National firm leaves 80 projects unfinished and owes money to more than 1,000 creditors
Yet another building giant has collapsed as the construction sector continues to grapple with rising material and labour costs.
National construction company PBS went into administration Tuesday, owing $25 million and leaving 80 projects unfinished, according to a report by The Australian.
RSM has been appointed as voluntary administrator of PBS and its trading companies operating in the Australian Capital Territory, New South Wales and Queensland.
Earlier this week, PBS abandoned construction sites amid climbing costs, rising losses and labour shortages, according to The Australian.
Unfinished projects
RSM Australia partner Jonathon Colbran told the publication that PBS had 80 residential and commercial projects in various stages of construction.
“All work on these sites ceased immediately prior to the appointment of the administrators and it is not clear at this stage whether works will recommence,” Colbran said. “If works do not recommence, the operations of the PBS construction companies will progressively be shut down and the sites will be handed over to customers.”
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Founded 33 years ago, PBS has grown from a family-owned building firm based in Canberra into a major construction company, The Australian reported. Since its founding, the company has delivered more than 7,500 residential dwellings and construction projects at a value of $3.6 billion.
Colbran said the company was another casualty of the ongoing crisis in Australia’s construction sector created by the confluence of fixed-price contracts, spiking material costs, labour shortages and extreme weather events.
“RSM’s initial investigations of the financial statements and records of the PBS construction companies have identified more than 1,000 secured and unsecured creditors. These creditors are owed a total of more than $25 million,” he told The Australian. “These are preliminary figures and may change following more detailed investigations over the coming weeks.”
Employees made redundant
PBS had more than 180 employees in three states and territories.
“All employees were made redundant on Monday, March 6, prior to the appointment of the administrators, and all outstanding employee entitlements have been paid in full,” Colbran said.
“This has been a gut-wrenching decision that we know will impact many lives and livelihoods,” PBS directors said in a statement. “However, after months of intense efforts behind the scenes, in the end it was the only responsible course of action available.”
Contractors unlikely to be paid
Zach Smith, head of the Construction, Forestry, Mining and Energy Union, told The Australian that workers on two abandoned PBS projects on the Gold Coast would likely be left unpaid.
“The situation we have today is we have contractors that have worked on PBS projects and are unlikely to get paid for the work,” he said. “That’s unpaid wages and entitlement profits, payments to suppliers. There will be a massive downstream effect from this announcement today.”
Smith said workers in the industry consistently go unpaid thanks to company collapses and the lack of security payment laws – a situation he called “intolerable.”
“Companies routinely go to work and the money they’re owed isn’t secured,” he told The Australian. “Unfortunately, the truth of the matter is there’s not a lot of legal protections for contractors in this position.”
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