relation to the modelling.

6.2 Research approach

A series of construction work scenarios was developed to examine the operation of the monetary
threshold definition of a construction project. These scenarios were used to test the sensitivity of the
monetary threshold definition of a construction project against various other project parameters,
including:

● location, and
● design specifications or choice of materials or finishes.

The impacts of rising costs of construction and the effects of linking the monetary threshold definition
to a method of price indexation were also considered in this modelling.

Steps in the modelling process were:

● scenarios were developed that were intended to reflect construction works that could be at the
margins of the operation of a monetary threshold definition,
● based on specified assumptions, cost estimates for each of these scenarios were generated,
● cost estimates based on variation on design criteria (materials and finishes) were estimated,
● regional variations in costs for each scenario were estimated, and
● cost increases for each scenario between 2011 and 2017 were estimated based on published
data relating to construction costs.

Finally, the scenarios were compared to determine whether:

● they would be included under the current monetary threshold definition,

● their status (i.e. excluded or included) would have changed between 2011 and 2017, and
● they have characteristics that could warrant inclusion in the definition of a construction project
based upon other WHS risk-based criteria (e.g. the likely number of contractors, the possible
presence of high risk work etc).

6.3 Scenario development

Six scenarios were developed to test the operation of the current monetary threshold definition of a
construction project.

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Case scenarios were developed with reference to examples that were cited by interview participants.
These examples were cited as examples of inconsistency, inadvertent capture and/or failure to
25
capture (e.g. high risk work) .

The construction works scenarios include the:

● construction of a small teaching space in an educational facility,

● renovation of a two-storey residential building and construction of an adjacent swimming pool,
● construction of a 2.5km long fence adjacent to a road,
● construction of a small commercial warehouse using pre-cast concrete panels,
● construction of a ‘one-off’ single-storey dwelling, and
● construction of a single-storey dwelling by a volume home-builder.

Assumptions made in relation to each scenario related to gross floor area/length and estimated
26
duration of works are presented in Table 6.1 .

Table 6.1: Assumptions for scenario development

Scenario Assumptions (gross Estimated works

floor area/length) duration (business
days)

construction of a small classroom 35m2 120

renovation of a two storey building and construction 220m2 (200m2 building, 120
of an adjacent swimming pool 20m2 pool)

construction of a fence adjacent to a road 2.5km 30

construction of a small commercial warehouse 800m2 180

construction of a ‘one-off’ single storey dwelling 200m2 120

construction of a single-storey dwelling that is part of 200m2 100

a large multi-dwelling residential development

NB: In the case of the renovation, we assumed the contract worksite was vacant.

6.4 Cost estimation

Cost estimates were developed based on the assumed gross floor area/length and the unit cost for
the specific construction activity. The cost estimates were generated with reference to the latest
132
edition of Rawlinsons’ Australian Construction Handbook, which presents an extensive and detailed
analysis of building/construction costs across different facility/structure types and regional variations.
Where prices were presented in the form of a range for a given construction activity the average price
was used to estimate the total cost.

_____
25 The developed scenarios are hypothetical and do not reflect features of specific real-life construction projects or works referred to by
participants. Each scenario is based on a set of stated assumptions.

26 Construction industry experts were consulted to provide an estimate of the duration of construction works for each scenario.

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Rawlinsons’ Handbook enables costs to be estimated subject to the following limitations and/or
parameters:

● cost estimates reflect the cost of production from the owners’ or developers’ perspective, which
is equivalent to a total contract sum agreed between the owner and the main/head
contractor. Costs are average prices of typical buildings or structures, including allowance for
preliminaries and builders’ profit and overheads. The estimates are indicative only and have
been developed for the purpose of testing the sensitivity of the monetary threshold definition in
relation to design and geographic location,
● cost estimates are used for feasibility studies only and provide no more than a rough guide to
the probable cost of a building,
● costs are based on the average price for typical buildings at December 31, 2016 within
metropolitan areas in each state/territory (unless otherwise stated), including allowance for
preliminaries and builders’ profit and overheads,
● costs are estimated according to the total floor area of all levels measured between the inner
faces of external walls,
● estimated costs exclude land, demolitions, balconies, verandas, covered ways external
services outside 3.5 metres from the outside face of the building, external works other than
those immediately adjacent to the building, loose, or special equipment, furniture, furnishings,
legal and professional fees, and
● regional costs are estimated by adjusting the building price index (BPI) to the costs estimated
for the capital city in each state/territory. The BPI reflects the potential higher logistics/transport
27
and wage costs associated with construction in regional areas .

6.5 Sensitivity analysis

Four variables were used to test the sensitivity of the operation of a monetary threshold definition of a
construction project to different construction project characteristics.

These variables are:

● geographic location, i.e. the state/territory in which the construction work is undertaken, and
whether works are undertaken in a metropolitan or regional location, and
● the complexity of the design of the structure being constructed (e.g. whether it is a basic design
or involves more complicated or expensive design elements or finishes).

Variation by geographic location

Cost estimates for each scenario were generated for each of six capital cities (Adelaide, Brisbane,
Melbourne, Perth, Sydney, and Darwin). In addition, cost estimates were generated for six regional
towns. These were purposefully selected to reflect variation in costs due to distance from the nearest
metropolitan areas. They were:

● Coober Pedy (846km from Adelaide, prices are +20%),

● Cloncurry (1707km from Brisbane, prices are +50%),
● Corryong (431km from Melbourne, prices are +8%),
_____
27 Regional cost indices give an indication of the locality adjustment factor to be applied to the figures of the base city in each state in order to
arrive at a figure for country towns. The respective index figures are a broad indication only of the cost variation and are applicable to the
total project cost. Choice of material, degree of prefabrication and general work load will have a considerable bearing on cost differentials
(Rawlinsons, 2017).

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● Port Headland (1640km from Perth, prices are +60%),

● Walgett (682km from Sydney, prices are +20%), and
28
● Tennant Creek (989km from Darwin, prices are +40%) .

Variation by design specification (materials/finishes)

The total cost of a package of construction works is dependent upon design specifications, including
features such as the selection of materials and the construction technologies that need to be
deployed to construct a particular structure (as it is designed). In order to test the sensitivity of the
operation of the monetary threshold definition, we developed two hypothetical design options for each
29
scenario. These reflected a basic design solution as well as a more costly option .

6.6 Development of estimates

Figure 6.1 shows how the cost estimates are presented for each scenario. It shows variation
according to location and design features.

_____
28 Regional price indices were sourced from Rawlinsons (2017). These regional towns were selected because their regional price indices were
approximately average for the state/territory in terms of the extent to which they vary from those of their nearest state/territory capital.

29 Cost estimates for each design scenario were based on data contained in Rawlinsons’ Handbook (Rawlinsons, 2017).

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Figure 6.1: Format used to present cost estimates for construction works scenarios

NB: The value estimation of the cases scenarios is based on “lump sum” contract. Shaded cells indicate that the construction cost is equal to or above the monetary threshold.

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6.7 Basic scenario cost estimates

Scenario one: Small teaching space in an educational facility

Table 6.2 shows the cost estimate for a small teaching space. The estimates are based on
assumptions of standard finishes, built in cupboards and no air conditioning (Design 1) and
standard finishes, built in cupboards with air conditioning (Design 2). The cost estimates reveal
that this scenario, for both basic and more complex design, could potentially fall below the
monetary threshold definition of $250,000. The estimates suggest that, irrespective of the works
location and design features, the works would not be deemed to be a construction project in
accordance with the model WHS Regulations, or trigger the additional principal contractor duties
related to WHS planning and coordination under a $250,000 threshold.

Scenario two: Two-storey home renovation with adjacent pool

Table 6.3 shows the cost estimate for the renovation of a two-storey home with an adjacent pool.
The Design 1 estimates are based on assumptions related to materials and finishes, such as
aluminium windows, timber doors, MDF skirting, wall finishes, screeds, floor finishes and pool
construction methods. The Design 2 estimates are based on the selection of more expensive
materials and finishes.

The cost estimates reveal that this scenario, for both design options, would fall outside the
monetary threshold definition of $250,000 in most geographical locations. However, the cost
estimates for the second design option were close to the threshold value if the works were to be
30
constructed in Port Hedland ($247,350) and would be above the threshold if the works were
31
undertaken in Tennant Creek ($273,878) .

These estimates show the potential sensitivity of the operation of the monetary threshold
definition to design features (e.g. the specification of more expensive construction materials or
finishes), as well as geographical location of the works. In particular, renovation works in
regional or remote areas of Australia may be captured by a monetary threshold definition set at
$250,000 compared with the same works undertaken in metropolitan areas.

Scenario three: Small commercial warehouse

Table 6.4 shows the cost estimate for a small commercial warehouse constructed from pre-cast
concrete panels. The estimate reveal that, irrespective of geographic location and design
features this type of construction works is likely to fall consistently above the current monetary
threshold definition for a construction project of $250,000.

_____
30 This is close to the threshold definition contained in the model WHS Regulations. It is acknowledged that the WA does not employ a
financial threshold.
31 This is close to the threshold definition contained in the model WHS Regulations. It is acknowledged that the NT has increased the
threshold to $500,000.

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Scenario four: 2.5km fencing

Table 6.5 shows the cost estimate for the erection of a 2.5km fence. The Design 1 estimate is
based on a basic timber butt-jointed paling fence. The Design 2 estimate is based on a
galvanised metal post fence with plastic coated link mesh.

The galvanised metal and mesh fence would be likely to fall within the $250,000 threshold
32
definition for a construction project in all metropolitan areas .

In terms of regional locations, the estimated cost of the metal and mesh fence exceeded the
$250,000 threshold definition in all regional towns, meaning that a 2.5km fence of this design
would be considered a construction project under the model WHS Regulations.

However, if constructed of timber, the 2.5km fence would not be captured by the $250,000
monetary threshold definition in Corryong ($162,000) or Walgett ($192,000) but would be
captured by this definition if constructed in other regional towns included in the analysis.

The metal fence would exceed the $250,000 threshold in all states/territories.

Scenario five: Single-storey dwelling (one-off construction)

Table 6.6 shows the cost estimate for the single dwelling, single-storey house. The Design 1
estimate is based on standard finishes while the Design 2 estimate is based on a more
expensive fit-out, as well as the installation of partial air-conditioning.

Cost estimates indicate that the more expensive design features would push the contract sum
above the $250,000 threshold definition value in all capital cities. However, the more basic
design would fall below the $250,000 threshold definition in Adelaide, but not in other capital
cities33.

Thus, the cost estimates suggest the operation of a monetary threshold definition in single-
storey, single dwelling residential construction is sensitive to geographic location. The single-
storey, single dwelling house construction could also be captured by the $250,000 threshold
definition in all regional towns considered in the analysis 34.

Scenario six: Single-storey house (volume home built)

Table 6.7 shows the cost estimate for the single-storey house built as part of a larger residential
development by a volume home builder. The Design 1 estimate is based on standard
materials/finishes while the Design 2 estimate is based on the specification of higher quality
materials/finishes.

_____
32 It is acknowledged that because the threshold definitions have been increased in the Northern Territory ($500,000), South Australia
($450,000) and Victoria ($350,000), the Design 2 fence would not be captured by the current threshold definitions operating in these
jurisdictions.
33 It is acknowledged that because the threshold definitions have been increased in the Northern Territory ($500,000) and Victoria
($350,000).
34 It is acknowledged that because the threshold definitions have been increased in the South Australia ($450,000) and Victoria
($350,000) that regional Design 1 would not be captured.

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The Design 2 house would also be above the $250,000 threshold in these capital cities.

In regional areas, the Design 1 house would fall below the $250,000 threshold in Coober Pedy
and Corryong but would be captured by the $250,000 definition in the other regional towns
included in the analysis. The Design 2 house would exceed the $250,000 threshold in all
regional towns included in the analysis.

The analysis suggests the $250,000 monetary threshold definition is sensitive to variations in the
selection of different quality finishes in residential construction. The analysis also indicates that
this monetary threshold definition may operate differently between metropolitan cities across
Australia, as well as between metropolitan cities and regional towns.

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Table 6.2: Cost estimate for small teaching space

GFA/length: 35m2 Value estimation (per sqm) - metropolitan areas, prices in AUD
Project duration: 120 business days

(SA)
Adelaide

(QLD)
Brisbane

(VIC)
Melbourne

Perth (WA)

(NSW)
Sydney

(NT)
Darwin
Design I
Classroom (Secondary): Standard finishes, built-in cupboards and
fittings, buildings only, no air-conditioning 1,715-1,850 1,560-1,680 1,715-1,850 1,550-1,670 1,735-1,875 2,315-2,500
Design II
Lecture & tutorial room (University): Standard finishes, built-in
3,170-3,420 2,805-3,020 2,955-3,185 3,065-3,305 3,160-3,410 3,867-4,172
cupboards and fittings, air-conditioning
Lump sum Design I 62,387 56,700 62,387 56,350 63,175 84,262
Total cost
Design II 115,325 101,937 107,450 111,457 114,975 140,696
Value estimation (per sqm) - regional areas, prices in AUD
Regional area

(+40%)
Pedy
Coober

(+50%)
Cloncurry

(+8%)
Corryong

(+60%)
Hedland
Port

(+20%)
Walgett

(+42%)
Creek
Tennant
lump sum, different designs

Unit & total cost 2,058-2,220 2,340-2,520 1,998-1,925 2,480-2,672 2,082-2,250 3,287-3,550
Design I
74,865 85,050 67,378 90,160 75,810 119,652
3,804-4,104 4,207-4,530 3,191-3,440 4,904-5,288 3,792-4,092 5,491-5,708
Design II
138,390 152,906 116,046 178,360 137,970 199,769

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Table 6.3: Cost estimate for two-storey home renovation with pool

GFA/length: 220m2 Value estimation (per sqm) - metropolitan areas, prices in AUD
(Renovation: 200m2, Construction: 20m2 pool)

(SA)
Adelaide

(QLD)
Brisbane

(VIC)
Melbourne

Perth (WA)

(NSW)
Sydney

Darwin (NT)
Duration: 120 business days

Design I
Aluminium windows: prices are based on stock pattern sections
with clear glass, fixed in position and complete with any hardware, 10,648 12,469 10,305 10,855 10,614 12,991
single glazed with 25% opening
Timber doors: prices include for hinges and hanging to frames,
Standard solid core flush door size 2040*820*35mm thick, faced both 898 1,335 1,230 1,125 1,370 1,095
sizes with Sliced Pacific maple veneer
Skirting: timber (MDF) 100*25mm, painted 2,274 2,807 2,622 2,703 3,294 2,774
Ceiling finishes: Seal and two coats alkyd enamel paint on plaster
2,236 2,112 2,071 2,104 1,997 2,728
or similar smooth surface
Wall finishes: Wall paper, prepare and hang paper and ceramic
19,988 21,359 19,012 18,956 20,721 24,386
tiles, fixed with adhesive, 150*150mm plain colour glazed
Screeds: Cement and sand (1:3) screed with steel trowel finish, laid
4,259 4,036 3,943 3,869 5,003 5,196
on concrete, in large areas: 13mm thick
Floor finishes: Carpet: wool tufted-medium use, tiles, resilient
linoleum sheet (heavy duty 2.5mm thick) 8,793 9,024 8,861 9,123 9,443 10,728

Domestic pool: open in-ground pool of fully formed reinforced

concrete construction 35,450 35,850 33,350 37,000 37,700 43,249
Design II
Aluminium windows: sealed double-glazed unit comprising two
18,446 20,679 18,412 18,893 17,862 22,504
panes of 6mm clear float glass. Casement
Timber doors: Standard solid core flush door size 2040*820*35mm
thick, faced both sizes with Sliced Pacific maple veneer, top 750mm 1,517 2,222 1,887 1,875 2,290 2,217
of 2040*820mm
Skirting: Terrazzo 150mm high covered 17,400 12,180 12,180 15,080 13,340 21,228
Ceiling finishes: Suspended ceiling, plasterboard, flush fire rate
19,470 17,820 17,325 19,223 18,233 23,753
plasterboard with concealed suspension, 2*16mm thin (one hour)
Wall finishes: Fabric prepare and hang: vinyl fabric, heavy duty
(commercial standard), Mosaic 61*61mm in main areas, fixed 33,733 33,823 31,860 33,017 33,868 41,154
adhesive
Screeds: cement and sand (1:3) screed with steel trowel finish, laid 6,975 8,165 8,054 6,622 8,072 8,203

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on concrete, in large areas 32mm thick + surface hardener brushed

on
Floor finishes: wool woven carpet, tiles, non-resilient, steel
22,856 23,565 22,498 22,884 23,455 27,885
305*305*3mm steel tiles galvanised
Domestic pool: open in-ground pool of fully formed reinforced
35,450 35,850 33,350 37,000 37,700 43,249
concrete construction
Lump sum Design I 84,546 88,992 81,394 85,735 90,142 103,147
Total cost Design II 155,847 154,304 145,566 154,594 154,820 190,193
Regional area Value estimation (per sqm) - regional areas (towns), prices in AUD
lump sum, different designs

(+20%)
Coober Pedy

(+50%)
Cloncurry

(+8%)
Corryong

(+60%)
Port Hedland

Walgett (+20%)

(+55%)
Tennant Creek
Design I 101,455 133,488 87,906 137,176 108,170 148,532
Design 2 187,016 231,456 157,211 247,350 185,784 273,878
NB: Shaded cells indicate the estimates above $250,000.

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Table 6.4: Small commercial warehouse using prefabricated concrete panels

GFA/length: 800m2 Value estimation (per sqm) - metropolitan areas, prices in AUD
Project duration: 180 business days

(SA)
Adelaide

(QLD)
Brisbane

(VIC)
Melbourne

Perth (WA)

(NSW)
Sydney

(NT)
Darwin
Design I
Single storey for letting, standard shell construction, metal roof, roller shutters, electrical service
to board, plumbing service only, no ventilation, fire sprinklers or fit out (LOW BAY)-pre-cast or 565-610 620-670 550-590 610-660 555-600 805-865
tilt-up concrete external walls

Design II
Warehouse for owner occupation, warehouse with metal roof, roller shutters, all services; no
ventilation or fire sprinklers, Officers and showroom, to front elevation, faced brick and glazed
external walls, Amenities and change room areas to rear of office/showroom including standard 665-720 705-760 635-685 690-745 645-695 787-848
fittings and partial air conditioning - Warehouse (HIGH BAY) - pre-cast or tilt-up concrete
external walls
Lump sum Design I 470,000 516,000 456,000 508,000 462,000 668,000
Total cost 554,000 586,000 528,000 574,000 536,000 675,600
Design II
Regional area Value estimation (per sqm) - regional areas (towns), prices in AUD
lump sum, different designs

(+20%)
Pedy
Coober

(+50%)
Cloncurry

(+8%)
Corryong

(+60%)
Hedland
Port

(+20%)
Walgett

(+55%)
Creek
Tennant
678-732 930-1,005 594-637 976-1,056 666-720 1,143-1,228
Unit & total cost Design I
564,000 774,000 492,480 812,800 554,400 948,560
798-864 1,057-1,140 686-740 1,104-1,192 774-834 1,152-1,247
Design II
664,800 879,000 570,240 918,400 643,200 959,352

NB: Shaded cells indicate the estimates above $250,000.

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Table 6.5: Cost estimate for erecting a 2.5 kilometre fence

GFA/Length: 2.5km Value estimation (per sqm) - metropolitan areas, prices in AUD
Project duration: 30 business days

(SA)
Adelaide

(QLD)
Brisbane

(VIC)
Melbourne

Perth (WA)

(NSW)
Sydney

Darwin (NT)
Design I
Timber, standard butt jointed paling face, 1500mm high 95 78 60 90 64 116
Design II
Mesh, 1200mm high fence of galvanised welded mesh roll top panels and tubular
119 104.5 118 136 121 145
posts, pre-painted finish to fence, green plastic coating to link mesh
Lump sum Design I 237,500 195,000 150,000 225,000 160,000 290,000
Total cost
Design II 297,500 261,250 295,000 340,000 302,500 362,500
Regional area Value estimation (per sqm) - regional areas (towns), prices in AUD
lump sum, different designs

(+20%)
Coober Pedy

(+50%)
Cloncurry

(+8%)
Corryong

(+60%)
Port Hedland

(+20%)
Walgett

(+55%)
Tennant Creek
Unit & total cost 114 117 65 144 77 165
Design I
285,000 292,500 162,000 360,000 192,000 411,800
143 157 127.5 218 145 206
Design II
357,000 391,875 318,600 544,000 363,000 514,750
NB: Shaded cells indicate the estimates above $250,000. In Melbourne the Design 2 metal fence cost estimates are above the monetary threshold definition currently
included in the model WHS Regulations but would fall outside the threshold definition adopted in Victorian OHS legislation ($350,000).

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Table 6.6: Cost estimate for single-storey dwelling (one-off)

GFA/length: 200m2 Value estimation (per sqm) - metropolitan areas, prices in AUD
Project duration: 100 business days

(SA)
Adelaide

(QLD)
Brisbane

(VIC)
Melbourne

(WA)
Perth

(NSW)
Sydney

(NT)
Darwin
Design I
Tiled roof approximately 150/350 sqm, medium standard finishes, framed 1,040-1,120 1,500-1,615 1,335-1,440 1,435-1,550 1,615-1,740 2,055-2,215
Design II
Tiled roof approximately 150/350
Prestige standard, partial air-conditioning + bathroom fit-out and services + kitchen 2,200-2,370 3,345-3,610 2,785-3,005 3,220-3,470 3,225-3,475 2,684-2,89135
fit-out and services
Lump sum Design I 216,000 311,500 277,500 298,500 335,500 427,000
Total cost
Design II 457,000 695,500 579,000 669,000 670,000 557,500
Regional area Value estimation (per sqm) - regional areas (towns), prices in AUD
lump sum, different designs

(+20%)
Pedy
Coober

(+50%)
Cloncurry

(+8%)
Corryong

(+60%)
Hedland
Port

(+20%)
Walgett

(+55%)
Creek
Tennant
Unit & total cost 1,296 2,336 1,498 2,388 2,013 3,032
Design I
259,200 467,250 299,700 477,600 402,600 606,340
2,742 5,216 3,126 5,352 4,020 3,958
Design II
548,400 1,043,250 625,320 1,070,400 804,000 791,650
NB: Shaded cells indicate the estimates above $250,000. In Melbourne the Design 1 single-storey dwelling cost estimates are above the monetary threshold definition
currently included in the model WHS Regulations but would fall outside the threshold definition adopted in Victorian OHS legislation ($350,000).

_____
35 Due to lack of data for this build, the unit price is derived by adjusting a 22% increase to the pricing estimated for Adelaide.

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Table 6.7: Single-storey dwelling (volume built)

GFA/length: 200m2 Value estimation (per sqm) - metropolitan areas, prices in AUD
Project Duration: 120 business days

(SA)
Adelaide

(QLD)
Brisbane

(VIC)
Melbourne

Perth (WA)

(NSW)
Sydney

Darwin (NT)
Design I
Tiled roof and built on a flat site, basic standard finish 120/140 sqm full brick
820-885 1,055-1,140 1,055-1,135 890-960 1,085-1,170 1,900-2,050

Design II
Medium standard finish 120/140 sqm full brick 1,015-1,095 1,350-1,460 1,305-1,405 1,025-1,105 1,270-1,370 2,040-2,200
Lump sum Design I 170,500 219,500 219,000 185,000 225,500 395,000
Total cost Design II 211,000 281,000 271,000 213,000 264,000 424,000
Value estimation (per sqm) - regional areas (towns), prices in AUD

(+20%)
Coober Pedy

(+50%)
Cloncurry

(+8%)
Corryong

(+60%)
Port Hedland

(+20%)
Walgett

(+55%)
Tennant Creek
Unit & total cost 1,023 1,646 1,182 1,480 1,353 2,370
Design I
204,600 329,250 236,520 296,000 270,600 474,000
1,266 2,107 1,463 1,704 1,584 2,544
Design II
253,200 421,500 292,680 340,800 316,800 508,800

NB: Shaded cells indicate the estimates above $250,000.

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6.8 Cost estimate variation by design features over time

Next we considered the extent to which construction costs for each of our scenario works
increased over the period 2011-2017. These figures were based on historic data published in
36
Rawlinsons’ Australian Construction Handbook (2017) . For the purposes of this analysis, the
total construction cost was estimated were the works to be undertaken in metropolitan
37
Melbourne .

The estimated cost increases for each scenario over the period 2011 to 2017 are presented and
briefly discussed below. The blue lines indicate the lower cost design option, while the red lines
indicate the higher cost design options.

Figure 6.2 shows that the cost estimates for the small teaching space (classroom) have
increased gradually over the period 2011 to 2017. However, as at 2017, costs for both the low
and high cost design options are estimated to be below the $250,000 monetary threshold
definition.

Figure 6.2: Cost estimate for small teaching space by design

_____
36 Rawlinsons (2017) acknowledges that this historic data is difficult to apply to small construction projects and those undertaken in
remote areas. Thus, the results should be read with this limitation in mind.
37 The analysis of cost estimate increases over time is based on a comparison with the $250,000 threshold definition included in the
model WHS Regulations. Melbourne construction prices were selected as the reference point for this modelling. However, it is
acknowledged that duties comparable to those of a principal contractor are triggered by a financial threshold of $350,000 under
current Victorian OHS legislation.

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Figure 6.3 shows that cost estimates for the renovation of a two-storey home with a swimming
pool have gradually increased over the period 2011-2017. However, as at 2017, these costs for
both the low and high cost design options are estimated to fall below the $250,000 monetary
threshold definition.

Figure 6.3: Cost estimate for two-storey home renovation (with pool) by design

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Figure 6.4 shows the cost estimates for a small warehouse made from pre-cast concrete panels.
The cost estimates show a relatively steep increase in the costs of this type of construction
works over the period 2011-2017. However, in 2011, the cost estimates suggest that this
construction work would have been captured by the $250,000 threshold definition.

Figure 6.4: Cost estimate for pre-cast concrete panel warehouse by design

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Figure 6.5 shows the cost estimates for two different options for constructing a 2.5km fence
(timber and metal). The cost estimates show only a slight increase in the costs of this type of
construction works over the period 2011-2017. However, throughout the entire period (2011-
2017) the metal fencing design option would have been captured by the $250,000 monetary
threshold definition, while the wooden fencing construction works would not. Thus, for this type
of works the analysis suggests the design and selection of materials would impact the operation
of the monetary threshold definition. The analysis suggests this impact would not have been
changed by price increases in the 2011-2017 period of analysis.

Figure 6.5: Cost estimate for 2.5km fence construction by design

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Figure 6.6 shows the cost estimates for a single dwelling, single-storey domestic house. The
cost estimates show a gradual increase in the costs of this type of construction works over the
period 2011-2017. However, the analysis shows that, throughout the entire period (2011-2017),
the higher cost option (with more expensive materials/finishes) would have been captured by the
$250,000 monetary threshold definition. The analysis suggests that the less expensive design
option (with lower cost materials/finishes) would have initially fallen outside the monetary
threshold definition in 2011, but would have been captured by this definition from 2012 onwards.

Thus, in single-storey, single dwelling house construction, design features (in particular the
selection of materials/finishes) can potentially impact the operation of the monetary threshold
definition. In the case of lower cost design options, the application of a $250,000 monetary
threshold definition would impact whether works were excluded or captured over time.

Figure 6.6: Cost estimate for single dwelling single-storey house by design

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Figure 6.7 shows the cost estimates for a single-storey domestic house constructed as part of a
volume built residential development. The cost estimates show a relatively steep increase in the
costs of this type of construction works over the period 2011-2017. However, throughout the
entire period (2011-2017), the lower cost option (with less expensive materials/finishes) would
not have been captured by the $250,000 monetary threshold definition. However, the more
expensive design option (with higher cost materials/finishes) would have initially fallen outside
the monetary threshold definition in 2011, but would (were this threshold definition to apply) have
been captured from 2013 onwards.

The estimates suggest that, in the case of a volume built single-storey house, the selection of
materials/finishes has the potential to impact on the operation of the monetary threshold
definition. In the case of more expensive design options, the application of a $250,000 monetary
threshold definition would impact whether works were excluded or captured over time.

Figure 6.7: Cost estimate for single-storey house (volume built) by design

Thus, the previous analysis of design variations and cost estimates in the period 2011-2017
suggest that the impacts of price increases over this period have had the potential to affect the
operation of the $250,000 monetary threshold differently for different categories or types of
construction works.

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6.9 Cost estimates by state/territory 2011-2017

Next we investigated the impact of inflation rate on the operation of the $250,000 threshold
definition in some of Australia’s state/territory capital cities. For the purpose of this analysis, price
estimates were based on the more expensive design options included in the analysis, and a
lump sum contract payment mechanism were assumed.

To compare the impact of inflation on construction costs between different states/territories the
following procedure was followed:

● the price of construction for the given project was estimated for different states/territories
(NSW, VIC, NT, WA, SA) for December 2016 according to Rawlinsons’ Australian
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Construction Handbook, and
● the price indices for the years 2011-2015 and 2017 for each state/territory were then
applied to the estimated 2016 price to generate a price estimate for each state/territory for
the period 2011-2015 and 201738.

_____
38 ”The information is based on historical data prepared over the years by the individual firms of the
Rawlinsons Group and is intended as a guide to the effect on building costs brought by
periodic variations in the rates of labour and materials as well as reflecting the cost effects of
building activity and resource availability (i.e. marker competition) at any time.” (Rawlinsons 2017,
p3).

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Figure 6.8 shows that cost estimates for the construction of a small teaching space in an
educational facility increased gradually over the period 2011-2017 in all of Australia’s capital
cities. However, in all capital cities, by 2017, the estimated costs were below $250,000 in all
capital cities included in the analysis.

Figure 6.8: Comparison of construction cost estimates for a teaching space by capital city

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Figure 6.9 shows that cost estimates for the renovation of a two-storey house (with domestic
swimming pool) increased gradually over the period 2011-2017 in all of Australia’s capital cities.
However, in all capital cities, by 2017, the estimated costs were below $250,000 in all capital
cities included in the analysis. Assuming that the rate of cost increases remains stable in these
capital cities, the cost of renovating a two-storey house (with domestic swimming pool) would
reach $250,000 in Darwin in 5 years, Adelaide in 12 years, Melbourne in 10 years, Perth in 9
years and Sydney in 10 years.

Figure 6.9: Comparison of construction cost estimates for a two-storey renovation (with
domestic swimming pool) by capital city

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2
Figure 6.10 shows that cost estimates for the construction of an 800m pre-cast concrete
warehouse increased over the period 2011-2017 in all of Australia’s capital cities. In all capital
cities estimated costs exceeded $250,000 throughout the entire period included in the analysis.

Figure 6.10: Comparison of construction cost estimates for a pre-cast concrete

warehouse by capital city

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Figure 6.11 shows that cost estimates for the erection of a 2.5km metal fence increased over the
period 2011-2017 in all of Australia’s capital cities. In all capital cities, except Brisbane,
estimated costs exceeded $250,000 throughout the entire period included in the analysis.

Figure 6.11: Comparison of construction cost estimates for the erection of a 2.5km fence
by capital city

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Figure 6.12 shows that cost estimates for building a single dwelling single-storey house with
more expensive materials/finishes exceeded the monetary threshold of $250,000 throughout the
39
period 2011-2017 in all capital cities included in the analysis.

Figure 6.12: Comparison of construction cost estimates for a single-storey house (single
dwelling) by capital city

_____
39 It is acknowledged that the threshold definitions have been increased in the Northern Territory ($500,000), South Australia ($450,000)
and Victoria ($350,000). However, the above cost estimates for a luxury single-storey house (single dwelling) suggest that the
construction of such a home could exceed these revised thresholds in the relevant capital cities.

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Figure 6.13 shows price increases for the construction of a volume built single-storey dwelling
between 2011 and 2017. The estimates suggest differences between states, and also changes
over time. Thus, given the materials and finishes specified, in Perth and Adelaide the cost
estimates indicate that the volume built single-storey dwelling would not have been captured by
a monetary threshold definition of $250,000 between 2011 and 2017. In Sydney, the project cost
estimate exceeds $250,000 from 2014 onwards ($251,887). In Darwin, the cost of construction
of a volume built single-storey dwelling in 2011 was estimated to be $395,884 (well above the
40
$250,000 threshold specified in the model WHS Regulations) .

Figure 6.13: Comparison of construction costs between capital cities for a single-storey
house (volume built)

6.10 Cost estimates by regional/metro locations 2011-2017

Next we considered the impact of whether construction work is carried out in a metropolitan or
regional location on the operation of the monetary threshold definition between 2011 and 2017.
Construction cost estimates for each scenario were calculated for a metropolitan location
(Brisbane) as well as a regional location (Cloncurry). For the purpose of this analysis, cost
estimates were based on the more expensive design options specified in the analysis. A lump
sum payment mechanism was assumed. Cost estimates were based on data published in
132
Rawlinsons’ Australian Construction Handbook . Figure 6.14 shows cost estimates for the
construction of a small teaching space in an educational facility over the period 2011-2017 in
_____
40 It is acknowledged that the threshold definitions have been increased in the Northern Territory ($500,000), South Australia ($450,000)
and Victoria ($350,000). The construction costs for a volume built single-storey house are below the threshold values specified in
legislation applicable to each state/territory capital city.

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Brisbane (metropolitan) and Cloncurry (regional) locations. These cost estimates were below the
monetary threshold definition of $250,000 for the entire period of analysis.

Figure 6.14: Construction cost estimates for a small teaching space in metropolitan
(Brisbane) and regional (Cloncurry) Queensland

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Figure 6.15 shows cost estimates for the construction of a two-storey renovation (with domestic
swimming pool) over the period 2011-2017 in Brisbane (metropolitan) and Cloncurry (regional)
locations. These cost estimates were below the monetary threshold definition of $250,000 for the
entire period of analysis.

Figure 6.15: Construction cost estimates for a two-storey renovation (with domestic
swimming pool) in metropolitan (Brisbane) and regional (Cloncurry) Queensland

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Figure 6.16 shows cost estimates for the construction of a two-storey renovation (with domestic
swimming pool) over the period 2011-2017 in Brisbane (metropolitan) and Cloncurry (regional)
locations. These cost estimates were above the monetary threshold definition of $250,000 for
the entire period of analysis.

Figure 6.16: Construction cost estimates for a pre-cast concrete warehouse in

metropolitan (Brisbane) and regional (Cloncurry) Queensland

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Figure 6.17 shows cost estimates for the construction of a 2.5km metal fence over the period
2011-2017 in Brisbane (metropolitan) and Cloncurry (regional) locations. These cost estimates
indicate that, if constructed in Cloncurry, the fence construction cost would have exceeded the
monetary threshold definition value of $250,000 for the entire period of analysis. However, if
constructed in Brisbane, the fence construction would have fallen below the monetary threshold
definition value of $250,000 and would only have commenced being captured by the threshold
definition in 2015 (at an estimated cost of $250,356). These cost estimates suggest that the
operation of the threshold definition in relation to this type of construction works has changed
over time in metropolitan Brisbane. Historically, the estimates also suggest the threshold could
have operated differently depending on whether works were undertaken in Brisbane or a
regional area in Queensland.

Figure 6.17: Construction cost estimates for a 2.5km metal fence in metropolitan
(Brisbane) and regional (Cloncurry) Queensland

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Figure 6.18 shows cost estimates for the construction of a single dwelling, single-storey house
over the period 2011-2017 in Brisbane (metropolitan) and Cloncurry (regional) locations. Given
the expensive materials/finishes assumed in this analysis, these cost estimates were above the
monetary threshold definition of $250,000 for the entire period of analysis.

Figure 6.18: Construction cost estimates for a single dwelling, single-storey house in
metropolitan (Brisbane) and regional (Cloncurry) Queensland

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Figure 6.19 shows cost estimates for the construction of a volume built single-storey house over
the period 2011-2017 in Brisbane (metropolitan) and Cloncurry (regional) locations. In Cloncurry,
the costs exceeded the monetary threshold definition value of $250,000 for the entire period.
However, in Brisbane the monetary threshold definition value was not exceeded until 2013
($251,917). These cost estimates suggest that the operation of the threshold definition in relation
to this type of construction works has changed over time in metropolitan Brisbane. Historically,
the estimates also suggest the threshold could have operated differently depending on whether
works were undertaken in Brisbane or a regional area in Queensland.

Figure 6.19: Construction cost estimates for a volume built single-storey house in
metropolitan (Brisbane) and regional (Cloncurry) Queensland

6.11 Building price index (BPI) versus consumer price index (CPI)

Next we compared the rate of percentage change in the Building Price Index (BPI) with the
Consumer Price Index (CPI) during the period 2011-2017. These comparisons determine
whether the pattern of change in CPI resembled that in annual BPI during the period.

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Historic BPI was sourced from Rawlinsons’ Australian Construction Handbook, based on data
from Australian capital cities (i.e. Sydney, Brisbane, Adelaide, and Perth). CPI data was based
on information sourced from the Australian Bureau of Statistics regarding the operation of CPI at
132
a state/territory and national level . Two types of CPI were modeled, as follows:

● the regional ‘housing’ CPI, and

● the national ‘all groups’ CPI.

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While the former only represents the changes in housing costs, the latter reflects price increases
in the main eight categories of goods and services procured by households.

The characteristics of price increases were examined using two measures:

● the overall percentage increase for a particular index, and

● the slope or rate of change over time for a particular index 41.

The first measure describes the cumulative percentage increases over the period 2011-2017,
while the second measure provides information about the cumulative pace of yearly percentage
change in these indices.

BPI is generated annually and the percentage change between annual figures were used in the
following graphs. BPI is released in June each year. BPI data for 2017 was extrapolated using
the first quarter projections from Rawlinson’s Australian Construction Handbook (2017). CPI is
generated quarterly, and the percentage change between corresponding quarters of each year
(i.e. comparing December 2015 and December 2016) were calculated and are shown in the
following graphs. Excluding 2017 where December data was unavailable and first quarter (March
2017) data was used to substitute.

In summary, the comparisons made for different Australian state/territory capital cities revealed
variation between the two consumer price indices and the BPI percentage changes for these
cities.

Percentage change in CPI did not always closely reflect the percentage change in BPI over the
period.

We present four cases below that show the results of the comparative analysis. These cases
show variation by location, year, and choice of consumer price index.

Figure 6.20 shows the cumulative percentage changes of the three indices in Sydney. It is
42
noteworthy that the rate of change in these indices differs. In the last year of comparison, 2017 ,
these rate increases are estimated to be:

● the regional housing CPI – 22.7%

● the BPI – 17.9%
● the national all groups CPI – 10.9%.

The rate of percentage change over time (slope of the line) in Sydney were:

● the regional housing CPI – 2.7%

● the BPI – 2.5%
● the national CPI – 1.7%.

_____
41 Percentage change relates to the corresponding quarter of previous year. Annual comparative analysis for the same month (i.e.
comparing a single quarter) are shown in the following graphs.
42 The values of indices in 2017 are based on the estimates presented in Rawlinsons’ Australian Construction Handbook (2017).

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The slope of change measure indicates that the rate of increase for the regional housing CPI
increased more rapidly in the period, compared to the two other indices. From 2014 onwards,
the regional housing CPI and BPI increased at a similar rate (reflected by the similar pattern in
the blue and orange lines in Figure 6.20). However, the percentage price increase in process
reflected in the national all groups CPI were smaller and grew at a slower rate.

Figure 6.20: Comparison of percentage change between BPI in Sydney (New South
Wales), regional housing CPI and all groups CPI

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Figure 6.21 shows the cumulative percentage increases of the three indices in Brisbane.
Different patterns were observed between the indices. All three indices followed a similar pattern
of percentage increases until 2014, when the rate of change of the national all groups CPI
slowed relative to the other two indices. In the last year of comparison, 2017 rate increases were
estimated to be:

● the regional housing CPI – 17.8%

● the BPI – 14.7%
● the national all groups CPI – 10.9%.

The rate of percentage change over time (slope of the line) in Brisbane were:

● the regional housing CPI – 2.5%

● the BPI – 2.1%
● the national CPI – 1.7 %.

Figure 6.21: Comparison of percentage change between BPI in Brisbane (Queensland),

regional housing CPI and all groups CPI

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Figure 6.22 shows the cumulative percentage increases of the three indices in Adelaide. In the
last year of comparison, 2017 rate increases were estimated to be:

● the regional housing CPI – 15.7%

● the national CPI – 10.9%
● the BPI – 8%.

The rate of percentage change over time (slope of the line) in Adelaide were:

● the regional housing CPI – 2.4%

● the national CPI – 1.7%
● the BPI – 1.2%.

This estimates for slope of change show that the rate of increase in the regional housing CPI
was considerably higher than that of the BPI in Adelaide over the period. The national all groups
CPI was closer to the BPI than the regional housing CPI.

Figure 6.22: Comparison of percentage change between BPI in Adelaide (South Australia),
regional housing CPI and national all groups CPI

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Figure 6.23 shows the cumulative percentage increases of the three indices in Perth. In the last
year of comparison, 2017 rate increases were estimated to be:

● the regional housing CPI – 13.2%

● the national CPI – 10.9%
● the BPI – 9.4%.

The rate of percentage change over time (slope of the line) in Perth were:

● the regional housing CPI – 1.9%

● the national CPI – 1.7%
● the BPI – 1.3%.

The regional housing CPI rose steeply until 2014, at which point the percentage rate of increase
levelled off and then started to decline.

The line slopes indicated that the rate of increase in the regional housing CPI exceeded that of
both the BPI and national all groups CPI between 2011 and 2014.

Figure 6.23: Comparison of percentage change between BPI in Perth (Western Australia),
regional housing CPI and national all groups CPI

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6.12 Implications for linking the monetary threshold definition to

indexation

The analysis suggests that the impact of linking the monetary threshold definition to indexation
would be impacted by the selection of price index used for these purposes. Regional housing
CPI and building price indices are subject to regional variation. A price index sensitive to local
differences in construction prices (as well as regional differences in rates of change over time)
may better reflect local construction costs and therefore be less likely to result in inadvertent
capture of works. However, it would create a wide variety of outcomes and create a complicated
system of jurisdictional differences. The use of a national all groups CPI for the purposes of
indexing would potentially create a greater degree of national consistency but increases may not
always keep pace or be correlated with increases in the costs of construction across the different
states/territories.

6.13 Comparison with relevant features of construction work

The final step in the scenario modelling was to consider whether features of construction work
that are likely to create additional WHS risk and/or require an additional level of WHS-related
planning and coordination are present in each of the scenarios we considered in the cost-
estimating analysis.

Based on information provided by interview participants we first identified a series of features of

construction work that could potentially increase WHS risk and/or require an additional level of
WHS-related planning and coordination. These are summarised below together with reasons for
their inclusion.

The presence of high risk construction work

Section 291 of the model WHS Regulations list 20 high-risk construction activities. This includes
construction work that:

● involves a risk of a person falling more than 2 metres; or

● is carried out on a telecommunication tower; or
● involves demolition of an element of a structure that is load-bearing or otherwise related to
the physical integrity of the structure; or
● involves, or is likely to involve, the disturbance of asbestos; or
● involves structural alterations or repairs that require temporary support to prevent
collapse; or
● is carried out in or near a confined space; or
● is carried out in or near:

 a shaft or trench with an excavated depth greater than 15 metres; or

 a tunnel; or

● involves the use of explosives; or

● is carried out on or near pressurised gas distribution mains or piping; or

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● is carried out on or near chemical, fuel or refrigerant lines; or

● is carried out on or near energised electrical installations or services; or
● is carried out in an area that may have a contaminated or flammable atmosphere; or
● involves tilt-up or precast concrete; or
● is carried out on, in or adjacent to a road, railway, shipping lane or other traffic corridor
that is in use by traffic other than pedestrians; or
● is carried out in an area at a workplace in which there is any movement of powered mobile
plant; or
● is carried out in an area in which there are artificial extremes of temperature; or
● is carried out in or near water or other liquid that involves a risk of drowning; or
43
● involves diving work.

Number of people working at the same time at a project worksite

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The National Standard for Construction Work (2005) required that a person with control of a
construction project where ‘five or more persons’ are working, or are likely to be working,
simultaneously on a construction site must ensure that: (a) a site-specific occupational health
and safety management plan is prepared before the work commences; and (b) the plan is
monitored, maintained and kept up to date during the course of the work. The National Standard
3
for Construction Work has been superseded by the model WHS Regulations and model Code
134
of Practice: Construction work in jurisdictions that have adopted the model WHS legislation.
135
However, in Western Australia, the Occupational Health and Safety Regulations (1996)
require that the main contractor for a construction site where ‘five or more persons’ are, or are
likely to be, working at the same time must ensure that an occupational health and safety
management plan is prepared for the site before work commences at the site, and that this plan
is kept up to date. A number of interview participants favoured a definition of ‘five or more
persons’ to trigger principal contractor duties.

Number of contractors engaged at the same time at a project worksite

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In the UK, the Construction (Design and Management) Regulations (2015) require that a client
appoints a principal designer in construction projects involving more than one contractor. The
principal designer is required to plan, manage, monitor and coordinate health and safety in the
pre-construction phase of a project and provide relevant information to the principal contractor to
help them plan, manage, monitor and coordinate health and safety in the construction phase. A
principal contractor must also be appointed by a client to coordinate the construction phase of a
project where it involves more than one contractor.

_____
43 Although interview participants suggested that the presence of high risk construction work (HRCW) should potentially trigger the
principal contractor duties, we acknowledge that the model WHS Regulations establish specific requirements in relation to HRCW.
Thus, a person conducting a business or undertaking (PCBU) involved in carrying out high risk construction work has extra duties
under the model WHS Regulations, including the preparing or ensuring that a Safe Work Method Statement (SWMS) is prepared
and that arrangements are put in place to ensure the SWMS is complied with while the work is carried out. The PCBU must also
provide a principal contractor with a copy of a SWMS if the high risk construction work is carried out in connection with a construction
project.

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Application of relevant features

Some of the scenarios that our cost estimate analysis suggested would not be captured by a
monetary threshold definition of $250,000 are likely to involve high risk construction work and/or
other characteristics likely to require careful attention to planning for WHS.

For example, the cost estimates for the construction of a small teaching space in an educational
facility indicated that this would likely not be captured by the monetary threshold definition of
$250,000. However, this scenario is likely to include some elements of high risk construction
work, in particular work that involves a risk of a person falling more than two metres. It is also
likely to involve more than five workers, and more than one contractor, particularly if trade-based
subcontractors are engaged.

Furthermore, proximity to the public and, in particular, a vulnerable group (e.g. schoolchildren) is
likely to increase the importance of planning/coordination of works. In the UK, the Health and
Safety Executive identifies the elderly, children and people with certain disabilities as being
vulnerable groups. Therefore, construction work in locations, such as schools and hospitals,
requires additional planning and provision for WHS risk control. In particular, the following
measures are identified as being relevant:

● securing a worksite when finishing work,

● ensuring excavations and pits are adequately covered or protected by barriers,
● isolating/immobilising vehicles and plant (and, if possible keeping them in a locked
compound),
● storing materials in a safe way to prevent them toppling or rolling over,
● removing access ladders from excavations/scaffolds, and
● locking away hazardous substances
(http://www.hse.gov.uk/construction/safetytopics/publicprotection.htm).

The scenario modelling also reveals that works involving repeated activity over an extended
duration may be captured by a monetary threshold definition even when they involve a single
trade or a relatively small number of workers.

Thus, if constructed from galvanised metal, the fence construction project would be captured by
the monetary threshold definition. This work may include elements of high risk construction work
(e.g. working adjacent to a road, railway or traffic corridor), but it is unlikely to involve multiple
contractors. It may also be undertaken by a small (single trade) work crew. In this scenario, the
PCBU would also be required to manage the works by developing a Safe Work Method
Statement, and making arrangements to ensure work is conducted in accordance with the
SWMS. However, under a monetary threshold definition value of $250,000, the estimated cost of
the metal fence construction works would trigger a requirement to appoint a principal contractor
under the model WHS Regulations.

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6.14 Overview of scenario modelling

A summary of the operation of the current financial threshold ($250,000) in relation to the
construction works scenarios under different conditions (geographic location and design
features) is provided in Table 6.8. The following observations can be made:

● the construction of a small classroom could potentially be excluded under all conditions,
● the two-storey home renovation with swimming pool may be excluded in all conditions
except when more expensive design options are specified and the work is undertaken in a
regional location in the Northern Territory44,
● the construction of a 2.5 km fence adjacent to a road is the most problematic scenario.
Under the low cost material option the works would only potentially be captured by the
$250,000 if undertaken in the Northern Territory. The high cost design scenario would
result in capture of the works under a $250,000 threshold in all metropolitan and regional
locations,
● the construction of a small commercial warehouse would be captured by the $250,000
threshold under both design conditions and in all metropolitan and regional locations,
● the construction of a ‘one-off’ single storey dwelling would be consistently captured,
except when in the case of the less expensive design specification in South Australia, and
● the operation of the threshold produced inconsistent results in relation to the construction
of a volume built single-storey dwelling. It would be captured in Darwin in all
circumstances. In Brisbane, Melbourne and Sydney, this scenario would be captured in
most circumstances. Regional variations also applied. This scenario may not be captured
in regional South Australia or Victoria if the cheaper design option applied. However, it
would be captured in all other regional areas modelled irrespective of the design features.

_____

44 This would not be captured in NT currently where the threshold is $500,000.

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Table 6.8: Summary of the construction project scenarios modelled by different variables in relation to the monetary threshold.

Metropolitan Regional

Scenario State Design I Design II Design I Design II

Construction of a small classroom SA

QLD

VIC

WA

NSW

NT

Two-storey home renovation with swimming pool SA

QLD

VIC

WA

NSW

NT

Construction of a fence adjacent to a road SA

QLD

VIC

WA

NSW

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Construction of a small commercial warehouse SA

QLD

VIC

WA

NSW

NT

Construction of a ‘one-off’ single storey dwelling SA

QLD

VIC

WA

NSW

NT

Construction of a single-storey dwelling that is part of a large multi-dwelling residential SA

development
QLD

VIC

WA

NSW

NT
NB: Lump sum procurement system and payment mechanism are assumed.

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Part 7: Conclusions
7.1 Introduction

In Part 7 of this report we present a synthesis of the results of the three data collection
approaches and respond to the research questions. We also identify some observations based
on the analysis that can be considered by Safe Work Australia in the forthcoming review of the
model WHS Regulations.

7.1 Research question 1

Is a higher monetary threshold associated with a higher risk and more complex and/or larger
construction work?

Some participants argued that, as the cost of construction projects increases, so too does the
level of complexity and WHS risk inherent in the work. This was explained in terms of larger
(more costly) projects involving more complicated technologies, items of plant and equipment,
multiple trades and a larger workforce over a longer duration. The scenario modelling revealed
that some works that participants identified as requiring additional WHS planning and
coordination, such as the construction of a warehouse building using pre-cast concrete panels
(tilt-up construction), would be captured by the monetary threshold.

However, many of the industry stakeholders we interviewed expressed the view that the
correlation between project cost or contract sum and WHS risk is weak or spurious.
Stakeholders who held this view argued that the monetary threshold definition for a construction
project operates in an arbitrary way.

The scenario modelling revealed that the costs of construction (that will determine the contract
sum) are sometimes influenced by factors unrelated to WHS risk. Thus, a designer’s or client’s
choice of more expensive materials or finishes can have a significant impact on the cost, without
materially changing the complexity or WHS risk inherent in construction works.

The scenario modelling revealed that, in relation to constructing a single storey house, the
choice of materials and finishes can influence whether construction works would be included by
the threshold or not.

Many industry stakeholders suggested that the model WHS Regulations were not intended to
capture single storey house-building projects in the monetary definition, but suggested that
inflationary pressures and rising costs of construction have contributed to a change in the
operation of the threshold. However, the scenario modelling also highlights a situation in which
costs can increase without a commensurate increase in project complexity or WHS risk.

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Industry stakeholders argued that the presence of high risk construction work, and a larger
workforce engaged over a longer period increases the likelihood of incidents, as well as
workforce exposure to WHS hazards. The presence of multiple trades and subcontractors was
also perceived to create a need for additional WHS planning and coordination by a principal
contractor.

While these risk factors may be more likely to be present in larger scale and more costly
construction works, some of the industry stakeholders we interviewed identified examples of low
value construction projects at which these risk factors would also be present. They identified
examples of included residential renovation work that, despite being relatively low cost, can
involve high risk construction work (e.g. the risk of disturbance of asbestos or the risk of a
person falling two metres or more) and, in most instances, involves one or more trade-based
contractor. One participant pointed to work undertaken under the Home Insulation Program as
an example of relatively low cost but high risk construction work.

The literature review also provided some evidence to suggest that low cost construction works,
for example, involving activities such as trenching, can sometimes pose high levels of WHS risk
and account for a greater share of incidents than large, well-managed construction project
environments. Reasons for this can include the ad hoc nature and short duration of these works,
as well as the fact that they may be undertaken by very small contractors engaged under highly
competitive contracting arrangements. Several of the industry stakeholders we interviewed
expressed the concern that a monetary threshold potentially reduces the focus on small scale,
low cost but high risk construction activities.

The scenario modelling revealed that other types of construction activity that have particular
characteristics with the potential to impact WHS may fall below the threshold. For example, the
construction of a teaching space in an educational facility could potentially involve working in
close proximity to a vulnerable group of members of the public (schoolchildren). The WHS
aspects of this work would potentially warrant additional planning and coordination as a result,
yet the cost estimates indicated that these projects would not necessarily be captured by the
threshold definition of $250,000.

The scenario modelling also revealed that other factors unrelated to project complexity and WHS
risk (such as design specifications and geographic location) can also significantly impact the cost
of a package of works, while being unlikely to impact the WHS requirements associated with the
work.

While monetary thresholds have been increased in recognition of the higher costs of
construction in some states/territories, within states and territories there is still significant
variation between metropolitan and regional areas. These variations can result in construction
activity being captured by a monetary threshold definition if it is undertaken in a regional town,
but not if it is undertaken in a metropolitan area. This impact was particularly relevant for single-
storey house construction. Geographic variations in cost again reveal that the relationship
between contract sum and WHS risk is problematic.

While it may be generally true to state that large and complex construction projects are likely to
cost more and present high WHS risk, there are also examples of low cost projects that present

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specific WHS challenges and involve high risk construction work. In other cases, cost increases
as a function of factors that are likely to have little impact on the level of complexity or WHS risk
inherent in a project. In some of these situations, geographic variation in construction costs have
the potential to create inequality in the way that the monetary threshold definition of a
construction projects operates.

7.2 Research question 2

How effective is the current definition of a construction project under the Model WHS
regulations?

In answering this question we draw on the interview data and scenario modelling to provide
discussion of the effectiveness of the current monetary threshold definition of a construction
project. For the purposes of this discussion we refer to whether the definition is practical,
understandable and equitable.

The majority of industry stakeholders who participated in the interviews expressed the view that
the current threshold definition is practical to apply and easily understood by industry
participants. The monetary definition is perceived to be clear and objective, making it easy for
duty holders and regulators to determine whether the particular principal contractor’s planning
and coordination duties triggered by the threshold definition should apply to a given situation.
Some participants noted that it is easy to identify the contract sum of a construction works
package in contract documentation for the purposes of determining applicability.

Some industry stakeholders also argued that the monetary threshold has become accepted by
industry and that industry participants can relate to the use of the contract sum as a trigger for
the principal contractor duties.

However, other participants perceived that the monetary definition is deceptively simple when, in
fact, several factors impact upon the reliability of the contract sum as a trigger mechanism for the
principal contractor’s duties. Sources of low reliability were identified as follows:

● the impact of the contract procurement strategy adopted on the contract sum (e.g.
whether engineering design/architectural design/building/landscaping and other services
are procured under a single or separate contracts),
● a prevailing or perceived lack of understanding of what is included/excluded in (e.g. tax,
45
levies, land, transport costs ),
● variation in the demand for and supply of specific materials (e.g. steel), which is believed
to impact project costs, but is unrelated to the inherent level of WHS risk in construction
works,
● market conditions and competition to win work, which is perceived to create downward
pressure on the construction prices, while also increasing WHS risk, and
● cost estimating uncertainty, error and price escalations after the award of a contract.

_____
45 Despite legislative guidance on costing practices provided within the Construction Code of Practice, this was identified as a point of
confusion for respondents.

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The point was made that all of the above-mentioned factors can potentially impact cost and
tender price without any commensurate impact on WHS risk.

The literature review also revealed that construction cost estimating is not a precise science and
it is common for costs to exceed initial estimates. Some of the industry stakeholders we
interviewed also identified industry pricing practices as impacting on the operation of the
definition. Thus, participants identified situations in which an initial price may be under the
monetary threshold, but that the price could increase subject to changes (for example to design
specification, materials etc) as the construction works progress to the extent that the final cost of
the works exceeds the threshold. The sensitivity of the monetary threshold to the selection of
different construction materials and finishes was also revealed in the scenario modelling.

Many of the industry stakeholders we interviewed perceived that the current definition presents
loopholes through which industry participants can avoid the operation of the principal
contractor’s duties. The most frequently identified loophole relates to the splitting of work into
packages that are let separately or sequentially to different subcontractors.

The industry stakeholders we interviewed expressed mixed views about the extent that this
happens. A small number indicated that it would be ‘too much trouble’ to structure work in order
to deliberately avoid the principal contractor duties and they perceived this practice to happen
only in rare circumstances. However, a larger number of representatives of regulators, unions
and construction contractors all indicated that the practice of contract splitting to avoid principal
contractor responsibilities occurs quite frequently, particularly at the ‘lower end’ of the industry.

There was a lack of agreement about the level at which a monetary threshold should be set.
Some industry stakeholders we interviewed indicated that $250,000 is an appropriate threshold
above which additional duties for WHS planning and coordination should apply. However, many
of the industry stakeholders we interviewed believed that the current monetary threshold
($250,000) is too low and captures works that do not warrant the additional principal contractor
duties. Participants cited various reasons to explain why and how the operation of the current
monetary threshold definition results in inadvertent capture of low WHS risk construction works.
These reasons were related to:

 variability in the cost of materials,

 cost variation linked to the geographical location of works, and
 the case of minor works carried out over an extended duration.

The problem of inadvertent capture due to the costs of construction has been addressed in a
number of jurisdictions by increasing the monetary threshold. However, these increases are not
consistent across jurisdictions and potentially contribute to a situation in which the principal
contractor duties apply to works carried out in some states/territories but not in others.

The scenario modelling also revealed that, under certain circumstances, the operation of the
monetary threshold definition is sensitive to the following variables:

● the design and selection of materials and finishes, and

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● the location of the works, i.e. the relevant state/territory and whether the works is
conducted in a regional or metropolitan area.

Thus, for certain scenarios modelled, the same works could fall above or below the threshold
value depending on features of the design, what materials and finishes are selected and where
the works are located.

A substantial number of the industry stakeholders we interviewed were opposed to the

application of a monetary threshold (see response to question 3 below).These participants
believed that a monetary threshold, even when set at a low level, would not necessarily capture
all work that warranted careful planning and coordination. These participants generally favoured
a definition that included a reference to the presence of high risk construction work, which they
argued can be present in projects with a contract sum below $250,000.

7.3 Research question 3

Is the use of a monetary threshold appropriate?

The industry stakeholders who we interviewed expressed strong and different opinions about the
appropriateness of the monetary threshold. Those who believe it is appropriate acknowledge a
monetary threshold has limitations, but believe it is the clearest and simplest way of determining
when the principal contractor duties should apply. They also suggest that, while it may be
imperfect, the contract sum and the level of WHS risk inherent in a construction project are
positively correlated, i.e., as the contract sum increases, so too does the level of WHS risk and
importance of WHS planning and coordination. Arguments in favour of a monetary threshold
generally focused on contract sum being a reasonable proxy for construction project risk,
together with practical arguments about the simplicity and clarity of a monetary approach and the
perceived ease of enforcement (relative to other types of definition).

However, a substantial proportion of industry stakeholders were also strongly opposed to the
use of a monetary threshold definition, irrespective of the level at which it is set. These
participants argued that a monetary threshold definition operates in an arbitrary manner and is
unrelated to WHS risk and therefore unrelated to the need for WHS planning and coordination.

These participants identified cases in which:

● low risk construction works would be captured by a financial threshold definition as a

result of their duration or contracting procurement arrangements (for example, in annual
minor works/maintenance contracts let by government), or
● works that pose a high level of WHS risk but that could feasibly fall below the threshold
value of $250,000 (for example, in small domestic renovations in which asbestos is
present).

The scenario modelling confirmed that the operation of the monetary threshold definition can be
influenced by factors that are not likely to be related to WHS risk or the need for WHS planning
and coordination by a principal contractor. These differences related to design specification

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(materials) and the location of works and particularly impacted single storey house building and
the construction of repetitive work over an extended duration (fence-building). The fence building
scenario is of particular interest because, in most metropolitan areas, the fence construction
would be below $250,000 if constructed from timber but greater than $250,000 if constructed of
metal. However, the WHS risk inherent in the fence construction depends on the location of the
fence. If constructed adjacent to a road then traffic management requirements would suggest a
higher level of WHS planning and coordination would be called for than if constructed adjacent to
an empty paddock. This example highlights inconsistencies inherent in using a purely monetary
threshold and suggests the need for a risk-based approach.

It is noteworthy that many of the industry stakeholders we interviewed favoured a more nuanced
threshold definition based upon more than a single monetary trigger. These participants
identified a range of different mechanisms that could be applied in different combinations.
However, the most frequently cited mechanisms were:

● a monetary threshold combined with the presence of high risk construction work,
● a combination of the number of contractors engaged at a worksite and high risk
construction work activities,
● a monetary threshold combined with a threshold of ‘five or more persons’ engaged at a
worksite, and
● a ‘five or more persons’ threshold combined with the presence of high risk construction
work.

Some participants also expressed the view that a monetary threshold definition could be
augmented by other mechanisms to overcome its perceived limitations. Thus, some participants
indicated that the use of an exclusion list with a relatively low financial threshold could ensure
that low value but high risk works are captured but that activities not intended to be captured
would be explicitly excluded.

7.1 Research question 4

What would be the likely impact of applying periodic indexation to a monetary threshold value?

Interview participants were generally in favour of periodic indexation of the monetary threshold
value, arguing that it would help to reduce the potential for inadvertent capture of low risk
construction works. When asked about the likely impact of indexation, responses were mixed.

Those participants who did not believe that the monetary threshold should be linked to a price
index were fundamentally opposed to the use of a monetary threshold on the grounds that it is
arbitrary and unrelated to WHS risk.

Most participants perceived indexation would have a negligible impact on the operation of the
monetary threshold as long as the increase in threshold aligned with the increase in construction
costs over time. These participants held the view that indexation is important to avoid the
inadvertent capture of low cost/low risk construction works due to inflationary pressures.

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However, other participants expressed concerns that indexation would reduce the number of
projects for which principal contractor duties would apply, with the risk of failure to capture low
cost but high risk projects.

The stakeholders we interviewed, particularly representatives of regulators, raised concerns

about the fact that indexation would need to operate differently by state and territory creating a
complicated system that would not be standardised or harmonised across jurisdictions.

The scenario modelling also revealed that the choice of indexing method could impact the
operation of the definition over time as the rates of increase in the national ‘all groups’ Consumer
Price Index, the regional housing CPI and the building price index vary over time. Further, in
some states/territories, annual increases in the regional housing CPI and Building Price Index
were higher than that of the national consumer price index between 2011 and 2017. These
findings suggest that the selection of an appropriate form of indexation would need to be based
on a robust econometric analysis of the consequences of the selection, and regional variations
should also be considered. The method of indexation selected would potentially impact the
operation of a monetary threshold differently in different jurisdictions.

The interview participants cautioned against making changes to a monetary threshold too
frequently. Most participants believed that annual revision of the threshold would be
unmanageable and cause considerable confusion among industry participants. Generally, the
interview participants suggested a review and adjustment every five years would be appropriate
and manageable.

Notwithstanding this, the scenario modelling shows that, in the case of the single storey house,
the operation of the monetary threshold definition (in terms of whether the works were priced
below or above $250,000) changed within a five year period between 2011 and 2015.

7.2 Research question 5

Should a monetary threshold be subject to CPI?

The majority of participants agreed that the monetary threshold should be linked to some form of
price index. Reasons for this were so that it can keep pace with price increases and, thus, avoid
inadvertent capture of works that present a low level of WHS risk and do not warrant the
requirement to appoint a principal contractor who engages in WHS planning and coordination.

The scenario analysis revealed that construction price increases estimated to have occurred
between 2011 and 2016 and forecast for 2017 changed the operation of the current monetary
threshold definition in relation to the construction of a single storey house (assumed to be in
Melbourne). Thus, without linking the monetary threshold to a price index, the duties will not be
consistently applied to particular categories of construction work over time. Works that may have
originally been excluded because they fell below the threshold may inadvertently be captured as
prices increase over time.

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Concerns were raised about increasing the complexity of the model WHS legislation, which
participants perceived would potentially reduce the effectiveness of what they regard to be a
currently simple and clear financial threshold definition.

Our analysis suggests that the impact of linking the monetary threshold definition to indexation
would be impacted by the selection of price index used for these purposes. Regional housing
CPI and building price indices are subject to regional variation. A price index sensitive to local
differences in construction prices (as well as regional differences in rates of change over time)
may better reflect local construction costs and therefore be less likely to result in inadvertent
capture of works. However, it would create a wide variety of outcomes and create a complicated
system of jurisdictional differences. The use of a national all groups CPI for the purposes of
indexing would potentially create a greater degree of national consistency but increases may not
always keep pace or be correlated with increases in the costs of construction across the different
states/territories.

7.3 Research question 6

How common are potential issues identified by Safe Work Australia such as: (i) capturing
smaller, less risky construction work due to inflationary pressures, expensive fittings or
regional/remote location of construction work, (ii) capturing minor construction work over
extended periods or where later additions to construction work push the cost over the current
monetary threshold, or (iii) preparation of contracts to avoid the threshold?

The scenario modelling, and comments made by interview participants indicate that inflationary
pressures, the specification of expensive materials or fittings and/or regional or remote location
of construction works creates inequity in the application of the monetary threshold. This is
particularly true in the case of smaller residential construction and renovation work. In particular,
several participants also pointed out that high risk construction work can also be present at such
worksites.

Participants identified examples in which minor construction work conducted over an extended
period, could also be captured by the current monetary threshold. This was identified in relation
to the letting of extended contracts for minor works and maintenance contracts that are awarded
on an annual basis.

Interview participants suggested that the practices of splitting contracts into smaller packages of
works to avoid capture, paying subcontractors in cash or quoting below the threshold and
subsequently increasing the project value through variations and claims occur frequently or
moderately frequently in the industry.

7.4 Research question 7

What are the proxy measures for triggering a coordination role by a principal contractor used
domestically and internationally, and what is the effectiveness of these alternative proxy
measures in managing risks?

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The research revealed alternative proxy measures for triggering WHS planning and coordination
roles include:

● a ‘five or more persons’ definition, and

● the presence of more than one contractor at a worksite.

The industry stakeholders we interviewed identified both advantages and disadvantages

associated with these approaches. Participants’ evaluations of the effectiveness (or likely
effectiveness) of these alternative proxy measures were mixed. A ‘five or more persons’
definition was perceived by some participants to be preferable to a monetary threshold because
it is not sensitive to price increases or clients/designers’ selection of materials or finishes that are
unrelated to WHS risk. Unlike the monetary threshold, these participants also commented that a
‘five or more persons’ threshold would operate consistently across regions and jurisdictions and
therefore it may be more equitable in its operation. Participants also believed that, like the
monetary threshold, a ‘five or more persons’ threshold is simple and clear. Both definitions were
considered to be understandable. However, some participants argued that using a ‘five or more
persons’ threshold would create practical problems for compliance and enforcement. This view
was explained in terms of:

● the dynamic nature of construction work means that the number of people working at a
worksite will change on a daily basis,
● potential difficulty for inspectors to know the numbers of workers engaged at a worksite at
any given time,
● potential variations in numbers of sub-contracted workers at a site, and
● a lack of clarity about who should be counted in this number, e.g. whether professionals
visiting the site for limited periods, such architects or building surveyors, should be
counted.

Nearly half of interview participants felt that the number of people on site is more closely
associated with the level of WHS risk than the monetary value of a contract. However, a ‘five or
more persons’ threshold was also considered to be imperfect. Participants believed that a ‘five or
more persons’ threshold would inadvertently capture some low risk construction work and also
potentially fail to capture high risk construction work.

Around one quarter of interview participants believed that a definition based on the number of
contractors simultaneously present at a worksite was more closely linked to WHS risk than the
contract sum. These participants commented that the presence of multiple contractors increases
the need for the type of planning and coordination duties triggered by the current monetary
threshold. Some participants also believed that a threshold based on the number of contractors
present would be simple and clear and potentially easy to regulate. However, participants’
reasons for holding this view were not explained.

The majority of interview participants argued that triggering the duties when there is more than
one contractor simultaneously present at a worksite would significantly increase the capture of
the threshold to include all construction works with the exception of single task activities (such as
some simple maintenance works). Participants pointed out that such a threshold would capture

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almost all residential renovations which typically involve a builder and at least one other
subcontracted tradesman.

An opposing view to the argument that everything would be captured by a multiple contractor
definition was also put forward by some participants who argued that a threshold based on the
presence of multiple contractors could potentially fail to capture large projects being undertaken
by a single contractor. Questions also arise in relation to the use of labour hire by large
contractors and how this could potentially impact the operation of a multiple contractor threshold.

Like the ‘five or more persons’ definition, a threshold based on the presence of multiple
contractors could potentially operate consistently across different regions and jurisdictions.

7.5 Research question 8

What proxy measures or alternative definitions have been used internationally? Are these
alternative definitions effective?

Alternative international threshold mechanisms are presented in Appendix C.

These mechanisms are:

● based on the number of contractors and a minimum duration of construction work

(Sweden, Norway, The Netherlands),
● based on a duration of work (except when asbestos is present) (Austria),
● based on the total costs of labour and materials and the presence of specified high risk
activities (Canada),
● based on work undertaken by a developer in the course of their business, involving a
contract sum of Singapore $10 million or more, involving a development under the
Planning Act, or involving a project to modify a permanent structure (Singapore), and
● based on a project being notifiable (combination of duration and number of workers or be
more than 500 person days). Specific duties apply where more than one contractor is
engaged at a project46 (UK).

Unfortunately, the literature review was unable to identify research or documents that specifically
evaluate or describe the effectiveness of these threshold mechanisms. Given the complexity of
incident causation and multiple regulatory, social, economic, cultural and industrial factors that
contribute to the occurrence of work-related injuries, as well as national differences in the
collation of WHS performance data, it is not possible to use injury or incident performance data
to compare the effectiveness of internationally adopted thresholds in driving improved WHS
outcomes in the construction industry.

We sought industry stakeholders’ views about the effectiveness of internationally adopted

threshold mechanisms. However, the majority of Australian participants indicated that their

_____
46 “contractor” refers to any person (including a non-domestic client) who, in the course or furtherance of a business, carries out,
manages or controls construction work.

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knowledge of these internationally adopted threshold mechanisms was insufficient for them to
comment on their effectiveness.

7.6 Research question 9

What is the likely impact of changing the definition of a construction project under Part 6.4 of the
model WHS Regulations (2014)?

The analysis revealed perceived problems inherent in the operation of the current monetary
threshold, in relation to:

● inconsistencies of capture,
● potential avoidance,
● the lack of a clear and direct correlation between contract sum and WHS risk, and
● the impact of inflation.

Alternative threshold mechanisms were identified and discussed by industry stakeholders.

However, none of these alternatives was universally supported. The advantages and
disadvantages of all types of threshold mechanisms were also identified and discussed.

The monetary threshold was perceived to be simple to understand, comply with and enforce,
and salient to industry. Interview participants perceived it is widely accepted. However, more
than half of the participants expressed strong beliefs that the monetary threshold does not
always capture high risk construction work or activities that warrant additional planning and
coordination.

Some participants considered that a multifactorial threshold, combining a contract sum (as an
indicator of scale and likely complexity of works) together with other prescriptions of high risk
activities could be more effective.

Participants’ comments suggest that the likely impact of changing the definition of a construction
project under the model WHS Regulations would vary according to the alternative definition
selected.

Table 7.1 provides a summary of participants’ perceptions of the likely impacts associated with
the adoption of different types of threshold mechanism.

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Table 7.1: Interview participants’ perceptions of the impacts associated with the
application of alternative threshold definitions

Perceived impacts of alternative definitions

Definition Positive impact Negative impact

A definition based on High risk construction work is: High risk construction work is:
construction activities
● well-defined, ● not as well-defined as
(e.g. the use of high risk
● statistically responsible others suggest, and
construction work as the
definition) for the most injuries and ● insufficiently
deaths, comprehensive and
● already referred to in inconsistent across
current WHS legislation, jurisdictions.
and Participants did not agree on
● proportionately related to how many high risk activities
WHS risk. should be present for the duties
to be triggered.

Multifactorial definition based on Some participants believed that Some participants believed that
more than one criterion
legislation using a multifactorial using a multifactorial definition
threshold prior to the introduction would:
of the model WHS Regulations  increase subjectivity and
worked well. make the threshold more
A multifactorial threshold was complicated and confusing,
perceived to:  make compliance and
 be sufficiently flexible to enforcement more difficult,
cope with different and
conditions,  increase the likelihood of
 be better able to capture loopholes.
works based on WHS risk
factors, and
 be less susceptible to
loopholes if carefully
written.

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WHS risk matrix framework Some participants perceived that Some participants stated that:
the development of a risk-based
 risk assessment is highly
approach could: subjective and ratings
 assist duty-holders to depend heavily upon the
understand WHS risk person doing the rating,
factors present in  this approach could create
construction works, and
inconsistencies in
 ensure that the interpretation and
requirement for planning application, and
and coordination activities
 the creation and
is triggered by an administration of a risk
assessment of WHS risk.
matrix framework would be
onerous.

Number of contractors Some participants perceived that Other participants perceived that
the number of contractors is a a threshold based upon the
good reflection of a need for presence of more than one
additional WHS coordination and contractor at a worksite could
planning at a worksite and that produce negative consequences.
such a definition would These included consequences
adequately capture the types of associated with broader capture
sites at which the principal of works, including minor works,
contractor duties should apply, capture failure, and the creation
and a definition based on the of new loopholes.
presence of more than one
contractor would be easy to
understand and administer.

7.7 Research question 10

What would be the likely impact of moving from a monetary threshold to a number of persons on
site threshold?

More than half of the interview participants favoured a ‘five or more persons’ threshold over the
current monetary threshold of $250,000. The most frequently identified reason for this is that the
‘five or more persons’ threshold was perceived to overcome the limitations they identified in
relation to the monetary threshold. These participants expressed the view that the number of
people engaged at a worksite is a better indicator of complexity and risk than a dollar value, and
more appropriately reflects the need for WHS planning, coordination and communication. In
addition, the ‘five or more persons’ threshold was perceived to operate equitably in different
states and territories and between metropolitan and regional areas. It was also viewed as
resilient to inflationary pressures and therefore less likely to produce ‘capture creep’ whereby
works to which the duties would not apply at one point in time, would be captured as a result of
increasing costs of construction. Participants also believed that the ‘five or more persons’
threshold would not produce inconsistent outcomes in relation to the specification of more
expensive building materials or finishes in a particular works package.

Some participants also believed a ‘five or more persons’ threshold would have fewer loopholes
as it is less easily subject to avoidance through contract splitting and cost/price manipulation.

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However, almost half of the interview participants perceived a ‘five or more persons’ threshold to
be:

● unreliable and difficult to administer (because the number of workers engaged at a

worksite is difficult to predict and varies over time), and
● more likely to capture small, low risk works than a monetary threshold and negatively
impact small-to-medium, sized construction firms.

A small number of participants also perceived that, like a monetary threshold, a ‘five or more
persons’ threshold could fail to capture worksites at which high risk construction work is being
conducted.

7.8 Research question 11

What would be the likely impact of introducing principal designer duties similar to the
Construction (Design and Management) Regulations 2015 in the United Kingdom?

The duties of principal designers can only be understood in the context of the other duties
established by the UK’s CDM Regulations (2015). The CDM Regulations create duties for clients
of the construction industry (including domestic clients, unless these duties are transferred to
another party).

Under the CDM Regulations (2015):

(1) A client must make suitable arrangements for managing a project, including the
allocation of sufficient time and other resources. These arrangements are deemed to be suitable
if: (a) the construction work can be carried out, so far as is reasonably practicable, without risks
to the health or safety of any person affected by the project; and (b) certain specified facilities
are provided in respect of any person carrying out construction work. Clients must ensure that
these arrangements are maintained and reviewed throughout the project and provide pre-
construction information as soon as is practicable to every designer and contractor appointed, or
being considered for appointment, to the project. The client must ensure that, before the
construction phase begins, a construction phase plan is drawn up by the contractor if there is
only one contractor, or by the principal contractor if there is more than one contractor and that
the principal designer prepares a health and safety file for the project.

Where there is more than one contractor, or if it is reasonably foreseeable that more than one
contractor will be working on a project at any time, the client must appoint: a designer with
control over the pre-construction phase as principal designer; and a contractor as principal
contractor.

These appointments must be made as soon as is practicable, and in any event, before the
construction phase begins.

Principal designers have specific duties for planning and coordinating activities before
construction work commences.

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Their role involves ensuring as far as reasonably practicable that:

“(a) everyone involved in working on the pre-construction phase cooperates with each other.
They must establish that effective communication is occurring and that information is shared
within the project team. This could involve holding meetings with others in the design team.
Progress meetings with the client and the principal contractor also provide a way of ensuring
work on the project is properly coordinated;

(b) designers comply with their duties. Appropriate checks should be made to ensure designers
are dealing with design risks appropriately. This can be done as part of the design process and
through regular progress meetings;

(c) designers provide information about elements of the design which present significant risks
that cannot be eliminated. This should include information about unusual or complex risks that
are more likely to be missed or misunderstood by contractors or others on the project rather than
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risks that are well known and understood. ”

In some procurement approaches design work takes place before a construction contractor is
selected and contractually engaged on a project. Thus, the principal designers’ duties ensure
that someone is responsible for coordinating and planning WHS risk management activities
before construction work commences.

This role is important because construction design is a complex socio-technical activity. Many
different specialist designers are often involved in the design of specific building elements,
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components or systems . These components must fit together in a compatible way and WHS
risk can arise at the interfaces between elements. Product complexity means that design
expertise often resides with specialist suppliers of components or systems who may not be
138
engaged when conceptual design decisions are made . Thus, prescribing responsibilities for
the over-arching coordination of this activity to ensure that the WHS risks are appropriately
considered and managed is potentially beneficial.

Under the Construction Design and Management Regulations 2015, domestic clients can also
enter into a written agreement with a principal designer to carry out the client duties on their
behalf, reducing the burden of the operation of these regulations on domestic clients whose
projects fall within the scope of the Regulations.

The UK-based construction industry WHS experts we interviewed provided some insight into the
experienced impacts associated with the operation of the principal designer duties in the UK.
They commented that:

● the principal designers’ duties address a perceived unwillingness among designers to be

involved or be held accountable for WHS risk management in their professional practice,
● the broadening of responsibilities for designers has the potential to focus industry attention
on how to effectively manage safety in design in construction projects in which multiple
design consultants are contributors,
● the broader duties have led to calls to increase designers’ education in WHS risk
management to support them in fulfilling their duties, and

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● the duties can help to create a shared sense of responsibility for WHS and improve
outcomes through improved communication, cooperation and coordination of pre-
construction WHS risk management activities.

UK interview participants also observed that the broadening of designers’ responsibilities could
potentially increase the likelihood of designers being prosecuted for breaching their principal
designers’ duties.

Very few Australian industry stakeholders commented on the UK principal designers’

responsibilities, but those that did suggested that this approach may encourage designers to
provide documentation relating to safety in design decisions and outcomes in sufficient time for
this to be factored into the pre-planning of construction work. At present, these participants
indicated that this documentation is often provided too late in the project life cycle to be helpful in
pre-construction planning for WHS.

7.9 Research question 12

How would a modified definition impact the capacity of the regulations to meet their objectives,
such that, they offer a practical and objective trigger for the additional responsibilities for
principal contractors?

The scenario modelling and interview data both suggest that, although contract sum is a
practical and objective trigger for the application of the principal contractor duties, it operates
inconsistently and potentially inequitably:

● across states/territories,
● between regional and metropolitan areas,
● between works utilising different materials and finishes, and
● over time as it is impacted by inflation differently in different locations.

A ‘five or more persons’ definition was favoured by approximately half of participants who
perceived this would better reflect WHS risk and a need for additional planning and coordination
by a principal contractor.

However, there was no consensus between participants as to a threshold approach that would
offer the best outcomes in terms of practicability, objectivity and effectiveness.

Interview participants cautioned against increasing subjectivity or modifying the threshold in such
a way that it would become overly complicated for industry participants and regulators to apply
and enforce.

As illustrated in answering research question 9, the likely impacts associated with a modified
definition vary, but all alternative definitions were perceived by the interview participants to have
potential negative as well as positive impacts.

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Final Report

Research observations

● Opinion on the appropriateness of a monetary threshold definition was divided. The

monetary threshold definition is believed to be simple, clear, accepted by industry and
easy to enforce. However, many industry stakeholders also believe that a monetary
threshold is arbitrary and unrelated to WHS risk. The trade-off between simplicity and
clarity of the threshold definition and the benefits of a risk-based regulatory approach
should be considered in the forthcoming review of the model WHS legislation.
● The construction contract sum is clear/simple and apparently objective mechanism to
trigger the principal contractor duties. However, many factors (other than WHS risk)
impact the contract sum. The cost of construction projects is subject to estimating error,
regional variations in the costs of labour or materials and variation in contractors’ margins
related to risk allocation under various contracting and payment arrangements. The extent
to which the operation of a monetary threshold is comparable across construction projects
should be considered in light of these variations. In particular, factors unrelated to WHS
risk that impact the contract sum should be carefully understood in relation to the
operation of the monetary threshold definition.
● The industry stakeholders we interviewed were generally in favour of periodic indexation
of the monetary threshold. However, our relatively crude modelling suggests that the
choice of index used to adjust a monetary threshold is likely to have an impact upon the
operation of such a threshold over time. The question of indexation is further complicated
by regional differences in the performance of various indices. We recommend further
econometric modelling be undertaken to provide a robust understanding of the likely
implication of indexation of the monetary threshold. It is also recommended that, were
indexation to be implemented, extensive consultation with stakeholders be undertaken to
seek input and agreement into the most appropriate method for indexation to be used.
● The number of persons working at a project at any one time was perceived by some
industry stakeholders to be more closely related to WHS risk and the need for WHS
planning and coordination than the contract price. However, the ‘five or more persons’
threshold was not widely perceived to perform better than a financial threshold definition.
The ‘five or more persons’ definition was criticised by industry stakeholders on the
grounds that it the number of workers engaged at a worksite is difficult to predict and
changes over the course of construction work.
● Consideration could be given to the viability and likely impact of adopting a threshold
definition based on multiple criteria or factors to overcome limitations inherent in a one-
dimensional threshold. Any consideration of a multifactorial threshold should consider the
balance between simplicity of operation and sensitivity to relevant WHS risk factors.
● In our analysis, the scenario modelling was based upon hypothetical construction activities
and cost estimates. Safe Work Australia could consider undertaking further comparative
case study analysis of similar ‘marginal’ construction works undertaken in jurisdictions
adopting different threshold definitions to better understand the operation of these
thresholds and the impacts on WHS management effectiveness and objective measures
of WHS performance.

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Final Report

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Appendix A: List of trades present on

a residential site over the duration of
the build.
1. Earthworks (excavator, site levelling, clearing, site pad)

2. Concreter/steel fixer

3. Plumber/drainer/gas

4. Electrician (include TV and phone)

5. Termite barrier/management installer

6. Brick/block layer

7. Carpenter frame

8. Roofer (Metal/tile)

9. Fascia, gutter, downpipes installer

10. Insulation (roof and walls)

11. Glazier window/door installer

12. Plasterer (internal linings)

13. Painter

14. Tiler (ceramic)

15. Water-proofer

16. Shower screens installer

17. Floor layer (carpet, vinyl, timber)

18. Cabinet maker (walk-in robes and fittings)

19. Carpenter internal finishes (doors/furniture, skirting, reveals)

20. Kitchen and vanity units (cabinets and bench tops)

21. Stairs, handrail and balustrading

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22. Security doors and windows

23. Electronic/Automated services appliance (surveillance CCTV and alike)

24. Landscaping soft (gardens, lawns), hard (driveways, retaining walls, paving)

25. Cleaners

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Appendix B: Risk assessment tool for

QLD prequalification system
Instructions:

1. Determine consequence rating—for each key area of risk (Column A), rate the
consequences should the risk event occur (Column B). Refer to Table 1 for descriptions
of typical consequences and associated levels. Considerations (Columns C & E) are
provided as prompts to assist decision-making and are not rated.

2. Determine likelihood rating—for each key area of risk, rate the likelihood of the risk event
occurring (Column D). Refer to Table 2 for descriptions of the likelihood ratings.

3. Calculate—When each risk event has been rated, multiply the numerical ratings from
Columns B and D and insert the total in Column F. Calculate the average of the figures
recorded in Column F by adding Boxes 1, 2 & 3 and dividing this figure by 3. Record the
average at the top of Table 3.

4. Determine PQC Service Risk Rating—locate the average within the ranges given in
Table 3. Record the PQC Service Risk Rating at the bottom of Table 3.

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Column A Column B Column C Column D Column E Column F

Key area of risk Consequence rating Considerations when determining Likelihood rating Considerations when determining Risk rating
(refer Table 1) consequence likelihood
(refer Table 2) BxD

1. Insignificant ● Consultancy is on the critical path 1. Rare ● Consultancy timeframe is compressed

2. Minor ● Implications if program or project 2. Unlikely ● Approvals required and may cause delays
3. Moderate completion is delayed 3. Possible ● Approvals involve various levels of
4. Major ● Time overrun has implications for service 4. Likely government (i.e. Local, State, Federal) Box 1
Time overrun 5. Catastrophic delivery 5. Almost certain ● Consultation with stakeholders required
● Public statements (e.g. media services) and may cause delays
have been made advising of a particular ● Requirement for coordination of
completion date consultants/number of consultants
requiring coordination

1. Insignificant ● Implications if the project budget is 1. Rare ● Whether project budget is based on
2. Minor exceeded 2. Unlikely historical data for projects of similar size,
3. Moderate ● Implications if life cycle cost requirements 3. Possible scope, location and currency
4. Major are not met or recurrent costs exceeded 4. Likely ● Firmness and clarity of Terms of Box 2
5. Catastrophic ● Availability of additional funds 5. Almost certain Reference/brief for commission
Cost overrun
● Capacity to reduce project scope ● Anticipated level of innovation requirement
● Capacity to stage project ● Degree of rigour required with respect to
life cycle cost performance
● Budgeted contingency amounts considered
adequate

1. Insignificant ● Implications if commission requirements 1. Rare ● Firmness and clarity of Terms of

2. Minor are not met or functionality is not fully 2. Unlikely Reference/brief for commission
Reduced 3. Moderate achieved 3. Possible ● Anticipated level of innovation
functionality / 4. Major ● Level of public awareness of, and interest 4. Likely ● Adequacy of project budget to cover brief Box 3
Commission 5. Catastrophic in, the project to which the consultancy 5. Almost certain requirements
requirements not relates ● Requirement for coordination of
met ● Effect of functionality on service delivery consultants/number of consultants
● Level of quality specified in the Terms of requiring coordination
Reference/brief for commission

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Table 1: Measures of consequence

Level Descriptor Example detail description

1 Insignificant Errors/omissions/defects/design flaws are inconsequential or non-

existent; intended functionality delivered; service delivery as planned.

2 Minor Errors/omissions/defects/design flaws requiring limited rework/redesign,

slightly reduced functionality; service delivery generally unaffected.

3 Moderate Errors/omissions/defects/design flaws requiring significant

rework/redesign; reduced functionality; delayed/reduced/interrupted
service delivery.

4 Major Errors/omissions/defects/design flaws making the building unfit for

occupancy without extensive rework/redesign, significantly reduced
functionality; significantly delayed/reduced/interrupted service delivery.

5 Catastrophic Errors/omissions/defects/design flaws resulting in partial or total building

collapse requiring demolition, redesign and rebuilding, serious injuries or
loss or life; loss of functionality/service delivery.

Table 2: Measures of likelihood

Level Descriptor Description

1 Rare May occur only in exceptional circumstances

2 Unlikely Could occur at some time

3 Possible Might occur at some time

4 Likely Will probably occur in most circumstances

5 Almost Certain Is expected to occur in most circumstances

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Table 3: PQC Service Risk Rating Ranges

Average of boxes 1, 2 & 3

1-4 5 - 11 12 - 19 20 - 25

Low Moderate High Very High

1 2 3 4

PQC Service Risk Rating (1 - 4)

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Appendix C: International definitions of a construction

project
Country Project definition in Legislation Construction project trigger threshold Duties triggered
legislation type

Sweden No definition given Process Any site where > one contract-or is present The Working Environment Act (Arbetsmiljölagen), which are
Work scheduled to last > 30 work days & > regulations about the obligations of employers and others
20 workers simultaneously, or > 500 person responsible for safety, to prevent ill health and accidents at
days work.
The Building Act (Plan-och Bygglagen), where the
employer is responsible for coordinating measures to
protect the workers on the construction site from illness and
accidents.

Norway The erection, demolition, Process Any site where > one contract-or is present The Working Environment Act (Arbeidsmiljøloven) to secure
and alteration (including Work scheduled to last > 30 work days & > a working environment that provides a basis for a healthy
alteration of the exterior of 20 workers simultaneously, or > 500 person and meaningful working situation, that affords full safety
a building, alterations in days from harmful physical and mental influences and that has a
the use and other projects standard of welfare at all times consistent with the level of
related to buildings, technological and social development of society.
structures and
The Planning and Building Act lays down formal standards
installations), as well as which apply to construction projects. It requires that a
physical alteration of the
written health, safety and working environment plan is
land and the establishment created before the project begins. This plan needs to set
and alteration of property.
out the arrangements for the project, taking into account the
potential risks to health and safety.

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Austria No definition given Principle Construction work which will presumably last The Health and Safety at Work Act
for longer than five days (this is different in (ArbeitnehmerInnenschutzgesetz)
the case of asbestos)

Netherlands No definition given Principle Any site where > one contract-or is present The Working Conditions Act which outlines general
Work scheduled to last > 30 work days & > provisions for employers and employees in relation to how
20 workers simultaneously, or > 500 person to deal with occupational safety and health, e.g. having a
days written OSH-policy. The Act gives certain powers to the
Labor Inspectorate (Inspection SZW), such as forcing the
employer to stop the work.

Canadian (i) the construction, Process (a) the total cost of labour and materials for ● Canada Occupational Health and Safety Regulations
Province demolition, repair, the project is expected to exceed $50,000; ● Canada Labour Code
alteration or removal of a ● Construction Projects Regulation (O. Reg. 213/91)
(b) the work is the erection or structural
structure, building,
alteration of a building more than two
complex, street, road or storeys or more than 7.5 metres high;
highway, pipeline, sewage
system or electric, (c) the work is the demolition of a building at
telecommunication or least four metres high with a floor area of at
transmission line, least thirty square metres;
(ii) the digging of, working (d) the work is the erection, structural
in or filling of a trench, alteration or structural repair of a bridge, an
excavation, shaft or tunnel, earth-retaining structure or a water-retaining
(iii) the installation, structure more than three metres high or of a
modification, repair or silo, chimney or a similar structure more
removal of any equipment, than 7.5 metres high;
machinery or plant,
(iv) the operation of a (e) work in compressed air is to be done at
manufacturing, industrial the project;
or other process, or (f) a tunnel, caisson, cofferdam or well into

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(v) any work designated by which a person may enter is to be

a Director of Inspection or constructed at the project;
a Director of Occupational (g) a trench into which a person may enter is
Hygiene as a project;
to be excavated at the project and the trench
is more than 300 metres long or more than
1.2 metres deep and over thirty metres long;
(g.1) the work is the construction, over
frozen water, slush or wetlands, of an ice
road for vehicles, machinery or equipment;
or
(h) a part of the permanent or temporary
work is required by this Regulation to be
designed by a professional engineer.
O. Reg. 213/91, s. 6 (1); O. Reg. 345/15, s.
2.

Singapore means a process: Process these Regulations apply to: ● Workplace Safety and Health Act
(a) undertaken by a (a) a project that - ● The Workplace Safety and Health (Design for Safety)
developer for the erection (i) is undertaken by a developer in the Regulations 2015
or modification of one or course of the developer’s business;
more permanent (ii) involves or is intended to involve any
structures on a plot of construction work of a contract sum of $10
land; and million or more; and
(b) in which the developer, (iii) involves development under section 3(1)
or a person appointed by of the Planning Act (Cap. 232); and
the developer - (b) a project to modify a permanent
(i) plans and manages the structure, in respect of which a
project; design-for-safety register has been kept
(ii) designs all structures under regulation 7, that involves
(including temporary development under section 3(1) of the
structures) erected or Planning Act.
modified under the project;
and
(iii) carries out construction
work;

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Appendix D: Semi-structured interview

schedule
Scripted introduction: Thank you for agreeing to participate in this important project and to be
audio recorded during the interview. Today’s discussion concerns the Model Workplace Health
and Safety regulations including the way this impacts on health and safety requirements for
construction industry participants. In particular, the discussion is around the threshold for
triggering additional ‘principal contractor’ Workplace Health and Safety requirements. Under part
6.4 of the Model regulations this would be once a total project cost reaches $250,000.

● Are you familiar with the current definition of a construction project under the Model WHS
regulations?

 If required: “The construction threshold in the model was derived from old OHS
regulations applying in New South Wales and Victoria at the time. The $250,000
amount was first prescribed in the New South Wales laws in 2001 when the average
new house costed $145,000. Once in place, the regulations require additional WHS
duties for the ‘principal contractor’. The current version of the model WHS Regulations,
dated 21 March 2016, incorporates amendments agreed since 2011.”

● How well do you think this definition works?

 Probe: Why?

● Does it create the right threshold for triggering additional requirements?

 Probe: Why/why not?

● Do you consider the use of a monetary threshold appropriate?

 Probe: Why/why not?

 Probe: What do you think are the implications of a monetary threshold? Good/bad?
 If they say bad > probe: What alternative ways could the definition be framed? Why
might these be better?

● Assuming a monetary threshold is to be used, should a monetary threshold be subject to

indexing?

 Probe: Why/why not?

 Probe: Is there a particular type of indexing you would suggest?
 If required: Explain types by script e.g. CPI
 Probe: Is there any other way to account for changes to the economy which affect the
cost of construction? For example, by comparing average building costs by state and

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reviewing the threshold to ensure it is commensurate with construction costs over

time?
 Probe: How might indexing impact the operation of the WHS regulations?

● What do you think would be the likely impact of applying periodic indexation to a monetary
threshold value?
● Could you identify any alternative measures that may be better?

 Probe: Why/why not?

● Do you know of any alternative measures that have been used internationally?

 Do you believe that these alternative measures are effective?

● Do you have any concerns about the practicality or feasibility of using an alternative
measure?
● What characteristics of construction projects might be used to trigger ‘principal contractor’
duties?

 Probe: Why are these things relevant to the need for coordination? For example, one
of the duties of a principal contractor would be relevant to the WHS management plan
– the duty to inform.

● Are characteristics other than project cost relevant to the requirements for planning,
managing, monitoring, and coordinating?
● In your experience, what makes a project require the additional level of regulatory
requirement for coordination and further health and safety duties?
● Does the current definition capture projects that require this extra level of responsibility?

 Probe: Why/why not?

● Does it capture projects that should not be included? For example because they are too
small or low risk? What do you think that may be due to?

 Probe: Could that be due to inflation?

 Probe: Could that be due to expensive fittings?
 Probe: Could that be due to regional/remote location of construction work?
 Probe: Could that be due to capturing minor construction work over extended periods
or where later additions to construction work push the cost over the current monetary
threshold?
 Probe: Are there other potential cases of ‘inadvertent capture’ that you are aware of?

● Does the current definition fail to capture projects that should be included?

 Probe: Why/why not?

● Do you think there are any loopholes in the operation of this definition?
● Is it possible to manipulate this to impact on inclusion or exclusion?

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● Do you think there would be different impacts for small, medium and large size firms
operating in the industry?

 Probe: Why/why not?

● Do you think the threshold works or is appropriate in different sectors of the construction
industry, e.g. civil engineering, commercial building and residential sectors?

 Probe: Why/why not?

● Western Australia uses a per person threshold, how well do you think this threshold
works?

 Probe: Following the implementation of the model laws, some jurisdictions moved from
a per person to a monetary threshold, how well do you think this is working compared
to before?

● In the UK, there are requirements for extra coordination efforts and the appointment of a
principal designer on any project where there is more than one contractor. Do you think
this is a good or bad definition for triggering additional WHS responsibilities?

 Probe: Why/why not?

 Probe: Do you think this definition could work in Australia? Why/why not?

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