THE vulnerability of more than 180,000 people working in Scotland’s construction sector has been exposed by an endemic cash flow issue, com- pounded by the collapse of Carillion, a leading independent accountant has warned.
The industry is facing an unprecedented sequence of problems, according to Campbell Dallas. And the firm believes this is likely to trigger further business failures, particularly among smaller supply chain contractors.
Derek Forsyth, head of recovery at Campbell Dallas, warned of four major issues affecting order books and com- pounding cash flow problems across the industry. These are a marked fall in major public infrastructure projects; prolonged severe weather; the collapse of a first-tier contractor; and persistent economic uncertainty.
He said: “This is probably the most challenging period I have known for the construction sector. The industry is beset with an endemic cash flow issue.”
Mr Forsyth said businesses aim to retain cash for as long as possible, which tends to affect smaller companies trading from one job to another.
Coupled with fewer contracts and wider economic and bad weather issues, many firms are facing “a very tough time”.
He added: “The Carillion collapse once again exposed the vulnerability of smaller firms down the supply chain to the failure of the principal contractor.”
Mr Forsyth said there was a pressing need for intervention to ensure smaller businesses are paid on time.
He also backed calls for the establishment of an independent body that could be charged with managing a Construction Cash Flow facility, initially for publicly financed projects.
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