Construction projects worth billions in limbo as Roberts Co's Victorian arm folds
The Victorian arm of construction company Roberts Co has entered into voluntary administration, leaving sites such as the record-breaking Amazon warehouse and major apartment and office builds up in the air.
Building projects running into billions of dollars by value are now up in the air following the lapse of Roberts Co into administration.
The Sydney-based company’s Victorian arm was working on eight projects when work stopped and contractors cleared sites of their equipment, tools and labour.
Company losses are so far put at $60 million and appear likely to rise.
The jewel in the Roberts Co project stable was the four-level Amazon site in Craigieburn, which will – eventually – become Australia’s biggest automated warehouse. Its site is the equivalent size of 11 Melbourne Cricket Grounds (MCGs).
Other projects affected by the giant construction company’s collapse are the Investa and Oxford Properties’ 702-unit build-to-rent project in Footscray, and Golden Age’s 28-level strata office on Little Collins Street in the Melbourne CBD.
As many as 18 other projects have a nervous wait hoping their completed projects don’t experience any post-build issues during the warranty period in which Roberts Co would be responsible for any defect corrections.
No one wants a builder to go under, the ripple effect is large.
- Matt Bourne, Roberts Co (speaking in 2024)
On its company website, Roberts Co (Vic), which delivers projects for Roberts Co and Monaco Hickey in Victoria, confirmed it had entered voluntary administration on the weekend but stressed that its businesses operating outside of Victoria are unaffected by this decision.
Roberts Co CEO and Managing Director, Emma Shipley, said the company remained committed to working with the administrator and clients to complete its current projects in Victoria to get the best outcome for our stakeholders.
“We commenced operations in the Melbourne market in 2022, when we took five Probuild projects and 150 staff out of voluntary administration.
“Despite our best efforts, our group can no longer continue to fund the losses incurred by Roberts Co (VIC) Pty Ltd.
“The building and construction industry in Victoria has faced both continuing material cost increases and the insolvency of many critical subcontractors. These conditions have caused significant delays and costs to our Victorian projects that are unsustainable.
“Ultimately, these factors have placed significant pressure on the Group – and the Board and I believe the only responsible course of action is for Roberts Co (VIC) to enter voluntary administration.
“We are deeply saddened by this outcome, as we know it will have significant impacts on our employees, subcontractors, suppliers, and clients in Victoria.
“However, entering voluntary administration provides an opportunity to assess all available options and determine the best path forward.”
The construction industry has been beset by insolvencies for two years, with constantly rising material costs, labour shortages and fixed-price contracts that run over budget bringing many companies to their knees.
Total construction insolvencies for the financial year to date of 2,215 are up by 20 per cent on the 1,839 at the same period last year, figures from corporate regulator ASIC show. The proportion of those coming from Victoria is on the rise.
The estimated build component of the Amazon warehouse is said to be about $400 million, while automation costs match that amount again.
Developer ESR on Sunday (16 March) reaffirmed its commitment to finishing the Amazon project.
“ESR is committed to continuing the project and liaising with the administrators to work through next steps,” a spokesperson said.
Advisory and Restructuring firm McGrathNicol, has been appointed as the administrator, with Jason Ireland and Matthew Caddy acting as the appointed administrators.
Roberts Co has a sister company in a joint venture to build Perth's Women’s and Babies’ Hospital and projects in New South Wales.
Further compounding the troubles in Victoria’s commercial construction sector is news that John Holland, which for a decade has been owned by China Communications Construction, has racked up a $55.5 million loss.
The grim result stemmed from issues with Melbourne’s Metro Tunnel rail project and the West Gate Tunnel motorway.
‘No one wants a builder to go under’
The reversal of fortunes at Roberts Co (Vic) has been rapid.
Less than 12 months ago, with a year under his belt as the Chief Executive at Roberts Co, Matt Bourne told media that they were regularly approached by administrators and flagging construction firms about taking on their workbooks.
“(We) always take a look … but it’s got to make sense from a strategy point of view”.
“We’re in a fantastic position, we are sitting between $900 million and $950 million in revenue,” Mr Bourne said in April 2024.
“We are focused on winning more and bidding less. The tendering market is very challenging and we are selective about what we go for and who we will work with.
“We don’t want to be in the race to the bottom. We want to work in an industry making sure everyone is viable and profitable. Profit is not a dirty word. I’m happy to lose a job on the wrong risk profile.”
But even then, there was an awareness of the risks.
“Wafer-thin profit margins are doing nobody any favours and … it is unfair on the building industry to wear all the risk exposure.”
His comments about failed builders proved prophetic.
“No one wants a builder to go under, the ripple effect is large. Excluding overheads I believe profit margins should be at 5 or 6 per cent but it depends on the risk profile of individual projects.
“Having a healthy margin means a business can be viable.”
Unfortunately for Roberts Co (Vic), they’ve contributed to what is sure to be a seismic ripple through Melbourne’s construction industry.
Roberts Co is a diversified construction company owned by Multiplex heir Andrew Roberts. Its name appears on buildings like the North Shore Health Hub and CSL Melbourne.
Mr Roberts fortune emanates from the $1.2 billion sale of construction giant Multiplex, founded by his late father John.
The company made headlines in 2022 when it purchased failed builder Probuild for just one dollar. This saw it pick up its six Victorian projects and commit to growing its pool of public work.
