Projects - Risk Management
Project South West
Builder risk review
Summary
- Builder Risk Review
- Sydney, NSW
- 130 Units
- Value – $40m
- Review financial accounts
Issues
- Lender was considering funding a project in South West Sydney and requested a review of the builder’s financial position.
- Working capital low for a company of its size.
- Retention trust accounts did not hold sufficient funds for the project that the builder was undertaking which meant that they were not complying with their contract.
- Associated entities placed into liquidation.
Solution
- Recommended that the Lender insist on a minimum level of working capital and personal guarantees from directors and related entities.
- Condition precedent that the retention trust account be set up and the balance regularly verified.
- Builder to provide evidence of compliance with taxation obligations.
Outcome
- Lender decided to fund the project using the conditions outlined in our solutions.