Why JV partnerships can be key in mitigating contractor failure risk

Richard Jones CROP

The recent collapse of a number of contractors has highlighted the importance of housing developers understanding contingent risk, writes Richard Jones

With the likes of London based Henry Construction and Kent based Claritas recently crashing into administration clients are looking to understand what the contingent risk is likely to be.

It has been estimated for example that Henry’s failure will affect 400 firms, either subcontractors or suppliers being owed money or clients whose projects are put in limbo massively impacting on programme as well as the cost to complete.

With the market the way it is, getting contractors who are on a firm financial footing to complete these works will likely prove very difficult. Performance and guarantee bonds will, even if they are in place, inevitably be seen to be inadequate. Getting a new contractor to take responsibility for partially completed works will form another challenge and will likely not be possible with clients having to either self-insure or rely on consultant and designer warranties

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