07-06-2022 9am.
Pivotal Homes had an annual allowable turnover of 30 million. The QBCC say builders can exceed that figure by 10% before they have to review their financials. Thats 33 million.
In 2021 Pivotal exceeded its allowable turnover by almost double (92%) which clearly didn't trigger any concerns in the QBCC Tower.
In answer to questions put to it by Kathleen Skene of the Gold Coast Bulletin, the QBCC gave this limp response;
"QBCC said the amount of work recorded on the licence was not an indication of how much revenue the builder had earned.
“Construction Notification values are not indicative of actual revenue earned during a financial year, as a construction contract may take more than 12 months to complete, or may cross from one financial year to the next,” a spokesman said.
“Licensees are required to comply with minimum financial requirements, including the requirement to lodge financial reporting with the QBCC annually".
That last part of their answer implies that it's left up to the builder to report excess turnover and that it's not overseen by the QBCC so if thats the case, why do we need the QBCC?
The fact is a year on year excess means that within 12 months they have exceeded their allowable turnover.
Math is not my strong suit but if you do the sums over the 2 years 2020 plus 2021, the total exceeds allowable turnover by almost 50%. You get a similar answer if you add 2021 and 2022. In the last 2 years they have done 3 years of allowable turnover, well outside their capacity.
No matter which way you look at it, the QBCC are not doing their job, part of which should be to keep track of these very important stats and act when they exceed 10% of allowable turnover.
A licensee is supposed to notify the QBCC if it is going to exceed its annual turnover allowance by 10%.
The QBCC would ask the licensee to lodge an interim financial report and decide whether to extend the turnover allowance.
Obviously the QBCC don’t monitor this data they require on a builders license and if builders don't notify them, they live in blissful ignorance. Another example of subbies playing Russian Roulette.
The QBCC's reply to Kathleen Skene's questions is a defensive and sour answer and is incorrect;
The QBCC declined to answer questions about Pivotal’s capacity to meet its minimum financial requirements in the months leading up to the liquidation, or if the company had applied to increase its maximum revenue limit.
“Due to privacy laws, the QBCC is only able to confirm financial information that appears on a licensee’s public record,” the spokesman said".
- The privacy laws only apply to individuals, not companies.
- QBCC have taken their eye off the ball yet again.
- A licensee is supposed to notify the QBCC if it is going to exceed its annual turnover allowance by 10%.
The QBCC would ask the licensee to lodge an interim financial report and decide whether to extend the turnover allowance.
From the QBCC response it would appear that the Pivotal management hasn’t advised the QBCC of the turnover breach or if they did, QBCC didn't do their job.
Creditors, clients and the public are entitled to know this information.
Pivotal had the financial capacity to handle 30 million in work. In 2021 they did $56,727,283, almost double their financial capacity. Its a bit like you having the capacity to pay a mortgage on a 1 million dollar home but you bluff your way into a 2 million dollar home. The end result will be the same as it was for Pivotal.
Pivotal have blamed gouging brickies, carpenters, Covid, supply chain issues, rain, floods and now the limpest excuse ever heard in the industry, a malware attack that caused staff to work extra hours which was the straw that broke the camels back.
When are they going to own the fact that they took on double the work they were capable of managing?
And that brings us back almost full circle to the possibility of insolvent trading and potentially false financials once again and all neatly hidden behind the QBCC's veil of secrecy and confidentiality.
The bottom line is that Pivotable bit off more than they could chew.
Pivotal was operating outside its financial capacity to perform the work.
The liquidation had nothing to do with the bricklayer, the carpenter and little to do with the supply chain issues but it had everything to do with exceeding its allowable financial capacity by a massive margin.
They simply stretched themselves too thin, way beyond what they were capable of doing within their means.
QBCC make a big deal about monitoring small builders and subbies licenses but they almost completely ignore big builders which cause massive damage to subbies and suppliers.
QBCC why bother having a capacity on a license if you don't monitor major breaches?
Les Williams from The Subcontractors Alliance said:
Lodging financials once a year is flawed.
Licensees simply transfer funds to their trading account when the report is due. JM Kelly simply shifted funds from one company to another then withdrew it – ie one lot of funds for 5 companies then they falsified the reports and altered an Internal Auditors Report – nothing done.
They should be made to prove viability to get Home Warranty Insurance or prove their financial capacity before taking on each contract.
We need a regulator but not this one.
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funny how qbcc go through the contractors to make sure they have correct licence and assets to comply and yet this guy just gets through the gate leaving devastation everywhere. Where was the qbcc through all this and not checking? They should be held criminally liable for this.