One year on from the collapse of Connaught, the obvious conclusion is that lessons have not been learned.
Proceed with caution
Why else would two more social housing contractors have gone to the wall in the past 12 months?
Such simplistic analysis, however, conceals much of the progress that has been made. As our feature shows, landlords are being much more careful about who they employ and are taking rigorous steps to examine the financial viability of the organisations they want to work with. Some have gone further still. Poplar Harca has introduced clauses to its tenders that allow it to reject bids that come in too low.
None of this will make any difference though if the contracting sector does not also respond, and there are some who are concerned it has not. Suicide bidding -
the practice of putting in bids for contracts below the value at which they can be delivered in order to secure the work - was widely blamed for the collapse of Connaught. Landlords are still reporting that main contractors are bidding well below their expected price.
To some extent this is understandable. In these tough economic times social landlords are under pressure to keeps costs down and demonstrate value for money, and contractors are simply responding to their demands to win work.
But this is not just about money. If bids for work do not allow it to be carried out to a sufficiently high standard then it is ultimately tenants who suffer. They suffer if work is not done properly and they can also suffer if the contractor their landlord employs goes under. Many of the engineers who lost their jobs when Connaught, Rok and Kinetics got into difficulties would have worked with the same households for years. The human cost of corporate failure goes beyond redundancy right into the heart of the community.
Our analysis, carried out by auditor Baker Tilly, suggests none of the 10 major contractors operating in social housing today face the same immediate problems as Connaught. But it is equally clear that more progress is needed before the sector can really be given a completely clean bill of health.