Case Study: 5 Ways This Council Fixed Supplier Risk After a $5M Project Collapse

When a contractor goes under mid-project, deadlines get pushed back, budgets blow out, there’s pressure on internal teams, strain on supplier relationships and uncomfortable questions from leadership.

A few years ago, one of the councils we now work with experienced this firsthand. They’d awarded a $5 million roadworks contract to a supplier they’d used before. In hindsight, they’d be the first to admit their approach to due diligence and probity was too relaxed. They were appointing a mature supplier who had delivered previous work without issue, the credit checks looked fine, so they went ahead and awarded the contract.

But as the data tells us, older doesn’t always mean less risky when it comes to suppliers.

Within months, work started to stall. Progress payments kept going out, but subcontractors stopped turning up. The supplier was in financial distress. Eventually, they went under. The project had to be re-tendered and restarted. Costs blew out. And internally, confidence took a hit.

Could It Have Been Avoided?

In short, yes. When the council first reached out, the first thing we did was review the historical financial data we had on the contractor in question. The credit score might have looked fine, but the financials told a different story. Based on what we saw, we wouldn’t have recommended engaging them. The warning signs were there.

We also reviewed the financial position of other suppliers involved in the project. Most were sound, but a few showed similarly concerning signs. While it was too late to change the contracts already in place, we advised the council to tighten controls like:

• Scrutinising milestones more closely
• Confirming that subcontractors were being paid
• Keeping the dialogue open with those at-risk suppliers

It was the first step toward building a more proactive, structured approach to supplier financial risk.

Here are five supplier financial risk process improvements we helped them implement.

1. They Now Follow A Clear Supplier Due Diligence Framework

Before working with us, full financial assessments were occasionally done for major projects, but only if time allowed or if there were concerns about a supplier. For familiar suppliers, a credit check, a reference check or even just a good reputation was often enough to move ahead.

There were no clear thresholds. No consistent process for when to assess a supplier or how deeply. And because assessments weren’t tied to contract value, it was easy to get the story they wanted, rather than the details they needed.

We helped the council implement a clear supplier risk framework. Contracts over $150,000 now require a financial risk assessment. Larger or higher-risk projects trigger more detailed analyses. Each report is matched to the contract’s value and complexity.

We worked with them to write this into procurement policy so there’s now a consistent standard that applies across the board.

Since that shift, they’ve assessed more than 30 suppliers. Not one has encountered financial distress.

2. They No Longer Chase Supplier Financials Themselves

At this council, the procurement team was overseeing contracts, handling purchasing, managing accounts payable and supporting compliance across dozens of departments. There was no room to be full-time financial analysts too.

Before we got involved, someone from procurement was chasing supplier financials manually. Often it meant uncomfortable back-and-forth, awkward phone calls or delays from suppliers unsure why the information was needed.

We took over that process. Now our team reaches out to suppliers directly, explains the process and manages the back and forth. We’re respectful, clear and focused on getting what’s needed quickly. That alone was a big shift.

We now get the required information more than 99% of the time, and faster than internal teams ever could.

When projects were time-sensitive, we typically delivered reports within 48 hours of receiving the financials. That responsiveness helped keep projects moving and gave procurement a level of reliability they hadn’t had before.

3. Their Supplier Assessments Are Clearer And Easier to Act On

Their previous reports were long, technical, and hard to action. Often, they came back with amber flags but no clear guidance. That left procurement in a bind: escalate it and risk derailing the process or ignore it and hope for the best.

These were skilled procurement professionals, not financial analysts. They needed clarity they could take into a meeting.

We gave them plain-English reports with visual summaries and clearly defined risk indicators. But more importantly, we include practical next steps tailored to the supplier, the contract and the council’s risk appetite.

That might mean milestone payments, parent company guarantees or resizing the contract to match the supplier’s capacity. Each one grounded in the financials and backed by rationale they could share with internal stakeholders.

We wanted them to be able to explain their decisions with confidence. 

4. They Use Supplier Risk Consultations To Support Internal Decisions

Sometimes the challenge isn’t identifying risk. It’s communicating it, especially when a project manager has a preferred supplier in mind.

That’s where our consultations made a real difference.

In one case, a supplier was being considered for architectural work. Our analysis raised concerns, but the project team was keen to move forward. So procurement brought us in.

We sat down with both teams and walked through the findings together. We explained what triggered our concerns, in plain terms. Then we explored a few options: how the contract could be structured to reduce exposure and what alternatives existed.

At the end of the day, everyone wanted the same thing: a successful project, delivered on time and on budget. That session helped align the team around the best path forward.

It also gave procurement confidence, clarity and support in a moment that could have been difficult to navigate alone.

5. They Can Now Engage Local Suppliers Without Taking On Excess Risk

The council had clear targets to engage more local suppliers. Many smaller businesses had the capability, but not the balance sheet, to take on larger contracts.

We helped them introduce practical steps to make local procurement possible without increasing financial risk. That included options like splitting contracts, adjusting scopes or requiring additional safeguards such as bank or parent company guarantees.

This meant procurement could support local economic development without compromising on probity.

Where Are They Now?

More than 30 suppliers have now been assessed under this framework.

Procurement isn’t chasing documents or stuck interpreting dense, jargon-filled reports. They follow a consistent process, built into policy and aligned across the team. Project managers are better informed. Leadership trusts the decisions being made. And when there’s pressure to move quickly or uncertainty around a supplier, they have support.

This approach has removed the guesswork. Risk assessments are tied to contract value and structured around clear thresholds. The process is fair, consistent and defensible.

Will it prevent every future insolvency? No. But if one occurs, they can show that the supplier was assessed and onboarded through a best-practice framework, with reasonable steps taken to protect the project and the community.