Cladding rectification funding guidelines

Funding for the rectification of external wall combustible cladding of some higher risk residential apartment buildings.

For privately-owned residential apartment buildings

Cladding Safety Victoria may provide funding for the rectification of external wall combustible cladding of some higher risk residential apartment buildings, as assessed by the Victorian State-wide Cladding Audit led by the VBA.

Funding for eligible buildings may be provided to owners corporations to design and implement cladding rectification solutions which comply with the relevant Victorian building regulations and meet the VBA’s Cladding Guidelines for Building Surveyors.

Who can apply?

Cladding Safety Victoria will contact owners corporations to invite participation in the program if they are eligible.

To be eligible for funding an owners corporation must be responsible for a residential building that has been:

  • assessed as having combustible cladding through the Statewide Cladding Audit, and deemed to be of higher risk;
  • subject to a Building Notice or Order related to combustible external wall cladding;
  • referred to Cladding Safety Victoria by either the VBA or a local council; and
  • prioritised for rectification by Cladding Safety Victoria.

Funding conditions

The terms and conditions for funding will be set out in a funding agreement. Examples include:

  • engaging practitioners that are on a pre-approved government register;
  • meeting agreed project milestones; and
  • providing regular progress reports.

Scope of works to be funded

Cladding Safety Victoria will only fund works associated with cladding rectification. Any additional works will need to be financed by the building’s owners.

Funding stages

Funding will be agreed in the following stages:

  • 1. Design;
  • 2. Rectification works; or
  • 2a. Design and Construct.

In many cases, these stages will be undertaken sequentially. However, in other instances, it may be desirable for a building practitioner to be retained to develop and implement a solution under a design and construct contracting model. Where this is the case, a single funding agreement will be executed between the relevant parties.

1. Design Stage – pre-works commencement 

The design stage focusses on developing a rectification solution which would bring about compliance with building Notices or Orders related to cladding. This includes preparation of a submission to the Building Appeals Board (BAB) for approval of the rectification solution, if necessary.

Costs within scope for Cladding Safety Victoria funding for the design phase may include:

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

2. Rectification Works Stage

Cladding Safety Victoria may provide funding for construction and materials for rectification, in line with the rectification solution. This will include appropriate disposal of waste material.

2a. Design and Construct Stage

Funding for design, construction and materials may also be provided by Cladding Safety Victoria where a building practitioner is retained to undertake a direct design and construct standard approach to fully remove and replace the combustible cladding from the building.  

Cladding Safety Victoria will not fund:

  • rectification works not directly linked to addressing building risk posed by combustible cladding – this includes but is not limited to building infrastructure, general building maintenance, upkeep and any other additional defect works which are not cladding-related.
  • services not directly or reasonably sought for achieving compliance with a Building Notice or Building Order, e.g. non-essential items such as internal fixtures, exterior blinds and awnings, solar panels and reticulation systems (not fire-safety related);
  • cladding or wall system works that are not within the scope of the recommended rectification solution, e.g. fixing other problems with cladding such as glazing, leakage in unrelated areas, inadequate structure, a full removal of cladding where it has been determined by the BAB that partial rectification is adequate, or aims to achieve a higher standard than the NCC minimum requirements;
  • addressing other fire safety risks required to comply with an Emergency Order or Building Order/Minor Works only; and
  • legal costs that fall outside matters requiring resolution with the BAB processes, and costs incurred for action against a practitioner or any other cost recovery actions. 

Funding will not be provided for any legal expenses incurred by the owners corporation.

Cladding Safety Victoria will not fund building work unless it is directly related to cladding rectification to address fire safety risks. This includes where buildings are:

  • required to undertake additional non-cladding related defect work, or
  • has opted to fully remove the cladding where an alternative design solution has been recommended and approved by the BAB.

In these circumstances, Cladding Safety Victoria will determine the amount of funding to be provided for the cladding rectification works, and these works must be invoiced and accounted for separately.

Assessing the cost-effectiveness of the rectification solution

Cladding Safety Victoria will undertake an assessment of the proposed costs of work. This may include cost benchmarking against other similar projects or through quantity surveying.

In assessing if the costs charged are reasonable and that the solution proposed is cost-effective, Cladding Safety Victoria will also be interested in:  

  • the complexity of the design and construction of the rectification solution;
  • the time and skill involved in the design and construction process;
  • any scale of costs that might be applicable to the process; and
  • reasonable costs incurred in obtaining quotes for approved rectification work (full removal or BAB approved solution only), that is, the cost of quoted work for both full and BAB approved solutions.

Retrospective funding

Owners corporations remain responsible for rectification of non-compliant combustible cladding. This includes complying with building notices and orders issued under the Building Act 1993.

Some owners corporations may commence cladding related rectification works prior to being notified of eligibility for the Cladding Rectification Program. In these cases, owners corporations can still participate in the program, providing they demonstrate that:

  • rectification works related to cladding (including the process of procuring works) did not commence prior to the establishment of the Victorian Cladding Taskforce on 3 July 2017; and 
  • the rectification works meet the same requirements and standards of the Program.

Importantly, Cladding Safety Victoria is progressing its program of work in a prioritised way, based on the risk profile of each building.

Cladding Safety Victoria will enter into funding agreements with an owners corporation which may reimburse it for costs incurred to complete the design phase of the rectification process. An agreed schedule for works and reimbursement milestones will be developed with each owners corporation wishing to proactively rectify their buildings on a case by case basis.

However, any retrospective funding to reimburse the construction phase will be released only to an owners corporation at the same time in the program that their building would have been designated for funding through Cladding Safety Victoria’s usual program. In addition, any retrospective funding will be subject to funding availability at that time.

Cladding Safety Victoria can provide further advice to owners corporations in relation to their potential eligibility for retrospective funding, including providing non-financial support and guidance to ensure owners corporations are not proceeding in a way that would disqualify them from eligibility for retrospective funding.

Reviewed 19 December 2019

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