Insolvency in the Construction Industry is on the rise and the impact is being felt in and around Buckinghamshire. Lewis Cohen, Partner and Head of Construction & Engineering, looks at the impact and sets out some key pointers.

South Buckinghamshire is a green and affluent part of the country, but in late October, the Construction & Property sector was rocked by the news that Inland Properties PLC (and various subsidiaries) had appointed Administrators.

Inland, based in Beaconsfield, is a major brownfield developer with a portfolio of successful residential projects across the South-East of England. In addition, the very large and respected M&E Engineering Sub-Contractor, M J Lonsdale Ltd, headquartered in Slough, and Staines based Richardson Roofing (Industrial) Ltd both also appointed Administrators.

In total, according to a report in Construction News, 37 construction related companies appointed Administrators in October 2023 compared with 19 in October 2022, with the year-to-date total at 312 which is a 58 % increase on the same period in 2022.

Whilst less than 500 Administrations is not a significant number, it has to be understood that Administration is only suitable for a small number of insolvent companies and that the vast majority go straight into liquidation.

Far more worrying is a report from Insolvency Practitioners, Begbies Traynor, who run the Red Flag Alert reporting system. They have advised that almost 6,000 construction related companies are close to being insolvent.

The current level of interest rates which has significantly increased the costs of borrowing, and inflation, both in general and in relation to Construction Industry specific materials have made it much harder to finance and build out developments.

In many cases, developments, which will have been conceived pre-Covid and before the significant inflationary pressure on the cost of fuel and the cost of transporting materials as a result of the invasion of Ukraine, are now struggling to complete.

In the last 12 months the team has advised a number of developers and contractors where all these factors have contributed to substantial delays and in some cases stalled projects.

How can I protect my project?


Employers must be cautious. Gone are the days of a quick turnaround.

First, and perhaps most obvious is do not overreach:

  • Make sure that there is plenty of contingency in the budget;
  • Keep your funder involved at all times; and
  • Set realistic estimates on timescale for completion and the expected profit margins.

Secondly, go out to tender with open eyes:

  • Do not award the contract on price only. If one contractor is 25% cheaper than the others, that should set alarm bells ringing;
  • Do not be scared of asking for a Parent Company Guarantee or a Performance Bond; and
  • In this market, look for contractors who are busy and have a track record.

Thirdly, remain involved during the construction phase:

  • The terms and conditions are to protect both parties. Too many developers do not adhere to the contract and fail to give appropriate notices – especially Payment Notices;
  • If the Contractor is falling behind or the Contract Price is increasing, you need to step in and take control and not let matters drift; and
  • Ensure your professionals are fully engaged and not delaying the project.


For Contractors, the advice is similar.

First, and as with Employers do not over commit:

  • Do you have both the requisite skills and capacity to undertake the Contract?
  • Is the project viable? and
  • What cash reserves do you need if any?

Secondly, be realistic when tendering:

  • Do not discount the tender if you cannot complete the work at the bid price;
  • Make sure the timescale for the project is viable; and
  • Do not be afraid to award to push back on punitive contract terms and in this climate, ask for an agreement on price fluctuations.

Thirdly, remain involved during the construction phase:

  • As above, the terms and conditions are to protect both parties. Record all instructions in writing and give notices of delay in compliance with the contract;
  • Look ahead and order materials in good time. Likewise review the design in advance and make sure that the design is sufficiently detailed. If not raise this with the design team; and
  • If the Employer falls behind in making payments or issues spurious pay less notices do not be shy in issuing a Notice of Intention to Suspend or commencing an Adjudication.


There are rigorous requirements on Directors to ensure that they are not trading insolvently. This requires proper accounting methods and regular reviews of cash flow and turnover.

Do not ignore early warnings. If there are any doubts consult your accountant.

Finally, if a contract is in difficulty take legal advice to protect your position and where possible enter into dialogue to negotiate a positive outcome for all involved.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.