The liquidation of two major builders has prompted questions of what savvy customers can do — if anything — to avoid unwittingly signing a contract with a construction company in danger of collapse.
PBS Building and National Construction Management (NCM) both entered into administration earlier this month, leaving millions of dollars in unpaid debts.
The Queensland Building and Construction Commission (QBCC) put restrictions on NCM in February, to stop it providing tenders or quotes without approval, but no such warning was in place for Canberra-based PBS Building.
The collapse of PBS Building is the latest in a string of high-profile insolvencies that began last year and included companies such as Probuild, ConDev and Oracle Building Corporation.
Russ Stephens from the Association of Professional Builders said for customers looking to secure a builder or with builds underway, it would be difficult to find out whether their project was at risk.
"It's extremely difficult to identify these problem companies because there’s such a lack of visibility across financials. There's no visibility at all," he said.
"So we, the general public [and] subcontractors, we're all reliant on the licensing authorities.
"But unfortunately, the data that's been submitted to them is [often] incorrect."
Mr Stephens said some builders in Australia simply did not have enough of an understanding of where their money was going.
"What we have is a dire situation in Australia, where most builders simply don’t understand their financials well enough," he said.
"And there is no obligation on them in terms of their licence to understand their financials either."
From COVID to collapse for some builders
Sunshine Coast Master Builders chair Nicola Scott said the conditions created by the COVID pandemic were still rippling through the industry.
She said the creation of the HomeBuilder Grant payment two years ago created a huge surge in demand across the state and beyond.
The surge pushed up the price of materials and labour, and delays became more common.
"During that time frame the prices have continued to escalate and your builder is constantly carrying that cost," Ms Scott said.
Do your research, but no guarantees
Ms Scott said those looking to build needed to do as much research as possible about their chosen building company before signing on the dotted line.
"Make sure that you do a little bit of digging on them. Have a look on the QBCC licensing website," she said.
"Do a search of their licence number and that will give you a bit of an indication of their annual turnover.
She said beyond the regulator's website, customers could seek out online reviews for the builder, and should watch out for delays or price increases.
Ms Scott said that even if customers did their due diligence, sometimes things still went wrong.
"If you don't know [a company's] financial position, then you just have to put your faith in that process," she said.
"From a consumer's perspective, that would be quite frightening."
The QBCC put licence restrictions on 537 builders in February, stopping them from signing new contracts for building work until they supplied financial details to the regulator.
