Views from the cheap seats on the construction industry are plentiful. Some are irresponsible.

Michael Chesterman April 19, 2022
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Views from the cheap seats on the construction industry

The urban dictionary definition of the expression views from the cheap seats is:

“A metaphor for a person’s point of view when they are not directly involved in a situation but wish to politely comment on it anyway.”

Based on this definition, since joining Helix 5 years ago, I have over 130 articles extending my views from the cheap seats on the construction industry. This is because I have never been involved in a business that carries out construction work in the industry. In writing these articles, I have never been afraid to call out issues, but at all times looking to provide solutions or alternative approaches. I have addressed in detail many construction industry issues, in the process classifying them ‘the good, bad, ugly, missteps and unresolved’. This was the heading for a September 2018 article of mine but I have always adopted this approach in writing all my articles.

I always call things the way I see them.

In general terms, I have addressed in considerable detail on multiple occasions:

  • SOP initiatives;
  • Regulatory obligations;
  • Insolvency;
  • Innovation causing disruption;
  • Contractor risks; and
  • A fairer and better construction industry is feasible if we change our thinking, the heading for a May 2020 article.

I believe that I have a demonstrated track record of raising issues and offering solutions calmly, judiciously, respectfully and always in a responsible manner. In my view, when offering views from the cheap seats on the construction industry, choosing what to say, always being respectful and perhaps more importantly, when to say it, is crucial.

The Probuild Collapse – views from the cheap seats 

Since the collapse of the Probuild group of companies and Condev, I have read over 100 articles of varying degrees. Some journalists, observers and industry parties have made a case that the Probuild/Condev disasters are symptomatic of an industry facing numerous challenges that it is not capable of dealing with. While I strongly disagree with these views, I nevertheless recognise that this is indeed a watershed moment for the industry. It has to be resilient enough to take on board these views to respond appropriately and persuasively.

In particular, I want to acknowledge the influence and value of comments from persons who are involved daily in running construction companies in these challenging times. The views of these people on the challenges confronting the industry should be noted. Not saying that everybody has to agree with their views but I would argue, nobody has a better ‘seat at the table’ than they do. I value reading articles that incorporate the views of these people because they have ‘skin in the game’.

Unfortunately, there are a significant number of other articles that don’t incorporate this type of real-life industry insight and are usually short on facts and tend to be sensationalistic i.e., taking views from the cheap seats on the construction industry. In this regard, I want to call out speculation in these articles about further company collapses as being very irresponsible.

I believe that comments like this only causes people to ask ‘who next”? Then as sure as night follows day, industry gossip hits overdrive.

The problem with this is that there is a risk of reputational damage being done to companies identified through such gossip and that may result in them experiencing financial distress. The possible beginning of a self-fulfilling prophecy.

This is where I draw the line concerning what views I consider are responsible and irresponsible.

Just throwing out a prediction in these media frenzy times that there will be more collapses is in my view, very irresponsible.

For the record, I have previously published an article (August 2021) titled Good news = bad news in the construction industry, highlighting the fact that in 2022 there will be an increase in industry insolvencies compared to 2021. However, this article was data-heavy, information-based and I would argue supported by insightful views of mine.

In this article, I will not be offering any views on the reasons for these high profile collapses.

Rather, I am willing to wait for the findings of the respective insolvency practitioners.

Let’s wait for all the relevant information before jumping in the cheap seats

In the 22 years working for the industry regulator before joining Helix, I was involved in hundreds of investigations into financially distressed companies.

One of the characteristics of a lot of these investigations was statements or assurances of comfort by key company persons that conveyed an upbeat position. This was unfortunately not reflected in their financial statements. Consequently, I developed a healthy scepticism of such statements.

In this regard, I have noted a statement by Tracey Marais, a key Condev person in a Courier Mail article dated 13 March 2022 (2 days before the company went into liquidation) titled Gold Coast construction giant Condev’s plea to developers for funding ahead of critical meeting where she is quoted:

“Ms Marais insisted all subcontractors, suppliers and staff had been paid to date.”

I have also noted a statement attributed to the liquidator of the company in a Courier Mail article dated 23 March 2022 titled Failed building firm Condev owes $31m to subbies, suppliers, where it is stated:

“Failed building giant Condev owes creditors and other suppliers more than $30m while its 107 workers are out of pocket for $2.45m.

In a report lodged with ASIC, Worrells insolvency partner Jason Bettles said unsecured and subcontractor retentions total almost $31m – owed to about 700 people and entities – while the Australian Taxation Office is owed $530,000. Secured creditor Westpac is owed about $6.3m.”

I am of the view that until all the facts are known and reported by the respective insolvency practitioners into the reasons for these two high profile collapses, then everybody should just ‘cool it’.

Get informed

While the industry is certainly facing a large number of challenges, I believe that there are an enormous number of knowledgeable persons in key industry bodies that recognise these challenges and have been working with all layers of government to improve things before these high profile collapses.

In other words, a lot of highly committed industry bodies, seeking improved outcomes for the particular sector they represent.

Now some people will say, given these collapses, all this stakeholder dialogue with governments has been ‘all talk and no action’. Fair enough. However, I would encourage those people to have a look at some of the detailed policy submissions a number of these industry bodies have advanced to governments.

Below are some of these industry bodies, with links to their website for policy analysis.

Ministerial Construction Council

The Ministerial Construction Council provides a platform for key stakeholders and government organisations to discuss matters relating to the QLD industry.

Who is on the Ministerial Construction Council?

According to the government’s response to the Parliamentary Committees recommendations into the Building Industry Fairness (Security of Payment) Act 2017, the Council consists of representatives from:

Who is on the ministerial construction council

View the interactive version here: Ministerial Construction Council

Pick an industry body that has a demonstrated track record in advancing solutions!

I would encourage parties to join an industry association that has a strong commitment to providing timely and well-researched updates to their affiliated members on emerging industry issues.

The only proviso I would suggest that parties should explore in deciding on a suitable association to join is ensuring that it is structured in such a manner so that the views of all members on emerging issues are considered when formulating positions on proposed policy or legislation.

A good industry body will consult their members on issues and then develop possible solutions for members’ consideration.

An industry body I have high regard for, but which is not a member of the Ministerial Construction Council, is the Australian Contractors Association (‘ACA’) whose vision is:

“A sustainable construction industry that is a great place to work.”

The ACA has identified three pillars essential to supporting a sustainable construction industry, which I support:

Australian contractor's associations three pillars essential to supporting a sustainable construction industry

The infographic above is displayed on page 8 of the ACA’s Report titled “Constructing the Future. A framework for a more sustainable construction industry.

The quote from the ACA below is from page 7 of the same Report:

ACA’s Report titled “Constructing the Future. A framework for a more sustainable construction industry.”

Final thoughts.

I do not believe that the industry is on the verge of total ruin and bereft of solutions. There are too many committed people working for industry bodies to allow this to happen.

It never ceases to amaze how many tenacious and hardworking people there are in the industry. Good people, representative of all sectors of the industry, who just want to do the right thing for their clients or other businesses, and usually with a smile on their face.

Of course, my ‘half glass full’ view of the industry must not disguise the fact that in many instances, there will be strong disagreements between these people and the bodies that represent them on solutions to industry issues.

However, in recent times, while the words may be slightly different, I have detected a common overarching theme in the advocacy of all these bodies, namely;

Social justice and awareness, sustainability for all, safety, health and wellness of their people

Not intended as legal advice. Read full disclaimer.
Michael Chesterman April 19, 2022

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