PBS Building goes into voluntary administration owing $25 million

Canberra-based PBS Building has gone into voluntary administration owing $25 million as the financial storm engulfing the company impacted more construction sites in the ACT.

Yesterday, it was reported that the Capital Food Market redevelopment site in Belconnen has been abandoned and locked up and reports swirled that the national building firm founded in Canberra was in trouble, with two sites in Queensland also deserted.

Today, PBS announced that RSM Australia Partners Jonathon Colbran, Richard Stone and Mitchell Herrett had been appointed administrators of five PBS construction companies in the ACT, Queensland and NSW.

Work on 80 sites – including the Belconnen Markets, Doma Group’s The Melrose residential tower in Woden and the townhouse component of Doma and Stockland’s The Parks development in Red Hill – has stopped, and the administrators do not know whether these projects will resume.

The joint statement from the board of directors and founder Ian Carter said it had been a gut-wrenching decision that would impact many lives and livelihoods but was the only responsible course of action available.

It said an unprecedented combination of record material costs, fixed-price contracts, labour and material shortages, extreme rain events, floods, bushfires and wars had proved an insurmountable challenge.

“We are the latest, but we won’t be the last construction group to buckle under the weight of a broken industry and way of doing business that needs urgent reform,” the statement said.

It said sites had been secured, not abandoned, to cut losses and ensure the company could negotiate better outcomes with clients for the ultimate benefit of creditors.

The company’s 180 staff, some of whom had been with PBS for 25 years, had been made redundant and received their entitlements in full.

The PBS Board of Directors is working closely and collaboratively with the administrators and will continue to work tirelessly to make this process as smooth as possible and to maximise value for our creditors,” the statement said.

Mr Colbran said PBS had become another casualty of the crisis gripping Australia’s construction industry created by the perfect storm of fixed price contracts, record material costs, supply chain challenges, labour shortages and extreme weather events.

“If works do not recommence, the operations of the PBS construction companies will progressively be shut down, and sites will be handed over to customers,” he said.

Mr Colbran said initial investigations had identified more than 1000 secured and unsecured creditors who were owed more than $25 million.

He said key PBS staff would be asked to remain available to assist the administrators, including to engage with customers and creditors and facilitate a handover of remaining contracts and works to customers if construction did not recommence.

“The administrators are taking these steps to ensure the maximum financial return for creditors,” he said.

“This is a key objective of the PBS board of directors who are deeply distressed by the dismantling of a business they worked so long and hard to build – backed by the support of their employees and loyalty of their clients – over more than 30 years.”

RSM will write to creditors this week and provide a further detailed report in three to four weeks.

Master Builders ACT CEO Michael Hopkins said PBS’s plight would have a devastating impact on employees, subcontractors, and suppliers in the ACT building and construction industry.

“MBA will be assisting our members, especially our subcontractors and suppliers, who will be deeply impacted by this announcement,” he said.

Doma Group confirmed that work had stopped on the 16-storey, 184-unit project, The Melrose, one of four buildings in a precinct bounded by Melrose Drive, Corinna Street, Furzer Street and Garth Close.

Doma general manager development Gavan Edgar said Doma became aware of the situation late Friday afternoon and was still assessing the safety and status of the $53 million project.

“The priority is to make the site safe and secure firstly,” Mr Edgar said.

“In due course, a different builder will be engaged to complete the works and we will then sit down with the new builder and have a discussion with sub-contractors and suppliers that were engaged by PBS on the Melrose project to find a way forward.”

This afternoon the site was empty except for a lone excavator doing some work.

Doma also partnered with national development firm Stockland on The Parks, a $260 million project on the former public housing site in Red Hill – a high-end mix of 83 townhouses and 136 apartments across six five-storey buildings.

Stockland contracted PBS to build the townhouses but work on the rest of the development is unaffected and proceeding.

A Stockland spokesperson said it would work with all relevant stakeholders as further details of PBS Building’s position were made available.

“We have secured all relevant building sites during this time,” the spokesperson said.

The Ginninderry Joint Venture engaged PBS Building in 2021 to construct 45 flexi-living homes in Stage 2 of Strathnairn.

A Ginninderry spokesperson said it been in contact with each buyer since the news broke of PBS’s troubles.

“Ginninderry will work with any administrator appointed to determine the impacts and how best to complete the homes currently under construction,” the spokesperson said.

“The purchasers will be kept informed by Ginninderry as more information comes to hand.”

Brothers Peter and Ian Carter founded Prestige Building Services in Canberra in 1989, and it also has offices in Sydney and Brisbane.

PBS has built some of the national capital’s prominent projects, including the Belconnen Theatre, Radford College stages 1-3, the Grove Retirement Village with Lendlease, Goodwin Farrer aged care facility and LDK Greenway Views Seniors’ Living village.