Losses from dud projects lead construction company to collapse

A regional family-owned construction company in New South Wales responsible for redeveloping regional hospitals across Australia has collapsed, placing 180 jobs at risk.

On Monday afternoon, National Buildplan temporarily ceased work on its projects as administrators Martin Green and Peter Krejci of insolvency firm BRI Ferrier were appointed.

Initial investigations by the administrators have revealed many of the company’s 50 active projects have been unprofitable, with four major projects taken on by National Buildplan resulting in substantial financial losses for the company.

SmartCompany contacted BRI Ferrier, but was told administrators are not making any further comment.

A statement on National Buildplan’s website says the company was placed in administration after “recent strategies to restructure the company and secure additional funding” were unsuccessful.

In an interview with ABC Radio yesterday, Krejci said the losses from the unprofitable projects are in the millions.

Krejci also said the company, which originally started in the regional New South Wales town of Armidale, employs 180 people and so far 110 jobs will be lost.

He said 70 employees will stay on to “ensure we maximise the value we get for those contracts” already in existence.

He said the unprofitable projects caused the firm to seek extra funding from its bank, but the bank decided not to extend the funding.

In November last year, National Buildplan and Watpac Construction secured a $65 million contract to expand the Port Macquarie Base Hospital.

The company also won an $8 million contract for works on the Dubbo Base Hospital and has a variety of other projects across regional New South Wales, Western Australia and Queensland.

There have also been reports of the company owing sub-contractors thousands of dollars. Krejci said sub-contractors in government projects will likely receive their money.

“The good news for a lot of the sub-contractors are those contracts would need to be continued with and whether the government decides to continue with the company under administration or find another builder, my understanding is it’s the government’s policy to ensure a lot of these sub-contractors are paid,” he says.

The past year has seen a high number of collapses within the construction industry and, in late January, the NSW government inquiry into the industry listed 44 recommendations in an attempt to curb insolvencies.

These recommendations included establishing a new regulatory body, requiring contractors to set up and administer project trust accounts and strengthening the security of payment legislation.

Fairfax Media has reported National Buildplan made $152.41 million in revenue last financial year, but only made a net profit of $1.09 million.

 

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