A BUILDING company which expanded rapidly but became known for “poor quality of work” went into administration owing £1.16million.

PMC Civil Engineering had a long list of clients including one of the UK’s largest housebuilders, a report by administrators said.

Turnover had almost doubled each year over its last four years, going from £1.1million to £8.3m.

But the company – based at Merley House, Wimborne – struggled to manage the extra workload.

A report by Carl Faulds, of administrator Portland Business Recovery, said the expansion brought the need to hire extra staff and sub-contractors and led to a “reduction in the quality of work”.

It added: “Whilst turnover had increased, the gross profit margin had substantially reduced. This poor workmanship meant the company, on numerous occasions, had to redo work at its own cost and as a result lost significant sums where clients reduced payments against poor quality workmanship or the costs to rectify the defects could not be charged.”

Mr Faulds wrote that standards of work had fallen below that of competitors. “Furthermore, the company lost a number of tenders of opportunities to tender for contracts due to the industry becoming aware of the poor quality of work and competitors using this to their advantage when competing against the company,” he added.

In the year ending October 2018, the business made a loss of £570,000. When it went into administration, there were 10 staff including the two directors.

One major client accounted for around 90 per cent of turnover and had been “tough on costs”, the report said. The company was pursuing a strategy to reduce its reliance on that client, but continued to lose tenders it expected to win.

The business was jointly owned by Paul Cummings, who had been director since the start, and Michael Page, who joined in 2015 with a brief to win work and develop the business. Mr Page put personal money into the company to try and keep it afloat, while Mr Cummings had increasingly taken a “more hands-off role”.

Administrators believe there are 111 creditors, owed a total of £1.16m. They expect the company’s assets to fall short of its liabilities by £859,023, leaving a dividend of three per cent for creditors.

Mr Page said he was owed £100,266 by the company and held a security over company assets. The administrators say his charge on the assets was not registered at Companies House, leaving him among the business’s unsecured creditors. The validity of his £100,266 claim will be reviewed during the administration.

Mike Fortune, joint administrator from Portland, said: “Whilst an increase in turnover is generally considered a positive within a business, we have seen all too often that a substantial rise can lead to cash flow and operational issues due to the increased demand on working capital and funding requirements of new projects that arise as a result of taking on more staff and subcontractors.

“PMC Civil Engineering’s rapid increase in turnover over a relatively short period, and the added demands on the management of the business as a result, led to issues regarding the quality of the workmanship and management of staff and subcontractors.

“This led to additional costs of rectification and funds being withheld by clients, which ultimately affected the company’s reputation within the market when tendering for new contracts.”