Construction insolvencies now represent one of the largest shares of corporate failures in Australia. While the triggers vary, the underlying pattern is often remarkably consistent: tight margins, poorly defined scope, delayed payments, disputed variations and contractors effectively funding projects from their own balance sheets.
In this episode of The Cut, Simon Cathro speaks with Paul Rojas, founder of RA Law Group, to explore why so many construction businesses find themselves in this position — and what operators can do earlier to avoid it.
With more than 22 years’ experience in commercial litigation, construction disputes, insolvency and debt recovery, Paul has seen the same structural pressures play out across countless projects. The conversation examines the contractual and commercial issues that often sit behind construction insolvencies, and the steps builders, subcontractors and developers can take to better protect cashflow.
The discussion also highlights the importance of understanding payment rights under security of payment legislation, managing variations properly and ensuring contracts reflect the commercial realities of construction risk. For businesses operating in one of the most challenging sectors of the economy, proactive contract management and early legal advice can often determine whether a project remains viable or becomes another insolvency statistic.
Key Points:
- Recurring patterns behind construction insolvencies: Many failures follow the same trajectory: poorly managed contracts, unpaid variations, project delays and sustained cashflow pressure.
- Using security of payment laws effectively: These laws are designed to protect cashflow, but they only work when payment claims are issued correctly and enforced promptly.
- Early legal and contractual planning matters: Reviewing contracts carefully, understanding termination rights and diversifying client exposure can help prevent financial stress escalating into insolvency.
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