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Construction failures up 38pc

The number of construction companies entering administration is 38 per cent higher than it was in the same period last year.

The third quarter figures from the Insolvency Service show a quarter on quarter increase of 10.5 per cent.

In total almost 1,000 construction firms went out of business in the last three months, with established names such as Holloway White Allom and Linford Construction, amongst the casualties.

The number of construction companies taking out Company Voluntary Arrangements was up 30 per cent quarter on quarter and up 50 per cent compared to the same quarter last year.

Alan Harris, founding partner of construction risk management firm CR Management said negative margins were inevitably claiming smaller firms.

He said: “Competition is still very cut throat with many projects being won at negative margins, putting growing pressure on companies’ cash flow indicating that insolvency figures may continue to rise.

“In the best position are the larger contractors who have overseas opportunities, who can move staff about both nationally and internationally as the work requires.  Smaller companies need to become more efficient and cost effective, considering outsourcing options, looking at new ways of procuring work that is less resource hungry than competitive tenders, and considering contracts very carefully at the beginning of a job so that there are no nasty surprises that could potentially put a company out of business later down the line.”

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