Construction sector floundering with UK economy’s highest insolvency rate

News Article - 22 July 2011
Category: Business

Latest insolvency figures suggest the UK's construction sector is encountering serious financial problems.

Statistics from June reveal that the construction sector holds the unwanted tag of the country's highest rate of insolvency.

The insolvency index published by information firm Experian revealed that ten building materials companies - 0.27 per cent of the construction sector - went bust last month compared with none the same month last year.

Overall, insolvencies across construction and building firms fell by 9.48 per cent from June 2010 - June 2011, but the sector continues to hold the second highest business failure rate in the UK.

Max Firth, managing director for business information services at Experian, said: "June's data indicates that the UK's business community as a whole is generally stable, however it also points to a change in circumstances for different sized businesses.

"The largest companies have experienced a turnaround in fortunes and now the larger mid-sized businesses are following suit with a significant improvement since last year.

"Our analysis also shows that businesses in the North seem to be faring slightly worse than their southern counterparts."

The figures from the insolvency index would appear to back up Mr Firth's view, with 0.10 - 0.13 per cent of construction firms going bust in the northern area, while 0.7 - 0.9 per cent of southern-based construction firms went bankrupt.

Construction industry business systems could provide a lifeline to businesses up and down the country with the ability to improve planning, estimations, cost allocation and billing.

Such systems can be integrated within business-specific applications, putting an end to re-keying and centralising everything from payments and remittances to management reports.

This would be a feasible solution for not only building contractors or civil engineers but organisations involved in site preparation or demolition.

Time spent collating management information can make it difficult for construction firms to take early action on overspend and overrun. But with a construction business system companies can monitor costs in real-time, perhaps allowing them the luxury of pre-empting events that could impact on profit margins.

Article keywords: construction industry, constrution uk, insolvency

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