Contractor

Alarm bells over buying low-cost steel

Australian and New Zealand Standards Authorities have released warnings over non-compliant low-cost steel being bought for local projects. Kiwi steel expert, Ian Jacob (pictured), who is based in Asia, offers Contractor readers his advice on avoiding being caught out.

WITH QUESTIONS OVER the standard of steel sourced in this region from low-costs countries the Australian Certification Authority for Reinforcing Steels (ACRS) has issued a warning about the potential supply of construction steels of unconfirmed origin and quality.

“Due to the strong focus on quality and safety in the Australian construction industry, local builders, specifiers, designers and customers expect construction materials to comply with all relevant Australian and New Zealand Standards,” it says.

“However, with reinforcing, pre-stressing and structural steels now sourced from multiple suppliers both from within Australia and from other parts of the world, often even within a single project, designers, specifiers and contractors can no longer assume that the construction steel delivered to the construction site will necessarily meet their minimum requirements.”

Subsequently, the Australian Steel Institute stresses the need for third-party certification and says there are structural steel products sold in Australia that don’t comply with the relevant Australian Standards. “Failures of products during erection and in service are known to have occurred with the cause being traced to non-compliant products,” it says.

The institute has also released a guide to third-party certification and independent specialist auditing that is accredited by a governing body.

Ian Jacob, a Kiwi steel industry veteran based in Asia and working for Mill-Pro Hong Kong, says while the Australian Steel Institute has highlighted the problem, it doesn’t go far enough.

“Their suggestion involving an independent specialist auditing organisation accredited by a governing body is simply not strong enough, and in our experience this needs to go a step further.”

“Random on-site testing is the only way you can address this issue and it must apply to everyone, including New Zealand fabricators as they are also using imported raw materials.”

Ian was visiting New Zealand at the time steel quality issues in major projects being built here were being discussed in the media. He was called to a meeting at the MBIE relating to steel procurement. MBIE manager of engineering science and design Derek Baxter consequently says the big message from that meeting was that suppliers had to improve their testing programmes.

“We’ve got good reason to have some concerns about the level of faith that some of our New Zealand purchasers (are putting) in the system,” he says.

“It’s the old adage of ‘If it seems to be too good to be true it probably is’. And if you have some concerns, rather than just pocketing the profit, you have got to spend some of that money on due diligence.”

Ian Jacob has stronger views through his experience dealing with steel supplies and suppliers. “Random on-site testing is the only way you can address this issue and it must apply to everyone, including New Zealand fabricators as they are also using imported raw materials.

“Our recommendation for contractors and buyers depends on the complexity of the procurement. While reinforcing steel or steel plate and beam requirements are relatively simple, if the product is fabricated, welded and/or coated then the intensity of the due diligence and inspection needs to increase significantly.”

Due diligence on your supplier is very important, says Ian.

“Your supplier must have a relationship with the manufacturer and this does not mean they have simply bought from them before – it means they have audited the facility themselves (not sent a third party to do it).

“You need to know that they know who they are buying off. A quality supplier will be able to provide you a copy of their audit report along with photographs covering equipment suitability to make the product; people qualifications to meet the AS/NZS standards/welding certification etc; governance/management and QA systems; and project and supply history.”

Make sure your supplier is the one procuring directly from the manufacturer or fabricator, he says, because additional parties in the supply chain dilute the ability to audit and control the specification and product.

“Ask them some basic questions like: ‘demonstrate your procurement history from that supplier’.

“Regardless of the project size, the supplier should deliver you a MDR [Manufacturer’s Data Report] that links the raw materials to each final product and to all testing.”

Ian also suggests getting an International Laboratory Accreditation Cooperation (ILAC) approved third party lab to perform testing throughout manufacture.

“ILAC is a certified lab in the supplying country that is recognised by IANZ. In New Zealand it’s important that your supplier does not simply subcontract the third party testing to their supplier, as they have then lost control of the process and integrity.” He adds that third party inspection must include: identifying all raw materials; recording the heat or batch number marked on each to create a traceability map; witnessing the extraction of raw material samples on the delivered materials from each heat or batch; maintaining a chain of evidence of these samples to the third party testing lab; and confirming the validity of the ILAC approval.

“Fake ILAC certificates are known to have been issued by suppliers,” he says, but anyone can ask the issuing test lab to validate the certificate.

“The third party tester should have reviewed an inspection and test plan [ITP] from the supplier that is signed off by the client outlining the tests and frequency.”

Ian also suggests contractually binding your supplier.

“The only way to change the current behaviour is to make the supply of substandard materials financially painful for suppliers.

“This takes two forms. A quality supplier will know before any goods are shipped that they are 100 percent correct, through their own processes, testing and a layer of third party testing in the source country.

“If a supplier is not performing these tests and ‘hoping for the best’ then failure needs to be painful financially for them.

“We also recommend that 10 percent of goods delivered to the site are randomly tested here in New Zealand by a third party.

“Any failure in these tests initiates 100 percent of every heat, batch or weld being tested here until it can be demonstrated it was only a single defect. Payment should be linked to successful testing results.”

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