- The company had several government construction contracts, including the new Bayswater station and several schools
- There are also several apartment projects, worth some $80 million, on the line
- The RBA has warned more construction businesses will go under
Western Australian building firm FIRM Construction has fallen into voluntary administration.
This occurred just several days after the state government evoked its contract to build a primary school in the southern Perth suburb in Wellard.
The company also had state government contracts at Westminster Primary School, Ocean Reef Senior High School and Lakelands Senior High School.
Additionally, it was building the new Metronet Bayswater stations which has been plagued by delays.
In terms of residential projects, the builder holds a portfolio of high-rise apartments across Cannington, Applecross, Nedlands and Mount Pleasant, worth around $80 million. All are under construction.
Mark O’Gorman, FIRM director, said the company like many WA builders has been impacted by Covid-induced supply chain issues and labour shortages, along with significant price increases across the board.
The school contracts were all signed during the middle of last year, with Mr O’Gorman noted that they did not qualify for financial relief.
“We have been closely engaged with the Department of Finance in the past few weeks to ensure our approach is aligned in terms of how best to deliver on our public sector projects, and we hope that process will continue while we are taking steps to restructure the company,” he said.
RSM has been tasked with restructuring the 20-year old business, which turned over almost $100 million two years ago. Since 2010, the company has completed 75 projects for the state government.
The subcontractors are reportedly owed hundreds of thousands of dollars. The administration also means the Wellard Village Primary School is unlikely to be completed by the start of the school year.
More insolvencies likely
The collapse of FIRM follows major WA builders that have collapsed over the past few years, such as Pindan.
With inflation at high levels, the Reserve bank has warned that is likely to be further increases in insolvencies across the sector.
“Ongoing delays as a result of supply-chain disruptions, inclement weather and illness-related workers’ absences have resulted in further increases in costs and have delayed when payment milestones are reached,” the RBA said in a recent report.
“According to industry contacts in the Bank’s liaison program, construction delays for detached homes are currently around 12 weeks on average – and much longer than this in some instances.”
