4 May 2014

Construction firms collapsing in Christchurch

7:19 am on 4 May 2014

Ernst & Young says poor business management in the rebuilding of Christchurch is causing an unprecedented number of construction firms to collapse.

170414. Photo Diego Opatowski / RNZ. Christchurch. Buildtech sign

The rebuild has lowered unemployment to well below the national average. Photo: RNZ / Diego Opatowski

The financial services company said many small companies rapidly boost employee numbers and hire more equipment, but then lack the capital to stay solvent when work delays or cancellations occur.

It said it's hard to tell if the rise in the number of collapses is due to more construction firms setting up in Christchurch, or a higher proportion of companies failing.

Executive director Rhys Cain said some also suffer from a lack of experience.

Ernst & Young recommends owners take professional advice before scaling up their business.