The latest data from credit reporting specialist CreditSafe has revealed a year-on-year decrease in the number of construction businesses going into administration.
Figures from October 2024 showed 28 firms going into administration, while 37 firms went under in the same period in 2023 – although October 2023 saw an increase from 19 in October 2022.
What this shows us is that costs have a substantial influence on the overall health and operation of the construction sector, as October 2022 saw a marked rise in inflation and costs across the economy.
As costs now stabilise, we might expect the construction sector to continue to recover and for these numbers to continue a downward trend.
Legally speaking, this trend is generally good news for parties involved in construction projects, from investors to contractors.
The legal perspective
From a legal standpoint, this could see a significant drop in the number of disputes coming out of construction projects.
Business failures in the construction sector are a significant source of disputes as they often result in payment delays and incomplete work.
For example, insolvent contractors may be unable to pay suppliers or staff, which may cause delays in work or prevent work from being finished at all.
The resulting disputes can be time-consuming and costly to resolve, particularly for large-scale projects where subsequent steps are postponed during dispute resolution.
For tailored advice on operating in the construction sector, please contact our team today.