The chief executive of the Olympic Delivery Authority has revealed the body is carrying out credit checks on its suppliers in the wake of the deepening financial crisis.
In an exclusive interview with Building, David Higgins said: “Subcontractors are obviously a concern. We do our own credit checks to make sure we’re not too exposed to companies.
“We haven’t introduced new criteria, but we are monitoring our exposure to individual contractors very closely.”
His comments follow consultant Pricewaterhouse Coopers’ recent revelation that the number of construction companies falling into insolvency has risen 35% since this time last year.
Higgins said small companies were the main concern. “The biggest UK contractors are well positioned because they’ve got good forward workloads and the suppliers market has some very big, well-capitalised companies.”
We are monitoring our exposure to individual contractors very closely
He added, however, that one positive had emerged from the downturn: “Subcontractors are more competitive. There’s a lot more interest now, and we’re getting a good response from tendering. Eighteen months or two years ago, it was much harder to get people to tender.”
Jonathan Hook, construction and housebuilding leader at PwC, said the ODA was being “sensible” in issuing credit checks but warned that it could leave firms already suffering from financial difficulties struggling to get work.
• Internal auditors have been brought in by main groundwork contractor Nuttall to investigate union allegations of unfair employment practices on the Olympic site. An ODA spokesperson said: “To date no evidence to support the allegations has been found.”