More Construction Firms Collapse

Unpredictable costs coupled with delayed project starts and late payments continue to plague the construction industry as it reels from an increase in insolvencies. Data released by The Insolvency Service (IS) in May shows 347 construction businesses went under in March, marking a 14% increase on the previous month.

The figures – which include compulsory liquidations, creditors’ voluntary liquidation and administrations – confirm March as the worst month since last October when 367 companies collapsed. However, they also show a 7% decrease compared with last March when 377 construction business became insolvent.

“Geopolitical uncertainty has kept energy and materials prices unpredictable, with additional pressure coming from rising shipping costs and ongoing supply chain disruption. These factors make it increasingly difficult for contractors to protect already thin margins,” said Mark Supperstone, partner at accountancy firm S&W.

Delays impact cashflow

A slowdown in project conversions has impacted construction companies’ ability to continue trading.

“While order books may look healthy, a combination of funding caution, regulatory delays and risk aversion are holding back projects and cashflow. Many of these businesses are not struggling due to a lack of work but due to lack of cash,” Supperstone explained.

“Ultimately, cashflow is king. Delayed project starts on top of delayed payments are creating acute liquidity pressures for contractors.”

On a rolling annual basis, construction remained the sector with the highest number of insolvencies in the 12 months to March 2026 in England and Wales at 3,827 cases, according to IS. The government agency helps to deliver economic confidence by supporting those in financial distress, tackling financial wrongdoing and maximising returns to creditors.

The March 2026 figures show specialist contractors accounted for 193 of the 347 cases. Building firms, including developers and residential and non-residential contractors, accounted for 144 cases. The other 10 were civil engineering firms.

Construction suffers four-year blow

The news follows previously released data from the IS that reveals construction topping the list for industries hit by insolvencies for four years in a row. The figures show 3,931construction firms collapsed in 2025, accounting for 17 per cent of all cases.

Several large contractors went under last year, the biggest being Ardmore Construction, which called in administrators in August. However, the number of construction casualties in 2025 was down on 2024, when 4,032 building businesses became insolvent.

Unfortunately, the outlook for the industry remains one of significant pressure, thin margins and elevated insolvency levels.

“Risk of failure is still a real threat for many businesses, particularly smaller and mid-sized firms operating with limited balance sheet headroom and restricted access to funding,” warns Supperstone.