Risk junkies

“Why do contractors bother? The risks are high and the returns are small. Many major players in the market are diversifying into the services sector in a bid to chase larger rewards and spread risks. For those that haven’t, profit margins have remained stubbornly low – and sometimes disappear altogether.”

Building wrote this evaluation of contracting in 2005. It would be great to say that risk has lessened, but the Top 150 Contractors tables this week still paint a “worrying picture”, with the ghost of Carillion oppressively haunting the figures.

In 2005, Multiplex had just announced £45m losses on Wembley stadium. Industry watchers blamed poor risk management on the job. Simon Vivian, chief executive of Mowlem, said: “If a client can get a contractor to take on all the risk, they will pass it over.”

Bob Rendell, chief executive of regional contractor Leadbitter, felt that clients were becoming more educated and there was potential for improvement. But with one disclaimer: “This is if the economy allows it to happen. If the economy goes into significant decline, it’ll go back to a dog-eat-dog world.” It’s almost as if he could see into the future …

To read the full article from 17 July 2005, click here