Rising costs, mountains of red tape and the prospect of being hit for millions in liabilities: Ardmore’s woes hold a mirror to the industry

News that Ardmore’s construction business has gone into administration really cannot have been a shock for too many people in the industry. But it is still shocking.

One lawyer, speaking in the wake of the news, wondered: “Who would want to be a contractor?”

Well, the answer to that is, still, quite a few but it is an increasingly asked question.

Take firms working in high-rise residential, for example. Why would anyone want to work in that sector? Rising costs, mountains of increased red tape and the very real prospect (as evidenced by Ardmore) that a job you thought you had finished years ago is going to actually cost you a fortune in the end.

In its statement announcing the administration of its construction business, Ardmore pointed the finger of blame squarely at a High Court judgment that was handed down last month.

In it, a judge ordered several Ardmore firms to pay Crest Nicholson £15m to rectify defects on a residential scheme in Portsmouth called Admiralty Quarter. 

Ardmore said: “The administration follows the profound impact of the recent Building Liability Order judgment relating to the Admiralty Quarter project, which completed in 2009.

“The judgment has affected client confidence, payment terms and certified values across a number of live projects, materially affecting the construction group’s ability to continue trading in the normal way.”

Ardmore knows it is not alone in this particular boat and there are several firms that will be a little bit more nervous today.

Ardmore says it has been given leave to appeal the decision and tapped into the wider angst the industry feels about this issue

Ardmore says it has been given leave to appeal the decision and tapped into the wider angst the industry feels about this issue when it said: “Ardmore believes the appeal raises issues of wider public importance for the construction industry, including the circumstances in which a Building Liability Order may be made and the extent to which liabilities may be imposed on group companies in respect of historic projects.”

To reiterate the earlier line, why would any firm take on a job where it thought it was going to be hit for liabilities years down the line?

Speak to firms privately and there is no doubt that well-intentioned legislation rolled out in the wake of the Grenfell disaster that killed 72 people is creating a brewing storm. Throw in planning changes and the gateway protocols – still a major issue for many despite the battery of monthly statistics the Building Safety Regulator has decided to pump out after overwhelming pressure to show it was doing something and listening – and many firms are in despair.

One boss got in touch to say: “The construction industry is a real conundrum at the moment. Fragile with low margins at one end with platitudes for increased productivity and playbooks at the other. Overlaid with Building Safety Act, planning reforms and so on.”

The government wants to grow the economy and one way to do that, it is commonly acknowledged, is to get building. It wants more homes – it is said this often enough – 1.5 million of them.

It cannot build low-rise schemes everywhere. Some are going to have to be above the heights that trigger the gateway approvals process. But contractors in this area, especially, must now wonder why bother. It’s a slog.

Here, in particular, it is important to ask the following: do contractors really set out to do a terrible job, so much so that they risk being called back to fix issues years later? Does any serious company really operate that way? Now, let’s be clear: many firms have indulged in behaviours that have been questionable over the years.

Remember Birse? Older heads will. In June 1997, nearly 30 years ago now, the chairman publicly apologised for having been too aggressive towards clients in the past and for upsetting employees.

Birse then introduced a non-confrontational culture at the company, bringing in a “resources consultancy” to train staff in the new approach. It was dubbed cuddly contracting and created a lot of headlines, and a bit of mirth, at the time.

The chairman’s name was Peter Birse and this is what he said in February 1999. Contracting, he reckoned, was a “waste of bloody time”. He added: “If you are working at margins between 1% and 3%, you need an awful lot of work to make money. Unfortunately, it only takes one or two bad jobs where you lose 5% to throw it all away.”

All they really want is to work for a decent client who pays on time, where everyone makes money and no one falls out. Less war-war and more jaw-jaw

This was said 27 years ago. So, what has changed since Birse – his firm was later bought by Balfour Beatty – made those observations? Have margins moved? No, not really. Is it a waste of time? Depends on who you ask – but right now Ardmore and those staff who have lost their jobs might think so.

The overwhelmingly majority of firms are in this industry because they want to be and, by and large, are pretty good at what they do. Firms make mistakes, of course they do, but do many really want to do such a bad job that they risk being reprimanded some years down the line? All they really want is to work for a decent client, that pays on time, everyone makes money and no one falls out. Less war-war and more jaw-jaw. And, let’s face it, most people in this industry are proud of what they do – and rightly so.

It should be a pretty straightforward premise – work for a nice client, do a good job, get paid, make a bit of money – but it can often appear otherwise.

Meanwhile, Ardmore says it is “pursuing the appeal against a judgment which we believe raises important questions for the wider industry”. Some might raise an eyebrow that it seems to be positioning itself as going in to bat for the industry but, in a way, somebody has to. What is the point of all this legislation and all these plans to build homes and infrastructure if no one is around to do it all?

Dave Rogers is deputy editor of Building