Page 959 - Week 03 - Thursday, 14 March 1991
Next page . . . . Previous page . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
contracts for new works and about 2,000 contracts for the execution of maintenance work. Think of that. Something like 5,000 contracts are going at any one time. In what has always been acknowledged as a relatively high risk industry, the construction industry, the performance of contractors of all sizes has been largely trouble free, considering the economic climate over the last 12 months.
In the serious cases of company failure that have occurred, the problems have often been brought about not, in my opinion, by the firm's construction activity, but by firms venturing into high risk development projects. Often the steady workload coming from their construction arm has supported other less viable parts of their business. I guess that what we have is the situation where frankly firms that are good at one thing try to expand into another area where they are not as good, and as a result they find themselves in difficulties.
Mr Connolly mentioned the Shelleys collapse - the collapse of R and G Shelley. Following the collapse of that company, I instructed that procedures be tightened for the management of project managers' funds, and this has been done. There is no "We are going to do it" or "We are reviewing it" or anything like that. The simple fact is that that procedure has been introduced. The tightening of those funds has been introduced into the system and is currently in place.
A thorough financial investigation is carried out for all contracts and, where there is any doubt about a contractor's viability, this assessment is being checked through a private enterprise service. The financial assessment involves an examination of balance sheets, bank information and statements, liabilities and assets and forecast cash flows. Major suppliers and subcontractors are contacted regarding payment history, and details on directors, shareholders and partners are thoroughly examined. This information is supplemented through credit bureaus and, where doubt still exists as to the financial viability of the company, a second opinion is sought from a chartered accountant using the corporate scorecard system of assessment.
In addition, to further protect subcontractors in these difficult times, I have instructed my department to explore options to ensure that payments made to the head contractor flow to their subcontractors. In response to this request, we have added a clause to the contract which allows Public Works to demand a statutory declaration certifying that the head contractor has paid his subcontractors all moneys due from the previous claim - and we do not shred it. This clause is invoked when advice is received that payments are not being passed to subcontractors.
Next page . . . . Previous page . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .