Seismic strengthening of existing buildings has been a constant workstream for the New Zealand construction industry over the past 10-15 years, driven by both commercial and legislative requirements.
Underpinning these projects have been the views of building occupiers and owners as to what represents an acceptable minimum seismic standard, and the statutory requirement to strengthen "earthquake-prone" buildings identified by local authorities as having an earthquake rating of below 34% of the "New Building Standard" (NBS).
There are moves underway to reform the earthquake-prone building rules, and occupiers have become more sophisticated in considering seismic risk. But these developments are unlikely to shift the underlying drivers of seismic strengthening. Occupiers generally prefer buildings with higher earthquake ratings – especially in areas of elevated seismic risk – and owners need to comply with the law as it relates to their assets. Additionally, given the prevalence of earthquake-prone buildings across New Zealand, strengthening and adaptive reuse of existing buildings represents both a necessity and an opportunity for the construction sector.
At the heart of strengthening decisions is the assessment of a building's earthquake rating which, in the commercial space, is usually assessed by reference to an Initial Seismic Assessment (ISA) or a Detailed Seismic Assessment (DSA).
An ISA provides a broad indication of a building's expected performance, considering factors such as typology, age of construction, local seismicity, ground conditions and usage. A common tool used by engineers to carry out an ISA is an Initial Evaluation Procedure (IEP), so the terms are often used interchangeably.
ISAs are typically used as a pre-purchase or due diligence tool to provide an indicative earthquake rating. However, caution is needed in attributing significant weight to an ISA assessment. As was made clear by the recent Court of Appeal decision of Weine v Tadd Management Limited [2024] NZCA 323, an ISA is an initial assessment only and may not have involved detailed inspections and calculations. Consequently, ISA outcomes can differ materially from conclusions that may be reached by a more detailed assessment.
In contrast, a DSA involves a more rigorous analysis, incorporating site-specific factors and review of structural plans, resulting in a more reliable building earthquake rating. While the cost of a DSA can be significant, they are often used for larger assets and to inform significant leasing, acquisition or strengthening decisions.
Understanding the relative merits of different seismic assessments is therefore key, as is ensuring that any related contracts provide robust and appropriate protections covering reliance on assessments and design, and ensuring that leasing, sale and purchase, and construction contracts are effective to properly allocate responsibility and risk.
For the construction industry, seismic strengthening presents both a commercial challenge and a strategic opportunity. However, it remains an area where care and expertise are needed to ensure that contracts work as intended and outcomes are certain, even if seismic events are not.