黑洞社区

The collapse of contractor ISG last year was 鈥渁 reminder鈥� of the need for sustainable profits for contractors, the chief executive of Wates has said.

ISG held more than 拢1bn of government contracts when it fell into administration last September and more than 2,000 workers were made redundant as a result of its failure.

In his chief executive鈥檚 review for Wates鈥� accounts for the year to 31 December 2024, published on Tuesday, Eoghan O鈥橪ionaird wrote the collapse was a 鈥渞eminder of the need to find a fair sharing of risk between customers and contractors鈥�.

O鈥橪ionaird told 黑洞社区 it was a 鈥渢errible event for the industry at large to see ISG go to the wall鈥�.

He said risk sharing was a 鈥渕ultifaceted challenge鈥�, admitting that on the delivery side contractors had 鈥渁t times over history been overly focused on revenue and not profits鈥�.

鈥淲e have allowed ourselves to take on projects which we might be able to deliver, but the profit margins were so thin, we were always putting ourselves and the projects and indeed our customers at risk,鈥� he said.

O鈥橪ionaird said Wates had 鈥渁 strong view that there has to be fair sharing of the risk so that customers get good value from the product that is delivered鈥� and that 鈥渟ustainable profit鈥� was in everybody in the industry鈥檚 interest.

>> See also: Downfall of ISG: how and why it collapsed

>> See also: 鈥極n some levels, it鈥檚 a straightforward industry but it has significant challenges鈥� 鈥� Wates鈥� new(ish) CEO on what he鈥檚 learnt so far

According to its latest accounts, Wates took on 鈥渟everal鈥� ISG projects last year as well as taking on some of its employees including the former head of ISG鈥檚 collapsed fit out arm, Lee Phillips.

鈥淲hen ISG did succumb, we were contacted by a range of customers, both private and public, asking if we could help, and we engaged constructively,鈥� O鈥橪ionaird old 黑洞社区.

鈥淲e were not able to support in all of them simply because of our capacity, but where we could help and where we had the supply chain and not our in house skills, we were pleased to offer advice, in some cases, take on the projects.鈥�

Phillips is now in charge of a newly created business at Wates which will focus on commercial fit out and refurbishment work in London.

Former ISG major projects divisional director Jason Sharp has reunited with Phillips along with a former commercial director of ISG International, Scott McCulloch, who takes up the same role at Wates. The new team currently employs 20 staff.

Pre-tax profit at Wates slumped 94% to 拢2.6m last year, as a result of investments, housebuilding cost pressures, and a pension transfer which resulted in a 拢28.8m exceptional charge. Turnover was up 9% to 拢2.3bn.