Probuild: fixed-price contracts into an inflation spike — then the parent pulled the plug

Probuild was one of Australia's largest building companies, a Melbourne-headquartered commercial construction group owned by Wilson Bayly Holmes-Ovcon (WBHO), a South African-listed builder. At its peak it employed about 786 people with more than A$5 billion of work in progress — including CSL's A$1bn headquarters, the A$2.6bn West Side Place tower and the A$1bn Caulfield Village project.

The trouble was priced into its contracts. Building prices had been locked in before a large and unanticipated surge in the cost of materials such as timber and steel, so costs ran ahead of what clients would pay. The construction union also said Probuild had bid under market on Brisbane's 443 Queen Street tower — 'they left a lot of money on the table at tender time' — apparently preparing for a sale to a Chinese state-owned constructor. That ~A$300m sale was blocked by the federal government in January 2021.

In late February 2022 WBHO abruptly told Probuild that all cash and securitisation support would cease — reversing a letter promising support until the end of June. Deloitte was appointed administrator. Probuild Constructions had posted a A$3.1m profit but negative operating cash flow of A$85m; WBHO Australia lost A$31.6m with negative operating cash flow of A$225m. About A$5bn of projects stalled, 2,300 creditors and 786 employees were left exposed, and subcontractors at 443 Queen Street alone were owed A$7–10m.

The pieces were sold off quickly. SRG Global bought the Western Australian business out of administration for A$15.2m, keeping 275 staff; Roberts Co took most of the Victorian assets; and developers took control of stalled towers such as West Side Place, funding restarts directly and guaranteeing contractor payments. The union used the collapse to push for reform of subcontractor payment protection.