Tier ones have responsibility to guard SMEs, says Costain boss

Main contractors have an obligation to help smaller companies to cease them going out of enterprise, Costain’s chief govt has mentioned.

Talking to Building Information after the publication of the group’s half-year outcomes for the 12 months ended 30 June 2022, Alex Vaughan mentioned he was involved for smaller suppliers navigating the present financial local weather.

In current months, a mixture of things together with Brexit, the COVID-19 pandemic, and rising materials prices has put stress on companies.

A complete of 23 companies went into administration in July, in keeping with knowledge completely supplied to CN by Creditsafe, the best determine since March. Within the first six months of the 12 months some 115 companies collapsed. Earlier this month, administrators at sister specialists blamed their collapse on an absence of help from most important contractors.

Vaughan advised CN that it was vital that tier ones work with a set of shared values to help smaller companies throughout these tough occasions.

“I’m clearly involved for suppliers within the sector who’re struggling,” Vaughan mentioned. “We get nice worth from our small suppliers – so we help them, and so they construct relationships with us and that’s a private duty.

“After we choose our suppliers, we’re clearly very acutely aware of who else they’re working for and in the event that they work in our sector. All the opposite tier ones share the identical behaviours, so we’re all accountable collectively, which provides us confidence that individuals working for us, and our friends, are going to be taken care of,” he added.

For the interval between 1 January 2022 to 30 June 2022, the agency reported that it paid 85 per cent of its invoices inside 30 days. This was an enchancment on 76 per cent throughout the identical interval a 12 months earlier, one thing Vaughan was eager to focus on.

“We additionally run a provide chain academy, so we truly prepare and assist the provision chain to be higher, and to be stronger companies. We use {our relationships} with folks like our auditors to supply teaching and to assist the provision chain,” he mentioned.

Costain launched its provide chain academy in October, with the goal of supporting and growing SMEs. It helps to align the corporate’s provide chain companions with the identical normal of coaching and growth utilized by the group itself.

Within the interim outcomes for the interval, Costain reported that its pre-tax revenue elevated to £11.2m, in comparison with £9.1m within the first half of 2021. Its income additionally rose by virtually a fifth to £665.2m, from £556.8m a 12 months earlier.

It mentioned its revenue was protected by inflation-protection mechanisms written into contracts. Vaughan advised CN that the mechanism labored to guard the corporate in opposition to “prevailing inflation charges” which have elevated costs of supplies akin to metal and concrete.

However he careworn the agency shouldn’t be making the most of inflation mechanisms and mentioned shoppers should not left to “simply decide up the entire tab”, and it appears to purchase various supplies that are much less inclined to cost fluctuations, the place it may.

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