Collapse of the giant construction companies of Lloyd and Porter Davis Homes
It’s a dark day for the construction industry in Australia. Two of the biggest players in the game have gone under. Melbourne-based Porter Davis Homes and Lloyd Group were forced to appoint liquidators and administrators, respectively. The reason behind this unfortunate turn of events is the soaring costs of their building projects due to improper corporate structure for construction business.
This morning, Porter Davis Homes announced the appointment of Grant Thornton Australia as liquidators, as they had over 1,500 homes in progress and a staff of 470. Shortly after, Lloyd Group, which had around 59 projects under construction for government clients and approximately 200 employees, also collapsed and appointed Deloitte as administrators.
The consequence of the collapse building companies
The collapse of two companies jeopardized jobs and building projects. Porter Davis Homes had funding issues due to rising costs, delays, and low demand, impacting its revenue forecast. Deloitte works urgently to rescue Lloyd Group by assessing costs and seeking buyers for projects.
This unsettling news affects employees, stakeholders, contractors, and suppliers. Administrators strive to find a way forward amidst challenges in Australia’s construction industry.
The collapse serves as a reminder of industry difficulties, with soaring costs and shortages affecting many companies. Adaptation is crucial for survival in this rocky road.
What We Can Learn from the Crumbling of Building Companies
To forget the heartbreaking stories of families left homeless and the devastating loss of lives caused by the collapse of building companies is difficult. It’s also challenging to comprehend how these construction giants, with their towering cranes and portfolios, could come crashing down so suddenly. But, there are valuable lessons we can learn from these catastrophic failures.
Lesson 1: Proper Corporate Structure for Construction Business
Having the right corporate structure for construction business can be a powerful tool for protecting personal assets. When entities operate under a corporate structure, they can gain various options for managing liquidation or bankruptcy. Unless there is evidence of directors violating corporate laws or three specific tax debts, their personal assets will be protected.
Lesson 2: Review Your Business Structure
Regularly reviewing your company structure to ensure its effectiveness in protecting your personal assets is crucial. If you are a shareholder who lends a significant amount of money to the company, make sure to review the loan structure to determine whether it is secured or unsecured.
Lesson 3: Seek Expert Advice
If you own a construction company, it is critical to have an excellent accountant who can offer reliable advice on managing debt levels and safeguarding your personal assets. By collaborating with expert advisors, you will be better prepared to navigate potential disasters and prevent financial losses.
Always keep in mind that safeguarding your personal assets is of utmost importance for every business owner. By applying these lessons and seeking expert advice, you can ensure the safety and stability of your finances in the years ahead.
Why Your Construction Company Needs a Great Accountant
Running a construction company can feel like a rollercoaster ride of excitement and stress. One minute, you’re celebrating the successful completion of a project, and the next, you’re facing a potential disaster that could ruin your personal assets.
This is why having an excellent accountant who can serve as both a financial analyst and a trusted ally is crucial. They can help you navigate the ups and downs of debt levels and protect your personal assets through the proper corporate structure of your business.
But what makes a great accountant? Here are some qualities to look for:
Your accountant should understand the complexities of the construction industry, including job costing and project management.
An excellent accountant explains financial concepts clearly, is responsive to inquiries, and keeps meticulous records.
In construction, every cent counts, so your accountant must catch errors before they become significant problems.
With a skilled accountant, focus on your strengths—building projects that meet client needs—and seek guidance to safeguard your future.
