Opinion: Connaught and Rok in a hard place

Aaron Morby 14 years ago

The financial crisis at Connaught and deepening woes at Rok have broken the magic spell sprinkled over maintenance and repair work.

Housing repair work was touted as the last safe haven for contractors on a forced retreat from cuts in other areas of public sector work.

But the events of the last few weeks sadly prove that all that glitters is not gold.

It is now painfully clear that responsive maintenance and repair work is not all it is cracked up to be, certainly at least in Rok and Connaught’s case.

The firms had  boasted to the City about steady work and long term order books that other contractors could only dream about.

But the glowing Stock Exchange updates mentioned little about costs and competition.

Maintenance hinges on getting things done properly first time round. Return trips get very costly, particularly on the scale offered today by councils and housing associations.

But getting some of the basics wrong is probably only part of the problem.

While details about what has been going on remain extremely sketchy, rumours abound that revenues were being booked at a faster rate than costs.

This smacks of Amey and Jarvis in the bad old days and explains why city investors sold the shares in droves.

Rok insists its problems are confined to the plumbing, heating and electrical division are are purely down to financial mismanagement which led to the suspension of finance director Ashley Martin.

Rival contractors like Morgan Sindall and Kier are fearful they will be tarred with the same brush and have gone to great lengths to spread the message that they are trading within expectations.

What is becoming clear, as many contractors that have failed to secure work know all too well, is serious problems like those seen at Rok and Connaught are often the symptoms of suicide bidding.

Repair and maintenance work is an area that has seen its fair share of sub-optimal bids. Worryingly, it is not the only sector.

The problems at Rok and Connaught may be down to other factors, but at their heart they are likely to spring from a very optimistic take on costs.

They are not the first, and sadly will not be the last, to have fallen foul of  a reality check in hard times.

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