FIXED-PRICE contracts could have played a part in the demise of building firms Camerons and JP Mauger, according to the former owner of a construction company.
Stephen Regal, who sold his eponymous construction firm four years ago after more than 50 years in the trade, admitted that he was not fully aware of the reasons for the two companies’ failures but highlighted the issues associated with these types of contracts.
A significant player in the Jersey construction sector, particularly in the building of luxury homes, JP Mauger went into liquidation this week, citing tough trading conditions as the reason for its collapse, making it ‘increasingly difficult for the construction industry in Jersey’. Fifty-one members of staff have been made redundant. Camerons collapsed in February.
Mr Regal said: ‘Some 20 or 30 years ago the States of Jersey contacted the Jersey Builders’ Federation and requested that the members considered tendering upon fixed-rate contracts.
‘This meant that fluctuations in the price of materials and or labour were now to be at the tendering contractors’ risk. This does not mean that variations to the contract would not be paid, merely changes in the cost of labour and or materials would not be.
‘Although I argued long and hard that the federation resist this change, it was carried by majority vote. I predicted the problems that this would cause, but nevertheless continued my company’s membership; however, I decided that we would not tender for long-term contracts.’
He added: ‘I am unable to think of any other sphere of business that any industry would lock itself into fixing prices up to say two or three years ahead.
‘I also note that some contracts have been placed by government-owned or run companies with non-domestic contractors.
‘This cannot but have had some impact upon the turnover and aspirations of the local construction industry. After all, doesn’t government possess a duty to help the local economy? Not at the expense of government that is, but Jersey possesses some exceedingly experienced contractors.’
Mr Regal added that the Covid pandemic and Brexit had also had a significant impact upon the industry.