A total of 21 construction-related businesses went into administration in April. This comes after 31 firms went under in February and 24 in March.
While the number of firms filing for administration has fallen, compared with the past two months, Stirling Advisory’s insolvency practitioner, Emily Ball, has suggested the decline will be short-lived.
Speaking to Construction News, Ball said companies are “hanging on and waiting”, but many of them will inevitably be forced to file for administration in the coming months.
She predicted that the construction industry will continue to see high levels of insolvencies over the next six to nine months. She added that fixed-price contracts, in a climate of rising material costs, would ultimately continue to plague the industry.
“Construction companies are stuck in fixed-price contracts,” said Ball. “Their competitors are still quoting the same rates, despite the price increase of the raw materials. So, at some point, those businesses begin trading at a loss. There’s going to be some fallout from that. But it will just take us a while to filter through.”
Ball suggested companies at the bottom of the supply chain will be particularly vulnerable to these pressures. “If you’re the little boys at the bottom, you’ve got very little ability to manoeuvre, because everybody’s so price sensitive,” she said.
She added that raising finance for struggling firms was a difficult challenge currently, with firms coming out of COVID-19 and stepping out of government support measures.
Grant Thornton partner Oliver Haunch echoed Ball’s sentiments and said subcontractors were particularly vulnerable due to fixed-price contracts.
Haunch was appointed administrator over Kershaw Mechanical Services Limited, which went into administration in April, after 75 years. The Cambridge-based M&E specialist turned over £28m for the year ending 31 December 2020 and was the highest-value firm to go under last month. Utilities giant NG Bailey acquired the service maintenance business of the collapsed firm soon after, saving 25 jobs.
Haunch added: “Although construction largely continued through the pandemic, many investment decisions were pushed back in 2020 and early 2021. This impacted [the] pipeline for construction companies and that is being felt now; i.e., they don’t have as many live jobs now as they would have expected. This has caused lower activity at the moment, even though future investment and pipelines are strong.”
In March, five out of 24 firms that went into administration were linked to the same parent company, JVIP group, which itself went under. In April, another associated company called St Johns TW Limited went into administration.
The full list of firms at different stages of administration can be found below.
Data provided by Creditsafe
|COMPANY NAME||LOCATION||DATE OF ADMINISTRATION||TYPE OF DOCUMENTS FILED||TYPE OF CONSTRUCTION ACTIVITIES|
|ALDERDALE SEATING LTD||Wolverhampton||29 Apr||Administration order||Other specialised construction activities|
|ASHCROFT DEMOLITION (CUMBRIA) LIMITED||Mayport||30 Apr||In administration||Construction of other civil engineering projects|
|ATLAS TRAFFIC MANAGEMENT LTD||Manchester||26 Apr||Administration order||Other specialised construction activities|
|CFS (OFFSHORE ENGINEERING) LIMITED||Hebburn||12 Apr||In administration||Other specialised construction activities|
|CROSSLEY WEBB CONTRACTS LIMITED||Halifax||14 Apr||Administration order||Other specialised construction activities|
|DCP CAROLINE 2 LIMITED||Sutton||7 Apr||Administration order||Development of building projects|
|DCP CAROLINE LIMITED||Sutton||7 Apr||Administration order||Development of building projects|
|DIGICOLLAB LIMITED||Cambridge||12 Apr||Administration order||Development of building projects|
|FOUNDA LIMITED||Nottingham||1 Apr||Administration order||Test drilling and boring|
|FUTURE TECHNOLOGY SERVICES LIMITED||Blackpool||5 Apr||Administration order||Electrical installation|
|GRAVITAS 002 LIMITED||Exeter||13 Apr||Administrative receiver appointed||Development of building projects|
|IKARIA DEVELOPMENTS LIMITED||Aldermaston||5 Apr||Administrative receiver appointed||Development of building projects|
|KEIRAN BROWN BUILDING SERVICES LIMITED||Ripley||22 Apr||In administration||Plumbing, heat and air-conditioning installation|
|KERSHAW MECHANICAL SERVICES LIMITED||Cambridge||12 Apr||Administration order||Plumbing, heat and air-conditioning installation|
|MACK CIVILS AND CONSTRUCTION LIMITED||Frome||12 Apr||Administration order||Construction of roads and motorways|
|MECHANICAL FACILITIES SERVICES LIMITED||Doncaster||8 Apr||Administration order||Electrical installation|
|OLYMPIUS DEVELOPMENTS LIMITED||Fareham||7 Apr||Administration order||Development of building projects|
|PAVILION RESIDENTIAL DEVELOPMENTS F3 LTD||London||13 Apr||Administrative receiver appointed||Development of building projects|
|PRESTON FARM MANAGEMENT LIMITED||Teeside||8 Apr||Administration order||Development of building projects|
|ROBERT JAMES INTERIORS LIMITED||Leigh-on-Sea||7 Apr||Administration order||Construction of domestic buildings|
|RSL HOMES LTD||Burton-on-Trent||26 Apr||Administrative receiver appointed||Development of building projects|
|ST JOHNS TW LIMITED||Tunbridge Wells||28 Apr||Administration order||Development of building projects|