Public and private sector clients fear suppliers could struggle to survive the coming months.<\/p>\n
Cashflow problems as a result of the pandemic, coupled with potential disruption caused by Brexit, could prove too much for some companies, a civil servant has warned.<\/p>\n
Speaking at the Construction News Summit<\/a>, Department for Education divisional director Paul Mustow said: \u201cI think our biggest concerns are around the fragility of the supply chain. [We need] to come through the end of COVID, make our way safely through an EU exit [and] come out the other side in a stronger place, and make sure that the whole the industry is secure through that.\u201d<\/p>\n Far East Consortium regional general manager Gavin Taylor said the current risks in the market meant clients had to be knowledgeable about their suppliers. \u201cIt\u2019s about getting close enough to your supply chain to ensure they\u2019re not going to pop. A lot of people are struggling out there for cashflow, and it\u2019s some of the ones that you don\u2019t expect,\u201d he said, adding that\u00a0firms needed to be honest with others in the supply chain about this position.<\/p>\n \u201cI think that we just need to be cautious around the financial stability side of things,\u201d Taylor said. \u201cWe need to be real on the gearing of some of these entities and really get a level of transparency, because transparency has been something that\u2019s always been lacking in the construction industry.\u201d<\/p>\n The clients speaking the CN Summit said they were aware of the role they have in supporting the industry. Ebbsfleet Development Corporation director of projects Julia Gregory said: \u201cSomething that we introduced really early on was much faster payments, through our main contractor down to the supply chain \u2013 and we have established parameters that we expect them to pay their subcontractors.\u201d<\/p>\n Mustow said the DfE had taken similar steps: \u201cAs part of the COVID relief measures that were brought in across government early in the pandemic, I think we really worked hard to try and get money out and keep money flowing to the supply chain to keep things moving early on,\u201d he said.<\/p>\n The pandemic has produced acute challenges for construction companies, but the clients agreed it had led to closer and better working relationships and more collaboration. Mustow said the government wanted to encourage this further with construction playbook guidance, which is due out soon.<\/p>\n CN<\/em> revealed it was being prepared by government earlier this year<\/a>. He said: \u201cThe construction playbook is very supportive of [better working relationships], because it starts to really drive collaboration in the industry and starts to really promote the government providing the sort of impetus to further collaboration.\u201d<\/p>\n As reported by CN<\/em>, the number of companies in the sector going under has actually fallen in each quarter since the start of the year<\/a>. The extended furlough scheme and legal protections on winding-up orders have been cited as factors benefitting firms, though there have been warnings there are many \u201czombie companies\u201d<\/a> being shielded by the measures who won\u2019t be able to continue once the government support is withdrawn.<\/p>\n","protected":false},"excerpt":{"rendered":" Public and private sector clients fear suppliers could struggle to survive the coming months. Cashflow problems as a result of the pandemic, coupled with potential disruption caused by Brexit, could prove too much for some companies, a civil servant has warned. Speaking at the Construction News Summit, Department for Education divisional director Paul Mustow said: …<\/p>\n","protected":false},"author":26091,"featured_media":360698,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false},"categories":[564,552,57171,526],"tags":[],"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\t\n