The advice and support we offer is mainly targeted at Banks, Funders, Insolvency Practitioners, Accountants and LPA Receivers with projects and property portfolios in distress or insolvent.
You will require rapid assessment and support with the decision to rescue, recover or exit. We expect to be measured on helping you achieve the most successful commercial outcomes.
We imagine you will be looking for commercial, pragmatic advice, delivered quickly by a team who understands your agenda and your challenges, and will hit the ground running. We will share the knowledge we have gained from working with Receives in previous recessions and draw on our deep firm-wide experience in rapidly responding to Contractors going into administration or liquidation. We will use our expertise to make fast, incisive assessments, replace Contractors where necessary and manage projects, either to completion or to a point where an exit can be facilitated.
You will benefit from the full weight of our cost and project management skills to help you understand the current state of your developments, the risks associated and optimum solutions to complete, including the viability of deploying the existing Contractor and supply chain. We will give you the best commercial advice and tell you what you need to hear, not always what you want to hear.
We will also draw on our extensive knowledge of Bank and Fund Monitoring to provide more richly informed analysis and reporting in the appropriate format.
You can expect to receive advice and guidance on a diverse range of distressed projects across a variety of sectors, from large complex projects to smaller scale, simple projects.
Our specialist areas of expertise span pre- and post-insolvency scenarios including:
Drawing on our wealth of experience in Bank Monitoring and Project Rescue and Recovery, we are well positioned to support you with those IBRs that require an independent view and a deeper dive on the project costs and risks or on an ongoing project viability assessment. This work can be carried out whether an incumbent Bank Monitor is in place or not. The scope of the IBR support would typically include:
Contractors’ progress on site against programme
Quality of Works
Comparative analysis on lending sums against Contractor and other development payments. i.e. checking the money has flowed in correct direction
Overview on accuracy of reporting that has been carried out on finances and programme
Perceived management of project risk
Compliance with CLC and government operational guidelines
Identification of early or key indicators of project failure, either through analysing Lender, Contractor or supply chain behaviours.
In the event of an insolvency there is often an immediate need to understand the security of the asset and the quality and progress of the works to date. Initial site surveys will be carried out to establish:
Extent of work completed to date
Work not undertaken in accordance with specification
Quality of workmanship
Schedule of Work to complete.
In parallel, an assessment will be carried out on safety and security to identify the immediate actions required to protect the asset.
In circumstances where the Borrower’s business is in distress or insolvent and the Contractor and supply chain is still operational, we will provide rapid decision support to assess the viability of continuing with the existing Contractor and suppliers. Our viability review will establish:
The contractual status
The financial stability of Contractor
Historical disputes with likely impact analysis
Supply chain resilience, including assessment of collateral and design warranties and viability
Willingness for Contractor to continue working on a non-adversarial basis.
One of your key deliverables will be our recommendation to progress with or terminate existing Contractors, and the sensitivities and dependencies for ongoing project success.
In the event of an administration or liquidation, we will harness our deep labour and materials knowledge to assess and model the costs to complete, whether this be via negotiation with the existing Contractor or by market testing/procuring a replacement.
The full impact of Covid-19 and the economic damage to construction costs has not yet been fully assessed. RLF is tracking all sources of knowledge including internal benchmarking on live projects across the UK and building a detailed cost model to make future costs predictions with as much certainty as possible.
Construction costs, Development costs and Whole-Life Costing can be undertaken, as required. Factors we will consider in our assessment include:
Working within social distancing constraints
Extent of remedial work required on quality issues
‘Supply and demand’ in the industry generally, and Contractor appetite to obtain new work. This will affect cost of material and labour supplies
Transfer of risk including historical liability such as design
Form of contract.
We recognise that this viability assessment will be one of the key decision influencers in terms of propensity to build out or exit, and that a robust commercial approach is critical.
We recognise that as part of any decision to build out your distressed projects, especially partially completed residential projects, cashflow planning is usually a critical factor in your decision making. We will help you minimise risks and outlays in completing the works.
Analysis of drawdowns to be scheduled
Assist in modelling future funding requirements
Inform revenue return through potential sectional completion arrangements.
We appreciate with all the inherent ramifications and risks that Covid-19 presents for construction projects, that it has never been more important to actively manage and mitigate risks and embed a culture of risk management throughout the project lifecycle. Our purpose is to help you mitigate your risks:
At the viability stage to proceed or dispose of distressed projects and sites, we will ensure that the risks are fully understood and documented
We will ensure that these risks are scheduled on a live register and managed, minimised, shared, transferred, or accepted through to completion
We will also register opportunities, which normally have a trigger date that allows realisation.
Strategy to maximise value is usually linked to how far your projects are from completion. The less work undertaken, the more opportunity for change is available. Each site and project will be different, but examples on where we can advise include:
Review design and look at potential solutions that would enhance interest for ultimate buyer
Consider phased completion to deliver “attractiveness” to accelerate staged sale (such as infrastructure only)
Value Engineer to reduce cost but not value
Review specification to incorporate solutions that have minimal impact when implementing social distancing
Advise on off-site fabrication options and modular construction alternatives.
By keeping abreast of all the options and remaining flexible in our approach, we will help you to maximise value on building out projects that are in distress.
On the assumption that any existing Contract has been terminated with the Contractor you will be faced with several procurement options to consider, each having a timescale impact. We will provide you with advice and guidance on each option with recommendations to help you make the right decision:
Renegotiate with the existing Contractor based on same Contract particulars (Fast)
Renegotiate with existing Contractor based on differing Contract arrangements (Medium)
Review strength of supply chain and engage with them through Construction Management or Management Contracting principles (Medium)
Go to market on a two-stage basis (Medium)
Re-tender based on suitable for JCT or NEC (Slow).
Our recommendations will be based on three key drivers, being time, cost certainty and quality.
There will be circumstances where speed to complete will be a fundamental part of your decision-making process. We will use our extensive UK construction knowledge to produce master programme options analyses, together with our assessment of the impact on turnaround times.
At a detailed level we will analyse workstreams and create programmes based on our understanding of prolonged site activities enforced on Contractors as they comply with the Government and CLC, Covid-19 guidelines.
Recommendations will be made on materials and methods of working that would shorten construction activities.
Where you have made the decision to proceed with building out the project, we will take a ‘business as usual’ approach to facilitate management of the ongoing works to a successful completion, reporting throughout. We offer a broad bank of experience in a variety of sectors.
We have vast experience dealing with Contractor insolvency on projects. We will help you manage the situation by
Advising the Employer through the contractual termination process
Negotiating with the appointed Administrators or Receivers on their behalf regarding financial entitlement
Assessing works to complete and procuring a new Contractor
Assisting with recovery (Performance Bonds and Parent Company Guarantees)
Managing the project through to completion.
Click here to view a showcase of some of our case studies