Scott Hutchinson says ‘crazy prices’ behind Probuild collapse, WBHO blames Covid

The boss of Australia’s largest private builder says more collapses will come given the ‘crazy’ low bids for projects while Probuild owners have taken a swipe at Australia’s hardline Covid policies.

The boss of Australia’s largest private builder says Probuild will not be the last major construction company to hit the wall as firms undercut each other with “crazy prices.”

Hutchinson Builders chairman Scott Hutchinson said Probuild’s long-delayed 443 Queen St project in Brisbane was a major contributor to the company’s failure as costs ran out of control.

Mr Huchinson said his firm had bid for the project but realised it could not compete with Probuild on the price. “We came second on that job but Probuild were well under us (on price),” said Mr Hutchinson.

“Costs ran out of control. Financiers are backing these projects without asking whether they have the balance sheet to complete the jobs.”

He added clients also had a role to play ensuring the price of building a project added up for contractors. “The problem is some will want to get a backyard builder to construct the Opera House.”

He said Probuild’s South African parent Wilson Bayly Holmes-Ovcon (WBHO) had realised to its peril that the Australian construction industry was one of the toughest in the world to make money.

443 Queens Street construction site in Brisbane

“I have spoken to other multinationals, including some in France, and they all say it is too hard to make money,” he said. ”It is highly competitive and regulated.”

In a statement to the Johannesburg Stock Exchange on Wednesday, WBHO said the “level of risk versus reward’ in the Australian construction market and the depletion of resources meant the company will no longer provide financial assistance to Probuild.

WBHO also took aim at the Australian government’s “hardline approach of managing Covid-19.

“A combination of border restrictions, snap lockdowns and mandatory work-from-home regulations for many sectors, has had a considerable impact on property markets,” it said in a statement,

Probuild had 18 projects underway across the country at the time administrator Deloitte was appointed on Thursday, the bulk of them in Victoria. Mr Hutchinson said his firm would be interested om taking on some of the incomplete work but it was too early to make any decisions.