Wednesday 21 November 2018

17 schools hit by building crisis as more firms go bust

Rise in insolvencies halts education projects

Minister: Richard Bruton. Photo: Damien Eagers
Minister: Richard Bruton. Photo: Damien Eagers

Fearghal O'Connor

The country is facing an education building crisis with 17 school projects hit by the insolvency of building contractors so far this year, new figures reveal.

The number of primary and secondary schools projects halted by financial problems in the building industry is up a whopping 750pc on the figure for the whole of last year, data from the Department of Education shows.

Financial problems have led to issues at schools in 13 different counties. In Dublin, Gaelscoils in Cabra and Ballymun, and Scoil Mhuire and St Brigid's on Haddington Road have all faced problems with their builders.

St Colman's College in Midleton and Colaiste an Chraoibhin in Fermoy have been hit in Co Cork, while in Maynooth, Co Kildare two secondary schools have also faced problems.

Elsewhere, schools in Dunleer, Co Louth, Ratoath and Kells in Co Meath, Carlow, Portlaoise, Bray, New Ross and Wexford have seen building work slowed or halted by the difficulties faced in the industry.

A table of information titled "major school building projects that have experienced difficulty due to building contractors going into examinership or liquidation processes from 2016-2018" showed that there were no cases of any such projects in the whole of 2016.

In 2017, there were issues with two projects and in 2018, to date, 17 projects have been affected, according to the information from Minister for Education and Skills, Richard Bruton.

The information was revealed in response to a parliamentary question by Fianna Fail education spokesperson Thomas Byrne who asked about the number of school projects that have experienced difficulty or delay due to issues with construction contractors.

The highest profile problems with the Government's public private partnership school building programme were those projects that were under way by Sammon Group, which collapsed in June after hitting financial difficulties. It had subcontracted on a number of Irish schools projects on behalf of British building giant Carillion, which had originally won the contract for the bundle of school building projects from the Department of Education and which itself collapsed earlier this year.

As previously reported in the Sunday Independent, there is huge concern in the building sector that pressure to win government contracts, including on vital education builds, has pushed builders to bid too low for projects. More than 40 building companies have gone into liquidation so far this year.

Gordon O'Regan, CEO of building and civil contractor L&M Keating, said his company had been very careful about bidding on State contracts because the criteria used for selecting the winning contractor prioritised the lowest bid ahead of other factors such as quality or community gain.

"The current procurement rules that govern large infrastructure and housing projects in this country must be reformed in line with best international practice," he said. "The rules today have allowed a 'race to the bottom' to take hold where price is the main determinant of successful bids. This is a dangerous and destabilising model that if allowed to continue could decimate large tracts of the indigenous construction sector in this country."

O'Regan, whose company has just finished building a major project for cruise ships in Dublin Port, said that "the recent well publicised collapse of several construction groups operating in the Irish market lays bare the perilous position that many Irish construction companies find themselves in as they navigate public procurement rules".

He warned that the Government needed to change procurement rules if it hoped to deliver on its huge Project 2040 plan.

"The margins and risk under which construction groups are forced to operate these State contracts are perilously tight and unsustainable. It makes sound economic sense for Government to change the contracts if they want to see the national planning framework and development plans delivered," he said.

Sunday Independent

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