As more Canberra builders collapse and leave a trail of debt in their wake, the construction industry is calling for "urgent change".
There is concern among the industry, one local business owner says, about how many more builders will go bust.
Insolvencies are up 35 per cent in the ACT, figures posted by the Australian Securities and Investments Commission (ASIC) have revealed.
In the 12 months to March, 146 ACT companies entered administration or appointed a controller, compared to 108 during the same period last year.
In February, Rork Projects entered administration owing about $28 million to creditors and halting work at 14 construction sites in the ACT.
Project Coordination followed in March, entering administration with about $20 million of debt.
Cubitt's Granny Flats and Home Extensions, Voyager Projects and, last year, PBS Building, are also among recent construction company collapses.
Representatives from the Master Builders Association of the ACT will meet with Chief Minister Andrew Barr on Tuesday to discuss the state of the industry.
Mr Barr said the government was concerned about the flow-on effects building company insolvencies had on local subcontractors "who may be left in debt".
The association says it previously engaged directly with ACT Treasury about the rise in building material and labour costs and the need to adjust government project budgets to account for these increases.
The association has also called for new regulations, such as potential reforms to security of payment legislation, to be better aligned with other jurisdictions.
The association said previous attempts to warn the territory government about economic issues within the industry had not been taken onboard.
"Despite our efforts, we fear that governments at all levels do not fully understand the economic and regulatory impacts that our local industry faces," Master Builders Association ACT chief executive Michael Hopkins said in a letter to the Chief Minister.
Industry demands 'urgent change'
Zach Smith, ACT branch secretary at the Construction, Forestry and Maritime Employees Union, said the industry could not afford to see more builders go bust.
"We need urgent change in our industry," he said.
He said insolvencies had a "massive ripple effect" throughout the industry because debts owed to subcontractors and suppliers were often payments for work that had already been completed.
"We're talking to subcontractors, some of whom aren't that big ... who are owed up to half-a-million [dollars] and sometimes more," he said.
"For those businesses, it is very hard and sometimes, unfortunately, impossible to wear a loss like that."
Project trust accounts need to be a priority, union says
The union wants to see a statutory trust model established that would allow project funds to be held in a trust and passed down promptly to subcontractors.
At present, subcontractors often have to wait 30 days to receive payment once work is completed.
A statutory trust model was one of 86 recommendations from a federal government review of security of payment laws, published by building contract dispute specialist John Murray in 2018.
"That means that the money that is allocated for a project remains in a trust and can only be paid to those companies and those workers that perform work," Mr Smith said.
More broadly, the construction industry needs to rethink how it does business, including the use of fixed-price contracts, Mr Smith said.
"We see time and time again builders signing up to contracts on the lowest price with wafer-thin margins, with a fixed price and a hard deadline," he said.
"It only takes a few events, often outside of the control of the builder, for that whole house of cards to come falling in.
"That leaves a trail of destruction in their wake."
Canberra businesses feel ripple effect
The impact of a building company collapse is felt beyond those who are direct creditors.
Pasquale Bono is the director of Impressive Cabinet Works, a joinery business based in Queanbeyan.
While the company wasn't directly affected by the recent business collapses, it will still suffer, Mr Bono said.
"Other people that we worked for were owed a lot of money and were affected by it and now they're going to struggle to pay us because of it," he said.
Mr Bono has changed the way his business operates in recent years to ensure he gets paid on time.
"We're no longer signing 30-day contracts," he said.
Instead the business requires some money up front for materials and takes progress payments throughout the job.
Mr Bono was optimistic the challenging period was temporary, but said there was a feeling among the local industry of "who's next?".
"Before signing a contract everyone's going straight on the credit reporting agency [websites] to make sure that they're working for a viable company and someone that's not going to stuff them around," he said.
