A BUCCAN building company has had its licence cancelled for operating under high-risk financial circumstances.
This follows a targeted Queensland Building and Construction Commission investigation that ended with the licenses of 12 companies cancelled.
Seven operators were more than 200 per cent over maximum revenue limits. The 12 included one from Townsville, five from Brisbane, one from Toowoomba, two from the Gold Coast and three from the Sunshine Coast.
Over a 12 month period, licensees can only take on work valued at a certain revenue limit depending on asset bases.
The worst licensee investigated had a revenue turnover 969 per cent over limit.
QBCC Commissioner Brett Bassett said these findings were a recipe for disaster.
"If a company is operating this far above their licence limit, and hasn't made arrangements to apply for a limit increase, then it begs the question - how well is the company being managed?" Mr Bassett said.
"It's like someone is driving a road train up the M1 but they only hold a learner's licence.
"The maximum revenue limits are set based on a number of factors, including the value of a company's assets, and they exist for a reason.
Before October 2014, the QBCC required licensees to submit annual financial records providing an opportunity for closer monitoring of financial health. This requirement was removed in 2014.
The QBCC now investigates when concerns are raised. The latest audit investigated 217 licensees.
Some 171 could provide updated financial information to support turnover and licence conditions.
The company operating at 969 per cent over a limit of $200,000 had a turnover of $2.13 million. The licensee provided evidence to support a revenue limit increase and avoid licence cancellation.
The 12 cancelled licensees breached maximum revenue limits by at least 150 per cent.
The worst was an operator with a limit of $600,000 who had construction notifications worth more than $1.68 million.
Mr Bassett said such management was risky.
"It is risky to employees of the company, it is risky for sub-contractors and suppliers working with the company, and it's a risk to the local community and customers," he said.
"Most of the licensees investigated were smaller companies with limits of $600,000 or less, but we discovered one bigger player with a maximum revenue limit of $1.9 million who had an actual revenue of $12.18 million.
"The QBCC requires licensees to hold minimum net tangible assets before they exceed certain revenue limits. This requirement promotes viable business practices and helps ensure a licensee is financially stable to complete a customer's job.
"We have heard of unscrupulous operators chasing contracts just to secure the deposit, maintain cash flow and pay their liabilities, without ever intending to finish the job.
Next month, QBCC financial investigators will begin a new audit targeting licensees who exceed revenue limits.
It is expected 200 licensees will be required to prove to the QBCC they have the assets and financial capacity to handle the contracts they've taken out.