There were 82 construction companies falling into administration in the fourth quarter of 2010, up from 68 in the third quarter. This was the first increase in construction administrations for eight quarters. The last quarter that saw an increase in construction administrations was Q4 2008, when 156 construction companies went into administration. Throughout 2010, 323 construction companies went into administration, down from 427 in 2009.
There were 290 compulsory liquidations of construction companies in the fourth quarter of 2010, compared to 293 in the thrid quarter and 295 in the same period of 2009. In 2010 there were 1307 construction companies forced into liquidation, compared to 1059 in 2009.
Receiverships in the industry totalled 35 in the fourth quarter of 2010, down from 48 in the third quarter. For the year as a whole, 181 construction companies went into receivership, down from 245 in 2009.
Commenting on the increase in administrations, Rupert Rawcliffe, construction sector director of accountants Grant Thornton said: "In some cases, the severe weather conditions in the latter part of 2010 played a key part in the failure of some construction companies where a halt in activity over a number of weeks was just enough to tip them over the edge. Taking into account a fall in the level of employment in the sector, government spending cuts and the deferral of some projects, construction businesses would have felt the pinch in Q4 2010, leading to more going under this quarter than the last. This comes as a blow to the sector as it ends the eight consecutive quarters of a decline in administrations, which had been assisted by improved market conditions and strategies put in place by businesses and the government to ride out the storm.”
He added: "Unfortunately, recovery in the construction industry is still very fragile with order books still quite weak. Construction activity going forward will be largely dependent on how economic activity plays out both here and abroad. At the moment, uncertainty over future business prospects remains and will not be helped by the increase in raw material prices as well as the latest VAT increase which will add more pressure to the sector."
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