A system that tracks building materials electronically may help reduce the use of cheaper, substandard products. BRANZ has been investigating to see if electronic traceability could be feasible here.
BUILDING QUALITY can be impacted by workmanship and the materials used. While the materials are described in the specification, sometimes a contractor may want or need to substitute the specified material for an equivalent alternative. This may be because the specified material is unavailable or because the builder wants to use a cheaper alternative.
Any change needs to be accepted by the designer, owner and, in many cases, the building consent authority (BCA).
Product substitution brings risk
Product substitution does not necessarily mean the alternative is non-conforming, but it can increase the risk. The term nonconforming product (NCP) covers:
- non-compliance – when the wrong product for a specific application is installed
- fraudulent – when documentation accompanying a product is inaccurate or misapplied
- counterfeit – when a product and accompanying documentation are created with the intention to deceive.
Use of NCP is not new, nor is it unique to New Zealand. In a non-statistically representative survey of builders and trades carried out by BRANZ in 2016, almost 40% stated that product is substituted often, defined as being on more than half of jobs.
Study into electronic traceability
In 2017, BRANZ completed a feasibility study into the use of electronic traceability to reduce use of NCP. It focused on answering these questions:
- What is the cost of NCP to New Zealand Inc?
- What would an electronic traceability system look like that could reduce the incidence of NCP, and what would the cost be to set up and operate such a scheme?
Direct costs may be $230 million
Obtaining an estimate of the direct cost of NCP is difficult, so two methods were used. The first method used media reports in which NCP was mentioned. This will always be an underestimate because it does not include undetected NCP. Based on this, a value of $95 million annually for residential construction was obtained.
The second method took estimates of the incidence of NCP in different construction product sectors in Australia and applied these same incidences to the New Zealand market. This produced a figure of about $230 million for residential and commercial construction.
These do not include indirect costs such as redesign, reputation loss and business disruption. There is also the potential for injury or loss of life with failure of NCP.
How could a traceability scheme look?
A model electronic traceability scheme was scoped to calculate the cost of such a system. This was one example of how such a system would look.
Global Trade Item Numbers
The scoped system would rely on manufacturers assigning Global Trade Item Numbers (GTINs) to their products. GTINs are unique identifiers that are machine-readable when represented as a linear or two-dimensional bar code.
GTINs would be stored on an electronic product repository called the National Product Catalogue. This catalogue already exists in New Zealand and contains information about products, including some used in construction.
A GTIN, when scanned, provides a key to product-specific information held on the National Product Catalogue. This would comprise:
- the manufacturer’s identity
- the location of manufacture
- conformity assessment information – for example, level of conformity assessment, details of tests undertaken to show compliance against Building Code clauses
- other product information – for example, hazardous substances and environmental product declarations.
From designer to BCA to merchant to builder
In the model traceability system scoped for the project, the National Product Catalogue could be accessed by designers to obtain product-related information. When the specification is produced as part of the consent documentation, this would include a materials list with GTINs for those products listed on the National Product Catalogue.
Once approved by the BCA, the list of materials for the construction project would be available to the builder who could forward it to a builders’ merchant.
When compiling the materials, the builders’ merchant would scan the linear or 2D barcode, which would immediately check that the product GTIN proposed for use on the build matches the GTIN on the materials list held by the BCA.
Such a check could also be made by a builder on receipt of goods at the construction site. A specific smartphone app would be developed for this purpose. By scanning barcodes of products intended for the build, the builder is assured that the material is as specified. Similarly, the builder is confirming use of the specified material on the build to the BCA.
Discourage non-specified materials
Where a proposed material is not as specified, a process for checking the appropriateness of an alternative material to the intended application would begin. This would most likely be a longer process, providing a disincentive for use of non-specified materials.
Such a system could potentially facilitate track and trace capability, where the location of products in the supply chain could be checked. This would be similar to current systems that track posted parcels, for example, but would require additional functionality that was not included in the feasibility assessment.
Costs and benefits encouraging
The feasibility study estimated the costs of the scoped system would be less than $6 million annually. If such a system could reduce use of NCP in New Zealand by 30%, the benefit would be $23 million annually.
To progress, involvement from stakeholders such as national and local government, construction product manufacturers and their associations would be needed. Further work needs to be done to scope such a system in detail and pilot it with one or more sectors.
The research is summarised in BRANZ Study Report SR365 Electronic traceability of New Zealand construction products: Feasibility and opportunities. An accompanying 2-page BRANZ Research Now summary is also available.
Articles are correct at the time of publication but may have since become outdated.