Building quality could fall amid tough economic conditions: Lawyer

Tough economic conditions and tightening margins in the state’s construction industry could lead to desperate builders building poor-quality structures to make cash, a legal expert has declared

Bennett & Philp director Tony Mylne says tightening margins could affect the quality of structures.

TOUGH conditions and tightening margins in Queensland’s construction industry could lead to poor-quality structures being built, a legal expert in the sector has declared.

An 11 per cent drop in total building work in the last financial year has put the squeeze on the state’s subbies.

Brisbane legal firm Bennett & Philp director Tony Mylne said there was an upswing

of Queensland businesses under threat during the hard times and some were at risk of insolvency.

“It’s a very competitive environment out there at the moment, both in the residential and

commercial property spaces,” Mr Mylne said.

He said the quality of structures could diminish as the lack of work, largely caused by declining building approvals across Queensland, began to bite.

“There are a smaller number of jobs in the market and lots of very competitive tendering on small margins,” he said.

“Anecdotally we hear of builders stopping tendering on projects, buying sites of their own and

engaging with other builders to carry out the job at a cost the original builder turned developer cannot match.

“The cheaper your job is, the more pressure you have on quality and problems will

eventually start to form.”

Mr Mylne said a higher rate of insolvencies was inevitable in a market of increased competition and reduced opportunities.

“How long any slump lasts will depend on various factors such as taxation, borrowing capacity, levels of immigration and so on,” he said.

“Times are going to be tough for a while but the ones that survive this period will be producing quality work and have good business practices.”

Mr Mylne backed plans from Masters Builders Queensland and the Housing Industry Association to teach and upskill subbies about how to run a business.

He said employers in the building industry needed to have a strategy to “ride this

wave of uncertainty”.

“Don’t put your head in the sand and ignore your cash flow problems,” he said.

“Nothing annoys creditors more than people turning a blind eye to issues with their cash flow.

“Tender for work at a margin that will allow a reasonable return.”