Hadden Construction Goes Into Administration

Hadden Construction, the Perthshire housebuilder established in 1992, has gone into administration with the loss of 66 Jobs.

Work on active sites including supported living apartment developments and affordable homes will stop depending on an evaluation of ongoing projects.

This week joint administrators Ben Cairns and Jonny Marston from Alvarez & Marsal were appointed to “wind down” company operations.

The failure of the company was blamed on rising materials costs and an increase in labour rates.

Mr. Cairns said: “Like other contractors, Hadden Construction has been battling a number of headwinds in recent years, including inflated materials prices, rising labour costs and supply chain interruptions.

“As administrators, we will seek an orderly wind down of the operations and will welcome any investor interest in the company’s assets.”

Mr Cairns added: “We understand that today’s news is unsettling for the company’s employees and will be doing all we can to support them over the weeks ahead.”

With a turnover of £30.2 million, the most recent figures for the company for the year ended March 31 2023 show a pre-tax profit of £260,503.

Hadden was appointed by the Scottish Procurement Alliance to its £100 million Refurbishment and Modernisation (RM3) Framework in March of this year.
Apart from several other public sector frameworks including Scotland Excel’s New Build Residential Framework, Wheatley Group, Link Group, Hub East Central, Hub South East and The City of Edinburgh Council, Hadden was already appointed to SPA’s Public Buildings and Infrastructure (PB3) Framework and New Build Housing Construction (H2).

In addition, it was preparing to replace 20 chalets on a permanent Gipsy Traveller site near Perth, the company signed a £1.9m design and construct contract in April to deliver 10 reasonably priced homes for rent in Newtyle for Abertay Housing Association.

Elsewhere, Hadden had worked on a £6.25 million renovation at the Muirhead House student residence at the University of Stirling.

The construction industry has the highest insolvency rate when compared to other industries. This is due to a number of factors.

Below are some of the common problems we’ve seen happen in the industry:

• Contract arguments and QS problems.
• Bad debts.
• Delays in repayments from HMRC, regarding CIS deductions (which are connected to PAYE scheme). HMRC can be slow in making CIS refunds, leading to issues with cash flow.
• Time to pay deals with HMRC for PAYE and VAT (where applicable) being too expensive for your cashflow.
• Losses made on large contracts, where large clients or main contractors slow down payments and sometimes go into administration. Hitting YOUR cashflow.
• So called “subby bashing”.
• Issues with sub-contractor non performance or slow completions.
• Difficult customers, be they private individuals, clients or contractors – who add extra work on and won’t pay extra!
• Lengthy contracts with material prices agreed at beginning. I.e. quotes do not keep up with rising costs. Especially tough after huge price rises in recent years.
• Less focus on financial accounts, financial management due to directors and management being onsite.
• Hard to win new contracts if cash flow is tight, perhaps due to low credit rating.
  Retention sums not released at agreed times.
• Suppliers taking legal actions such as County Court Judgments, or even issuing winding up petitions.