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A family-owned construction company has been placed into voluntary administration just before its golden jubilee, and it owes more than $20 million to its creditors.
Project co-ordination directors informed staff at their Canberra and Wollongong offices on Tuesday that they had appointed RSM Australia Partners as administrators.
The ACT and NSW-based company has built buildings worth more than $120 million, now in doubt, while future projects worth more than $90 million have were stopped in their tracks.
The majority of the company’s 67 employees, 38 based in the ACT and 29 in NSW, will be made redundant and given compensation immediately.
The company was created in 1975 and specialized in the construction and management of public and private buildings, leaving management with the “destructive” decision to sell the company.
Family construction company Project Coordination (pictured, construction site) collapsed in its 50th year of business and owed creditors more than $20 million.
Father and son directors, chairman Paul Murphy and chief executive Gavin, said they “were distressed by this decision” in a joint statement shortly after informing staff.
“Even though other construction companies have collapsed around us over the past year, we never thought we would be one of them,” the statement read.
“We thought we had the means, the future order book, the capacity and the goodwill of the industry to overcome this ordeal.
“Each of us has invested significant amounts in the business to try to manage increasing labor, material and borrowing costs on fixed-price contracts with very tight margins.”
The statement revealed that the company exhausted a range of options to raise capital last Friday, calling the situation “untenable.”
Mr Murphy, who was one of the company’s first 25 employees, said he was devastated by the collapse of Project Coordination.
“The economic and regulatory environment in which construction companies operate today is more challenging than any I have experienced in the last 50 years,” Mr Murphy said.
“Worse than the recessions of the 1980s and 1990s and the global financial crisis of 2007/2008. Nothing was as bad as that.
Project coordination is exiting the industry after completing more than 900 projects across the country worth more than $2.5 billion.
The company leaves 14 construction sites across the ACT and NSW, worth more than $120 million, in limbo and a further $90 million in unrealized future projects (photo, construction site)
RSM’s Jonathon Colbran, Frank Lo Pilato and Brett Lord will oversee the company’s near future.
A statement released by the financial and advisory accounting firm said work on 10 sites in the ACT and four in NSW was halted ahead of their appointment.
The 14 sites are “at various stages of construction, from design and early works to some nearing completion”.
Mr Colbran said the company had been hampered financially by “losses from fixed-price contracts combined with increased subcontracting, supplier and operating costs”.
An initial investigation carried out by RSM identified “more than 200 creditors” to whom the Project Coordination still owes more than 20 million dollars, the majority of which had been committed less than two months ago.