Solar projects blamed for company’s collapse

SOLAR projects have been blamed for the collapse of Queensland engineering and infrastructure company RCR Tomlinson. 

RCR was placed in administration last year, with McGrathNicol appointed as administrators on November 21.

However, at a creditors meeting on Wednesday, investigation by administrators revealed RCR could have been insolvent before the end of October 2018 or possibly earlier.

Project Gretel which includes the Daydream and Hayman solar projects, was blamed as one of the reasons for RCR's failure, with it having the most "significant cost overruns".

"During the initial phases of construction, RCR experienced significant execution delays, specifically relating to adverse ground conditions, impacting the time and cost incurred in installing the piling for the solar panels," the report said.

"These delays resulted in RCR readjusting its forecast time and cost to completion in April 2018, reducing the forecast margin to approximately $11.5 million."

The company's entire solar business was fingered as problematic by McGrathNicol.

"Based on the administrators' investigations to date, while the other business units were experiencing some difficulties in winning contracts and settling certain claims, no material circumstances have come to the administrators' attention outside of the solar business unit, that were significant enough to have made a quantifiable contribution to RCR's failure," it said.

RCR Tomlinson was involved in engineering, procurement and construction of at least 15 solar projects in Australia including the Haughton Solar Far, near Ayr.

The administrators said there were problems with the industry which had a "detrimental impact" on RCR. It said the sector often had a "low margin with uncertain revenue pipelines".

"The contract tendering process was competitive, with constant pressure to manage costs, reduce delivery time frames and in some instances there was considerable risk shifted to RCR in terms of achieving milestones, managing costs and liquidated damages for delay," the report said.

McGrathNicol said changes to testing requirements by the Australian Energy Market Operator and Network Service Provider, impacted the time and cost incurred by RCR in progressing through the grid testing phase

RCR Tomlinson is not the only company that has suffered because of changes requested by the Australian Energy Market Operator.

Windlab, the company building Kennedy Energy Park, released its annual results on February 28 detailing issues with the operator.

In a statement the company said the nature and rapid implementation of the new rules added complexity to renewable energy projects and had a direct flow on to the cost of development and capital cost of projects.

"This has become an industry wide problem, contributing to a number of well publicised project delays and cost overruns that have impacted some wind and numerous solar project developers and constructors," it said.

There is a real risk some creditors will not be paid what they are owed by RCR if the company is placed in liquidation, like McGrathNicol recommends.

A second meeting for creditors will be held on March 26 where a vote will be held to determine its future.

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