PERTH Building Company (PBC) has emerged from the remnants of listed WA engineering firm Clough Limited’s construction wing, Entact Clough, to compete in Perth’s busy mid-size construction market.
PERTH Building Company (PBC) has emerged from the remnants of listed WA engineering firm Clough Limited’s construction wing, Entact Clough, to compete in Perth’s busy mid-size construction market.
Targeting an annual turnover of between $15 million and $20 million in its first year, PBC is tendering for residential and commercial construction contracts valued between $2 million and $20 million.
With $8 million dollars on its books, PBC has already negotiated its first contract and is tendering on several other projects valued between $10 million and $15 million.
The first contract, scheduled to begin in November, is to construct a two-storey office block and warehouse valued at almost $3.5 million in Henderson.
PBC is also near to completion of two of Entact Clough’s remaining contracts – a new commercial office block and factory extension in Bayswater and a new administration building at HMAS Stirling on Garden Island.
PBC, which is made up entirely from former Entact Clough employees, including directors Adrian Ridderhof, Chris Weston, Terry Berryman and Kevin Luttrell, was formed in July by management after Clough decided it no longer wanted to proceed with its construction wing.
In a shock to the building industry, Clough told WA Business News in August it wanted to exit commercial construction and move back to its core engineering service, removing the business from a sector it saw as medium risk and low margin.
“The days of general contractors being general contractors are over, they now have to specialise in the things they do best and that are most significant to their turnover and profit,” Entact Clough founder and PBC development manger Kevin Luttrell said.
However, a contributing factor to Clough’s exit is understood to have been Entact’s lack of success in the tendering process.
“Entact was overlooked in a number of contracts because of terms and conditions offered by Clough despite being a low bidder,” PBC managing director and former Entact Clough general manger, Adrian Ridderhof said. “That was the nail in the coffin really. Clough could not accept the terms and conditions of the commercial building industry in Perth.”
With new company arrangements, a low overhead structure and support of past clients, sub-contractors and experienced staff, PBC says it can compete in the buoyant commercial market.
“We have at least a year ahead of us,” Mr Ridderhof said.
“It is hard to forecast. Being in that $2 million to $20 million range there is not a huge lead-time for projects, however the outlook between now and the end of 2005 is pretty good. Basically we are focusing on the next 18 months at this stage.
“We eventually want to build up to a reasonable size but not necessarily a major force.”
Mr Ridderhof said there had been plenty of positive feedback about the start-up of PBC.
“Previous clients and contractors see us as going back almost to the old Entact days, which had a reputation for giving really good service on projects,” he said.
Mr Ridderhof said the governance requirements did not suit Entact Clough’s position in Perth’s commercial construction industry after Clough Limited became a public company in 1999.
He said mid-size construction companies should not go public and planned for PBC to remain a strong, private mid-size company.
“Having been through it once and seeing it happen at other companies it just puts a different onus on building contractors,” Mr Ridderhof said.
