Firm Construction has fallen into administration, with director Mark O'Gorman saying the business had been doing everything it could to overcome financial challenges.
Firm Construction has fallen into administration, with director Mark O'Gorman saying the business had been doing everything it could to overcome financial challenges.
Greg Dudley and Jerome Mohen of RSM have been engaged to restructure the Subiaco-based contractor, which had revenue of $96 million in 2020.
Firm had suffered delays on a series of construction jobs, and Business News reported this week it was no longer working on five projects: three apartment developments, a school, and the redevelopment of Bayswater Station.
COVID-19, supply chain issues, labour shortages and material price rises had put Firm’s operations under pressure, director Mark O'Gorman said in a statement to Business News today.
Cost escalation on private sector projects, and government contracts signed since mid-2021, had put the business under significant financial pressure, Mr O'Gorman said.
“We have been closely engaged with the Department of Finance in the past few weeks to ensure our approach is aligned in terms of how best to deliver on our public sector projects, and we hope that process will continue while we are taking steps to restructure the company,” he said.
“It is unfortunate that five projects awarded by the state government between 1 July 2021 and May 2022 did not qualify for any financial relief for the significant cost escalations they incurred.
“We have been doing everything we possibly can to work through these financial challenges.
“Paying our staff and sub-contractors while continuing to deliver the projects we have committed to has been our focus and priority.
“We have ensured most of our sub-contractors are protected by the use of Project Bank Accounts (PBAs) – on both our public and private sector projects.
“We are a highly regarded contracting business, which we built from scratch and are optimistic about trying to find solutions, through a restructure process.
“We want to see our projects completed to allow thousands of kids to go to their new schools.”
Mr O'Gorman said the company strongly supported the Master Builders Association WA’s building reform package.
That would lead to fairer construction contracts, he said.
Subiaco-based Firm said it had delivered 75 projects valued at about $500 million for the state government over the past 13 years.
The business had been in operation since 2003.
Firm had five government contracts still under way.
Those were for works at Kalgoorlie TAFE, a performing arts centre at Lakelands Senior High School, a sports hall at Ocean Reef Senior High School, Westminster Primary School and Kalamunda Senior High School.
They were worth about $50 million combined.
"The Department of Finance’s priority is to work with RSM, the external administrators appointed by the company earlier today, to pay any outstanding amounts that may be owed to subcontractors, using project bank accounts," a spokesperson said.
"The department is committed to working with the administrator on determining a way forward for all remaining projects.
"Discussions with RSM are ongoing so the department is unable to provide further detail at this stage."
