The casualty: A 50-year legacy
When a company like Project Coordination (Australia) Pty Ltd – which had successfully traded for half a century – is forced to shut its doors, you know something is seriously awry.
Despite the directors pumping in personal funds to keep it afloat, escalating costs and locked-in low margins on projects finally made ongoing viability impossible.
• The building and construction industry in Australia faces significant supply chain disruptions, exacerbated by the global pandemic.
Project coordinators collapse by the numbers
• $120m in active projects stopped
• $90m in upcoming work cancelled
• Over 200 creditors were owed over -$20m
• 67 staff made redundant
The tough decision no director wants to make
As co-director Paul Murphy lamented, the “soul-destroying” call to hand control to external administrators wasn’t taken lightly after 50 years of grit and determination. However, with a $20m creditor deficit racking up in just two months, the cashflow issues were quite simply catastrophic.
I’ve seen this same private anguish and denial play out countless times with clients. But trying to hold back the inevitable with band-aid solutions only chips away at whatever remaining equity can be salvaged.
Australia’s construction industry in turmoil
While Project Coordination’s collapse is undoubtedly an emotional body-blow after such a long run, the statistics are highlighting this as merely the tip of an insolvency iceberg enveloping construction nationwide.
So far in 2023, 2, 349 construction companies across Australia have already entered insolvancy – a whopping 28% of all corporate collapses
Paul’s comments that “nothing has been as bad as this” – including recessions of the 80s, 90s and the GFC – underscores the unrelentingly tough climate.
As I’ve cautioned for years, builders run on wafer-thin margins, making them extremely vulnerable to even modest input cost hikes or funding constraints. The domino effect when one major player collapses is also far-reaching.
With Project Coordination’s debtors, creditors, subcontractors etc now being impacted, you’re likely to see a cascading raft of follow-on insolvencies across its supply chain in coming weeks.
This rolling crisis could bring the east coast construction sector to its knees if allowed to intensify unchecked. Not since the Credit Crunch of 2008 have we seen such systemic existential stresses on the building and construction industry in Australia.
Early intervention is critical for your business and the wider economy
As this deeply unsettling case reaffirms, construction owners and directors cannot bury their heads in the sand any longer and hope conditions will improve. Decisive action is required urgently – preferably before the situation degenerates to administration or liquidation territory.
At AVA Advisory, we specialise in preventative measures for financially distressed directors and owners of construction businesses – with worried builders and tradies across the sector finding comfort and confidence as our clients.
Our role is optimising your options while you still have room to move, rather than forcing a ‘one size fits all’ insolvency solution.
Common turnaround pathways we pursue include:
• Informal creditor arrangements and put options
• Safe harbour restructuring protections
• Pursuing claims against debtors/fee disputes
• Refinancing, sourcing investments or asset sales
• Negotiating debtor/creditor compromises with stakeholders
The longer you delay taking proactive steps, the fewer viable roads will remain open for your construction enterprise.
Even where insolvency is inevitable, an practised restructuring plan executed early can preserve greater value for all stakeholders.
So if you’re haemorrhaging cash, at risk of defaulting on loans, or simply struggling to stay on top of creditors – don’t go it alone. Reach out to our construction industry experts at AVA Advisory today on 1300 181 220 for an urgent consultation.
The carnage unfolding in the building sector is very real and escalating rapidly. But with proactive guidance, your business doesn’t have to become another insolvency statistic.
The time to act is now before it’s too late. Get sound, strategic asset protection advice in-place as well as an opportunity of a controlled restart of your business via an SBR.
Call the specialist building and construction advisory team at AVA Advisory on 1300 556 842 or schedule a consultation to discuss your options with our construction turnaround specialists. Your survival and the livelihoods of your staff may depend on it.
The casualty: A 50-year legacy
When a company like Project Coordination (Australia) Pty Ltd – which had successfully traded for half a century – is forced to shut its doors, you know something is seriously awry.
Despite the directors pumping in personal funds to keep it afloat, escalating costs and locked-in low margins on projects finally made ongoing viability impossible.
• The building and construction industry in Australia faces significant supply chain disruptions, exacerbated by the global pandemic.
Project coordinators collapse by the numbers
• $120m in active projects stopped
• $90m in upcoming work cancelled
• Over 200 creditors were owed over -$20m
• 67 staff made redundant
The tough decision no director wants to make
As co-director Paul Murphy lamented, the “soul-destroying” call to hand control to external administrators wasn’t taken lightly after 50 years of grit and determination. However, with a $20m creditor deficit racking up in just two months, the cashflow issues were quite simply catastrophic.
I’ve seen this same private anguish and denial play out countless times with clients. But trying to hold back the inevitable with band-aid solutions only chips away at whatever remaining equity can be salvaged.
Australia’s construction industry in turmoil
While Project Coordination’s collapse is undoubtedly an emotional body-blow after such a long run, the statistics are highlighting this as merely the tip of an insolvency iceberg enveloping construction nationwide.
So far in 2023, 2, 349 construction companies across Australia have already entered insolvancy – a whopping 28% of all corporate collapses
Paul’s comments that “nothing has been as bad as this” – including recessions of the 80s, 90s and the GFC – underscores the unrelentingly tough climate.
As I’ve cautioned for years, builders run on wafer-thin margins, making them extremely vulnerable to even modest input cost hikes or funding constraints. The domino effect when one major player collapses is also far-reaching.
With Project Coordination’s debtors, creditors, subcontractors etc now being impacted, you’re likely to see a cascading raft of follow-on insolvencies across its supply chain in coming weeks.
This rolling crisis could bring the east coast construction sector to its knees if allowed to intensify unchecked. Not since the Credit Crunch of 2008 have we seen such systemic existential stresses on the building and construction industry in Australia.
Early intervention is critical for your business and the wider economy
As this deeply unsettling case reaffirms, construction owners and directors cannot bury their heads in the sand any longer and hope conditions will improve. Decisive action is required urgently – preferably before the situation degenerates to administration or liquidation territory.
At AVA Advisory, we specialise in preventative measures for financially distressed directors and owners of construction businesses – with worried builders and tradies across the sector finding comfort and confidence as our clients.
Our role is optimising your options while you still have room to move, rather than forcing a ‘one size fits all’ insolvency solution.
Common turnaround pathways we pursue include:
• Informal creditor arrangements and put options
• Safe harbour restructuring protections
• Pursuing claims against debtors/fee disputes
• Refinancing, sourcing investments or asset sales
• Negotiating debtor/creditor compromises with stakeholders
The longer you delay taking proactive steps, the fewer viable roads will remain open for your construction enterprise.
Even where insolvency is inevitable, an practised restructuring plan executed early can preserve greater value for all stakeholders.
So if you’re haemorrhaging cash, at risk of defaulting on loans, or simply struggling to stay on top of creditors – don’t go it alone. Reach out to our construction industry experts at AVA Advisory today on 1300 181 220 for an urgent consultation.
The carnage unfolding in the building sector is very real and escalating rapidly. But with proactive guidance, your business doesn’t have to become another insolvency statistic.
The time to act is now before it’s too late. Get sound, strategic asset protection advice in-place as well as an opportunity of a controlled restart of your business via an SBR.
Call the specialist building and construction advisory team at AVA Advisory on 1300 556 842 or schedule a consultation to discuss your options with our construction turnaround specialists. Your survival and the livelihoods of your staff may depend on it.
