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Contractor insolvency – A time to reflect and change

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The last 12 months have a been unsettling to say the least. The sector has lost a number of long standing and well-respected regional contractors. Cruden Group, CPUK, Pochin, Bardsley, Fawley, Styles and Wood and Harry Fairclough and others have all shut their doors for the last time. Hundreds of very experienced professionals have found themselves out of work with very little notice at a very worrying time.

The Neo team were working on projects with Curden, Pochin and Bardsley at the time of their administration and have firsthand experience of the damage and upset this has caused to all involved. The fall out is not just restricted to the insolvent companies and their employees, the knock-on effects are damaging for their client organization, subcontractor supply chain and professional services team. The ripple effect from the loss of a main contractor can see many clients, subcontractors and consultants also in hot water due to the financial impacts on their business.

The recent loss of Cruden has particularly hit me due to the number of projects I have worked on with their team since I entered the sector. The first scheme I worked on was Pickmere Court in Crewe for the then Wulvern Housing and the most recent scheme was Wharfdale Extra Care for Wigan Council. In between this I would estimate I have worked on well over £100m worth of schemes with them establishing great working relationships with their staff. 

Unfortunately the current market place and impacts of Covid 19 are likely to put ever increasing pressures on our regional contractors. With over £300m of annual capacity lost over the last 12 months we must turn the tide or our region will no longer be able to support our development needs.

For me this must involve a stark change to the procurement processes that are regularly adopted by the industry. Recent events have made it clearer than ever that ‘lowest price wins’ is not a sustainable model and in the long run means we all lose. A more balanced quality-based alternative must be established where the project team absorbs the rough with the smooth and risk is shared more evenly amongst the stakeholders. We must reach a position where quality is held in the same esteem as cost, tenders based on lowest price alone must be discouraged and phased out or we will continue to see the loss of longstanding respected contractors from the market.

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