Eleven construction-related businesses entered into administration in May – a record low since COVID support payments stopped.
Exactly 50 per cent fewer firms went out of business last month compared with April, when 22 collapsed.
It is the lowest recorded amount since July 2021, when only seven firms went into administration. This was just before various government support schemes for businesses were phased out and the number of construction firms going out of business spiked.
During the early months of this year, data from Creditsafe showed a slow decline in administrations, although it was still high by historical measures. A total of 31 firms went under in February, followed by 24 in March and 22 in April.
Despite the dramatic drop in month-on-month administrations for May, experts have warned that administrations will continue in slow drips. They also said that contracts will continue to deal with the effect of fixed-price jobs in a volatile market that is rife with inflation and shortages.
They added that even if companies avoid falling into administration, they could be in the stages preceding it, with defaults on COVID loans and loan repayments.
Commenting on the results, DRS Bond Management director Chris Davies told CN: “If you look at some of the creditor days for contractors, we’re starting to see more suppliers stretch.”
Davies added that the trend of insolvencies would continue at a steady pace, although more may be at the tier two level and further down the supply chain.
He likened the stages to red, amber and green: tier one contracts that were in the red would have stopped trading in earlier cycles of administration and it was now more likely for the impact of the tier one administrations to be seen along the supply chain.
One of the larger firms that went under last month was Urban Splash’s modular housing business, House, which cited “operational” issues at its factory for off-site production. The administration resulted in 150 redundancies and also took down the developer, Port Loop Holdings Limited, which was working on an Urban Splash neighbourhood in the Birmingham area.
Teneo Advisory’s Adrian Berry and Daniel Smith were appointed administrators. They confirmed that the rest of the group would not be affected by the modular firm’s collapse.
Looking ahead, with the possibility of a shrinking economy and recession, Davies said the solution for firms was to de-risk and not take up lump-sum contracts.
He added that student accommodation and hotels were examples of high-risk building projects since failing to deliver on time and budget would be punitive.
The full list of companies in various stages of administration is below.
|COMPANY NAME||LOCATION||DATE OF ADMINISTRATION||STATUS||CONSTRUCTION ACTIVITIES|
|BEXHEAT LTD||Bexley||31 May||Administration order||Plumbing, heat and air-conditioning installation|
|PORT LOOP HOLDINGS LIMITED||Manchester||17 May||Administration order||Development of building projects|
|CMS ENVIRO SYSTEMS LTD||Glasgow||11 May||Administration order||Glazing|
|DICKINSONS (PLUMBING & HEATING CONTRACTORS) LIMITED||Leeds||13 May||In administration||Other specialised construction activities|
|URBAN SPLASH HOUSE LIMITED||Manchester||20 May||In administration||Development of building projects|
|BARLOWS SERVICES LIMITED||Southwick||7 May||In administration||Electrical installation|
|GALLITO LIMITED||Wetherby||27 May||In administration||Other construction installation|
|DCB (KENT) LIMITED||Sittingbourne||19 May||In administration||Development of building projects|
|KNIGHTSGATE (UK) LIMITED||Eastleigh||25 May||In administration||Development of building projects|
|URBAN SPLASH HOUSE HOLDINGS LIMITED||Manchester||20 May||In administration||Development of building projects|
|URBAN SPLASH HOUSE INVESTMENTS LIMITED||Manchester||20 May||In administration||Development of building projects|