News
Glenigan: Rise in construction insolvencies despite steadier project starts
07/12/2009
The Glenigan Index has seen the flow of new construction projects steady in recent months after the sharp falls endured since the onset of the credit crunch. However, whilst welcome, the industry remains in recession. Official statistics from the Insolvency Service illustrate how the earlier fall in new work is being felt across the construction industry. At 1,030, the number of construction firms going into liquidation during the second quarter of this year was 58% up on a year earlier and running at around four times the level of two years ago. Similarly the industry has seen a 50% increase in personal bankruptcies over the last year.
Provisional data indicates that the number of casualties remained high during the third of 2009, with an increasing number of firms going into receivership. Looking ahead to 2010, the industry’s prospects appear brighter. The recent stabilisation in project starts has been largely driven by a rise in government funded work, while a gradual improvement in private sector work is forecast to lift project starts next year. However, this will present new challenges for the industry. Competition for work will remain fierce, but firms will need to be especially alert when pricing work. Whilst material prices and labour rates have been falling over the last year, projects priced during 2010 are likely to be built out during a period of firmer input costs.
From the Glenigan Subscriber Newsletter, kindly made available to CIMCIG members, who are also eleigible for a 10% discount on Glenigan products.
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