Developer rushes to find new builders amid Sommer woes

THE developer of a major residential project at West End is rushing to find new builders as one of the state’s biggest construction companies finds itself in financial strife.

Work has ceased on the construction site at Citro apartments on Victoria Street, West End.

THE developer of a major residential project at West End is rushing to find new builders as one of the state’s biggest construction companies finds itself in financial strife.

The Queensland Building and Construction Commission (QBCC) this week suspended the licence of Brisbane-based Sommer and Staff Constructions, which was building Equire Development’s 106-unit Citro apartment complex in West End.

Equire general manager Tiel Lillehagen said the building, which features a pool, outdoor cinema, BBQ and dining areas, was about 12 weeks from completion.

“This is going to have an impact on us in terms of time and costs,” said Mr Lillehagen. “We are now talking to some large Queensland companies about finishing the project. It is largely the cosmetic finishes.”

Mr Lillehagen said hopefully subcontractors who had worked for Sommer could be engaged to complete the work. Sommer also was working on the Ivory apartments in Upper Mt Gravatt.

The QBCC suspended the 44-year-old company’s licence on Wednesday because of concerns about “the real likelihood of serious financial harm to suppliers, subcontractors or consumers.”

It is believed to owe subbies about $9 million. The company was licensed to perform work up to $60 million, placing it in the top 1 per cent of the state’s construction firms. Calls to Sommer yesterday were not returned.

QBCC commissioner Brett Bassett said the watchdog was targeting building companies operating beyond their financial limits. Mr Bassett said revenue limits placed on builders ensured they were operating financially- sustainable businesses.

A recent investigation had led to 12 licence cancellations of building companies operating under high-risk financial circumstances.

At least another 200 builders will be required to prove to the QBCC that they have the assets and financial capacity to complete contracts.

“The maximum revenue limits are set based on a number of factors, including a company’s assets,” said Mr Bassett. “The worst licensee investigated was found with a revenue turnover of 969 per cent over its limit. This is a recipe for disaster. It is like someone driving a road train up the M1 but they only hold a learner’s licence.”

Queensland’s building industry has been rocked by a series of company collapses in recent years, with subbies losing hundreds of millions of dollars in the process.

Public Works Minister Mick de Brenni said the government’s new Project Bank Accounts, which sees money set aside to pay subbies did not apply in Sommer’s case.

“They currently apply to government projects between $1 million and $10 million and Sommer wasn’t working on any government projects that fit that category,” he said. “They can help protect subcontractors in the case of insolvency, but what’s more effective is to identify companies that are looking a bit wobbly well before they get to that point.”