Accountant Explains: Why So Many Construction Companies are Going Bankrupt

Over 700 construction companies have gone under in just 3 months, with what looks like more on their way out.

So what's happening? It's not just interest rate rises or inflation, it goes DEEPER. And it might have started with one simple government incentive...

I break it down in this video, and give my perspective as an accountant.

—

Thank you for watching this video. I post videos on this channel to provide the latest and most frequently asked business questions. Please take a second to say hi in the comments below. Also, if you enjoy the video and find it valuable, subscribe to the channel, like and share it with anyone who you think might find my channel useful!

—

► Subscribe to my channel here:

—

Davie has over 10 years experience in advising businesses in management accounting and taxation issues. He heads up a passionate team at Box Advisory Group who are dedicated to offering proactive and outstanding service to our clients.

Davie’s extensive experience in providing tax and consulting advice and astute business knowledge has paved the way for success for many businesses.

He is a member of the Chartered Accountants Australian and New Zealand, a member of the Australian Tax Practitioners Board and holds a Bachelor of Commerce degree from the University of New South Wales.

—

Follow Me:

Disclaimer:

This video is for informational purposes only and should not be considered financial or legal advice. This video does not take into consideration your personal circumstances. Consult with a qualified financial planner, tax advisor or legal consultant before making any decisions regarding investments.

[shaneyule]

I'm a contract plasterer and painter. The day I gave up new project homes was the best day of my life. Dodgy builders trying to live the hiigh life with a building full of office workers instead of visiting sites and paying the actual workers to do a good job. I now do my own reno, private and bespoke work. $100 an hour, 10hr days, 4 days a week. All the wanna be high rollers can be up themselves as much as they want. In the end who do they call when they have dramas with there building.

[jasonr]

this is what you get when you have no manufacturing.

[harrylo]

Fixed pricing shouldn't matter given thst most of these builders take short cuts, using cowboy trades to build homes that don't even comply with engineering plans half the time and then signing off their own work as 'compliant'.

[vplfqop]

The tradies not taught by old school tradies, older houses were built properly not slapped up with defects, building inspectors had to abide by the rules regulations. Now it's about squeezing as many homes on a once was one house block as quick as can on the cheap.

[seanyeejiunfa]

Bro your shirt is as tight as the construction industry's budget

[monkeydog]

6:50 Yes, fixing defects adds time and costs to a project, that's why it's so important to get things right the first time! Doing a decent job adds five minutes in some cases, or nothing at all, if you know what you're doing!

[timjones]

The standard of so called tradesmen has dropped so low that anyone buying a new home gets 50% of what they've paid for.

[Scourgewor]

Having been a Porter Davis customer once I can tell you nothing of value was lost. That company was everything that was wrong with the building industry. Once the building started the facade of professionalism disappeared and you were at the mercy of whoever they managed to hire at the lowest rate. Some trades were great and some were terrible. There was no minimum standard in their eyes and if someone came back to redo something they be sure to make you wish you hadn't bothered. If you called their office no one ever answered. It's amazing what they got away with.

[aussie]

Clients shedding tears when their builder goes under yet those same clients would be jumping and screaming if they had to pay the increased material costs on their home build.
I’m just glad I’m out of the trade after decades of dealing with clients. Sure some were good but most only looking for cheap prices.

[bpositive]

There are no penalties to going bankrupt. There are no incentives for making good decisions.

[peterjames]

Hi Davie, Great video! Agree with all your points. I was building throughout this period. Managed to get out in 2023 by the skin of my teeth. Here in SEQ, another factor was incessant rain. I reported actual rain days compared to historic rain days from the nearest BOM weather station - I experience about double the number of rain days. This helped me avoid liquidated damages from delayed practical completion date (must be stated in the contract). But this must have added cost to many other builders. Also, on several big projects my contacts are doing (a hospital and a university building and an arts building) the projects experience extensive mold outbreaks, I reckon this was caused by a mixture of materials being stored outside and generally damper conditions.

[raven]

Tired of "supply chain issues"...
Apparently Australia doesn't produce any Timber, Concrete, Steel, Glass, Copper.
Like cmon!! I'm not believing this shit !

[stephenpercy]

Ther biggest expense increase is Labor not labour!

[geekswithfeet]

Number 1 reason is material price gouging

[joshuajackett]

The message here is clearly the Builders were caught in an environment that gave them zero chance of survival.

[Clluthu]

Government too busy relying on the "tried and true" policies that have got us into this mess in the first place.

They are not doing what needs to be done to fix the actual underlying issues.

This was actually a good to the point video without over politicising the issue like some other YouTubers who just end up creating an echo chamber of nitwits.

[Nabraska]

Back in the 1970, s you could buy a house for $3000-$4000 on the outskirts of Sydney.. just goes to show how much the dollar has become so worthless in 50 years

[billbrown]

The best summary of what happened I have heard by a long way. Well done.

[louisraubinger]

My thoughts are that the big players in the building industry ran a kind of a Ponzi scheme. They needed to get new customers to finish off the existing builds. Always undercutting the smaller builders.

[mikldude]

In the end, it comes back to cost for business, we used to have a motor industry in Australia, and decade after decade politicians policy disadvantaged out manufacturing and made it easier for imports every single year .
And here is a statistic. Every major car maker in Australia either went broke or left for greener pastures.
The building industry….. rinse and repeat.