Monday, 22 September 2014

Troubled contractor loses Liverpool deal

Liverpool Mutual Homes has decided to cancel a contract with troubled social housing contractor Kinetics Group.

The 15,000-home association terminated a repairs and maintenance and gas services contract because it did not believe Kinetics was fulfilling its contractual obligations. The contract will end in August, seven months early. More than 240 Kinetics staff will transfer to LMH.

Steve Coffey, chief executive of Liverpool Mutual Homes, said: ‘Delivering excellent services to our customers is an absolute priority. 

‘However, in the opinion of LMH we have major concerns regarding the compliance of our contractor Kinetics Group Limited with its contractual obligations.

‘Despite working with the contractor for some time to try to address these major concerns it has not been possible to achieve a resolution. We have a duty to our customers to make sure we provide them with the best services possible.’

A spokesperson said Kinetics was disappointed by LMH’s decision.

Chris Cheshire, chief executive of Kinetics, said: ‘It is the nature of the maintenance business and not unusual that contracts come to an end and we can now devote our energies to our remaining LMH projects.’

Kinetics will continue to carry out construction work for LMH.

The news of the contract termination comes days after Inside Housing revealed that Kinetics secured an extra £2 million from private equity firm Sovereign Capital. The decision was taken after Kinetics suppliers slashed the time it was allowed to pay for goods from 90 to 30 days, hitting the firm’s cash flow.

Readers' comments (11)

  • Trevor Galley

    Most organisations pay in 30 or 28 days!
    However, a sad decision by LHT.
    In these troubled economic times we need to be very aware that every thing is connected.
    Will this lead to loss of local job opportunities?
    or is there more not being said here?
    Broadsword

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  • Trevor Galley

    Most organisations pay in 30 or 28 days!
    However, a sad decision by LHT.
    In these troubled economic times we need to be very aware that every thing is connected.
    Will this lead to loss of local job opportunities?
    or is there more not being said here?
    Broadsword

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  • Sexton

    If someone sign for 90 days payment agreement, will first need to have their head examined. And now the questions:....

    1- Who vetted the contractor and how?
    2- Who recommended the contractor and signed for it?
    3 - What was the reality check and due diligence based on?
    4 - How long did it take for the association to realise the shortfall?
    5 - What was the pace for penny dropping?

    and many other questions, that one should answer prior to blowing the PR trumpet of "delivering excellent services"

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  • The whole 90 days element has been taken out of context. The time taken calculates from undertaking the supply. So literally you undertake works in month 1 and bill at the end, the clients take 30 days to check and approve so thats 60 days. Then there will be IT problems, people on leave etc and very often it ends up 90 days but the average is 60. There are some exceptional clients who can do it in less and they do (City West Homes Salford are a good example) but the supply chain all have to undertake to work to the slower clients though. The suppliers very often agree to 90 days but if your spend quicker than the amount of credit you need then the terms might be 90 days but in fact you will be operating to much less (30 days) because you need a constant flow of goods to service the contract etc If the client is a poor payer then your need to pay suppliers overtakes your slow paying clients and thats where a problem begins but typically you have to solve it because the client wont or cant ! Inevitably the contractor bears the brunt of the blame but hey ho thats the rub of the green !

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  • The Democratic Dictator

    I think Chris has hit the nail on the head here, due to suppliers demanding 30 day payments rather than 90 days, it was no longer feasible for Kinetics to continue supplying a service based contract which would always leave the firm in arrears and worsen its credit score. Well done for LMH to identify this issue and acting on it early without it interfering too much in the provision of their commitment to provide excellent services.

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  • All down to buisness basics. Don't spend more than you earn or you go bust....oh you did. Can't be the clients fault then

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  • Spaced - maybe it's the truth about Kinetics Management that hurts. The staff no doubt kept the boat afloat longer that it should. I hear that people wre buying materials on their personal credit cards to keep contracts going and resindets with heating which now won't get repaid as you have gone bust.

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  • Reality 4 all, what you "heard" is wrong and again just proves that I am right, that all you Kinetics haters are just passing judgement based on hear say and what your mates have told you down the pub.

    Please do get your facts right first. Please also note I myself have not gone bust. I am not Kinetics, merely and old employee. I suggest you change your name as you are not living in reality, your comments and judgements are wrong I am afraid.

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  • it look like the fat cat lives on as the all the lads that worked down in margate will not get payed for 5 weeks or more and thats what hurts i hope they all get red hair

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  • this is true
    many of my contracts in the south east were kept afloat by all the dedicated staff from camerons who begged and borrowed materials
    and put there hands in there own pockets we kept on going right till the end they all should hold there heads up high not like some people in kinetics who should hang theres in shame
    even on thursday we were still ensuring it was all safe before we left site

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