Contractors say Arrow's collapse shows high risk of construction

Arrow's collapse is another demonstration of what is wrong with the construction industry. Photo / Getty Images

The downfall of Arrow reflects high risk of construction, Civil Contractors NZ said.

The voluntary administration of Arrow International (NZ) will impact not just on the employees of the company and its clients, but the wider network of contractors and subcontractors who supported its construction projects, it said in a statement.

Civil Contractors chief executive Peter Silcock said Arrow's collapse was yet another demonstration of what is wrong with the construction industry in New Zealand at present, and unless the root causes were dealt with it would continue to be a major issue.

"Once again, this is about attribution of risk. Arrow is one of New Zealand's top vertical construction companies and it's a real shame to see a well-respected player exit the market," he said.

"We need to see a more equitable distribution of risk and a more collaborative approach."

Times when there was a lot of work on could be extremely difficult for construction companies, who manage complex networks of subcontractors and suppliers, he said.

"We need a more mature relationship between clients and contractors. Part of the issue is clients repeatedly going for lowest price but wanting a gold-plated outcome," he said.

"That's fuelling incessant litigation when the budget just won't stretch to cover costs."

With fewer players in the industry to take on the current workload this was likely to exacerbate the issue.

Arrow Construction's announcement of voluntary liquidation today followed the collapse of a other major construction companies, including Ebert Construction in August 2018 and Corbel Construction in December.

Silcock said despite improved protection of retentions for sub-contractors, it was "extremely disappointing" that many who had been involved in Ebert's work were still out of pocket, with disused cranes still standing next to abandoned work sites.

Construction business Arrow International has gone into voluntary administration after a contractual dispute left it with insufficient cashflow to meet operating costs.

Administrators from accountancy BDO were appointed to Arrow this afternoon.

"This is not the outcome we wanted or expected, but in light of a recent adjudicator's decision, we had no choice but to take this course of action," the company's board said in a statement.

Civil Contractors NZ represents 600 member organisations – including large, medium-sized and small businesses in civil engineering, construction and general contracting.