Government contracts pushing risk off their books onto building firms - industry insider

Construction insiders say the risk contractors are taking in building projects are behind the collapse of a number of firms - and government departments have a hand in it.

Ebert Construction Ltd has been put into receivership this week and Christchurch company Maven Interior went into liquidation yesterday.

Initial indications suggest Ebert could owe as much as $40 million.

Accounting firm BDO partner James MacQueen said increasingly jobs were "design and build", meaning specifications were given and a construction company worked out how it would design and build it at a fixed price.

These projects carried a higher risk and the government was one of the main culprits, he said.

"It's all about the transfer of risk, and particularly some of the government departments, they're trying to get the risk off their books."

Mr MacQueen said the Ministry of Education was an example.

Independent dispute resolution consultant Peter Degerholm said he was asked to look at a contract from the Ministry of Education in June which had tied a contractor into carrying the cost of the ministry's project for almost three months.

"In an industry that is known to be cash-strapped I was horrified that that's the sorts of contracts that the government is putting out."

Mr Degerholm said the government was providing a bad example.

He said contracts went out with scant design detail but with a fixed cost. "In many cases the real cost of construction is not known until the final detail is available".

Construction lawyer Marcus Beveridge said the situation reflected the thin margin building companies worked on, which may have caught out Ebert.

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"It's different building factories for Fonterra in the regions than dealing with the pretty slick and fast rules of construction in downtown Auckland."

On a lot of projects the head contractor was more of a project manager and virtually all the work was done by sub-contractors such as electricians, plumbers, roofers, tilers and painters.

One of the most worrying things when a contractor went under was how it affected subcontractors, Mr Beveridge said.

"It means a lot of subcontractors are not going to get paid and it results in a bit of a domino effect where those sub-contractors end up going into liquidation or receivership."

Mr MacQueen said the folding of Ebert was likely to take out a few subcontractors, which would in turn have a flow through to other companies. 

It comes after the Ebert Construction went into liquidation today. Source: 1 NEWS



Slaying of George HW Bush's doctor may have been motivated by revenge over mother's death

A man suspected of killing one of former President George H.W. Bush's doctors may have been seeking revenge for his mother, who died on the doctor's operating table more than 20 years ago, authorities said today.

Joseph James Pappas, 62, should be considered armed, dangerous and possibly suicidal, Houston police Chief Art Acevedo said at a news conference today.

"There was a lot of planning that went into this. There was a lot of planning and, sadly, some skill," Acevedo said of the July 20 attack on Dr. Mark Hausknecht.

Hausknecht was gunned down while riding his bike to work at Houston Methodist Hospital, which is part of the busy Texas Medical Center.

Authorities say the shooter rode past Hausknecht before turning around and firing.

A tip on Wednesday led police to suspect Pappas, the chief said, though he didn't elaborate as to the nature of the tip.

Acevedo said Pappas hadn't been seen in 36 to 48 hours.

He said the last anyone had heard from Pappas was in a Wednesday text message in which Pappas wrote that he was going to kill himself.

Acevedo said police searched his home today and found evidence that ties Pappas to the killing, but he declined to elaborate as to the nature of the evidence.

The chief said Pappas is white and very fit, and that he's likely getting around on his 10-speed bicycle, which he rides "extensively and almost exclusively."

Friends and family have described Hausknecht as a humble and generous man who was adored by his patients, volunteered in his community and cared about the environment.

Hausknecht was also an avid cyclist and rode his bike to work each morning, as he lived less than 3.2 kilometers from his office.

In 2000, Hausknecht treated Bush for an irregular heartbeat after the ex-president complained about lightheadedness.

This undated photo provided by the Houston Police Department shows Joseph James Pappas. Authorities on Wednesday, Aug. 1, 2018, identified a man who they believe gunned down one of former President George H.W. Bush's doctors last month as Pappas, the son of a woman who died while the doctor was operating on her more than 20 years ago. Source: Associated Press

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Joy turns to utter despair for Pussy Riot members, re-arrested moments after being freed from prison

Four Pussy Riot protesters were detained in Moscow on Monday night (local time) within moments of being released from prison following their stunt during the FIFA World Cup final in Moscow.

They had been sentenced to 15 days' detention after they ran onto the pitch at Luzhniki Stadium dressed as police officers during the second half of the final match between France and Croatia.

Olga Pakhtusova, Olga Kurachyova and Veronika Nikulshina were clearly surprised as they walked out of the correctional facility, only to be re-arrested by police.

The fourth protester, Pyotr Verzilov, who was being held separately, was reportedly also re-arrested.

It was not immediately clear why the group has been detained.

Lawyer Nikolay Lyaskin, who works with opposition leader Alexei Navalny, was waiting outside the court and said he didn't know the reason for the re-arrest.

However, a tweet on Pussy Riot's official Twitter page said they were being charged with "the organisation and holding of public events without prior notice" and could face another 10 days behind bars.

Four of the Russian protesters could face another 10 days inside, on top of the 15 days already served. Source: Associated Press