The construction industry in Australia is facing a major setback as two prominent companies, the Lloyd Group and Porter Davis Homes, have recently gone into voluntary administration and liquidation respectively. This news comes at a time when construction costs are already on the rise.
On Friday, the Lloyd Group, which specializes in civil design and construction, appointed Deloitte Turnaround & Restructuring partners Sam Marsden, Sal Algeri, Jason Tracy, and Tim Norman as voluntary administrators of six companies that make up the group. With around 59 uncompleted projects still on their hands – 30 in New South Wales and 29 in Victoria – this decision was deemed necessary to manage creditors' interests.
Similarly alarming is the news that Porter Davis Homes has gone into liquidation with over 1,500 incomplete projects. As one of Australia's largest construction companies facing financial difficulties due to rising costs associated with building materials such as steel and timber.
According to recent reports from mid-2022 by Australian Bureau of Statistics (ABS), these increased costs have seen an almost five per cent increase from previous quarters - an unprecedented high for this sector.
These developments will undoubtedly cause inconvenience for several clients who were eagerly awaiting project completion or refunds from these companies. However it remains unclear how much compensation will be offered for those affected by these closures given current circumstances surrounding both firms’ finances.
The situation highlights how important it is to carefully consider financial risks before engaging in large-scale development projects particularly during periods economic uncertainty associated with pandemic recovery efforts; a sentiment echoed by industry experts warning developers not take shortcuts or overlook issues which could lead similar consequences down line if left unchecked.