March administrations report: failures reflect challenging climate

The number of construction firm failures remained high in March compared to the dip experienced at the end of last year, the latest monthly data from Creditsafe shows.

The month’s total of 31 collapses continues last month’s trend of a rise in company administrations.

Before February’s figure of 32, failures had been a downward trend with 15 collapses in December 2024 and 10 in January 2025.

There was a 7 per cent year-on-year rise in construction administrations compared to March 2024’s total of 29.

And cumulative data for the first quarter (Q1) of this year shows that 73 firms went under compared to 67 in January-March 2024.

Surrey-based Marbank Construction Ltd was the highest-turnover firm to go under in March, calling in administrators from FRP Advisory.

The company was formed in 1994 and specialised in commercial buildings, retail parks and distribution centres.

At its height it recorded revenue of £91m in 2008, when it operated as a general design-and-build contractor.

Marbank subsequently refocused on the industrial shed sector, specialising in steel-framed and steel-clad portal structures, mostly in South East England.

Its latest published accounts, for the year to 31 July 2023, showed revenue of £67m compared to £59m the year before.

The firm’s pre-tax profit more than doubled from £183,000 to £438,000.

At the time, it employed a monthly average of 24 staff and owed trade creditors £6.5m.

Another casualty in March was Cannock-based building services specialist TNA Electrical, which called in administrators from Leonard Curtis on 4 March.

The £30m-turnover firm worked on jobs worth up to £12m.

Its latest accounts for the year to January 31 2024 showed a pre-tax loss of £2.1m with the company employing a monthly average of 25 staff.

The group has not published more recent financial accounts as it extended its last accounting period by three months to 31 December 2024.

In its last published figures, company directors identified no material uncertainties over the company’s ability to keep trading, describing “several high-quality prospects on the horizon”.

However, they acknowledged that the construction skills shortage, supply chain issues and cost increases were all posing “significant risks” to the company.

“Additionally, our overseas ventures have heightened our exposure to foreign currency fluctuations and liquidity risks,” the directors said.

The company valued its current assets at £9.3m, although the bulk of this (£8.9m) was money owed by debtors, with just £305,000 in cash at bank and in hand.

James Hawksworth, consulting partner in the restructuring advisory team at RSM, warned that the construction sector is facing a challenging time with the increase in employer National Insurance Contributions (NIC) from 6 April and the impact of US tariffs.

“The number of formal insolvencies in construction continues to reflect a challenging time for the sector even before it has felt the impact of the NIC increases, minimum wage rises and US tariffs,” he told Construction News.

“The number of administrations in Q1 was approximately 25 per cent higher than the relatively low number seen in Q4 2024 and these figures reflect the level of stress indicated by the numbers of winding-up petitions being filed in the sector.

“In Q4, we witnessed the highest number of winding-up petitions being filed in the sector for many years, with HMRC filing as many petitions as trade creditors filed for the quarter.

“This level of trade creditor aggression is a sign that businesses no longer have the financial strength to accommodate slow payment and are quicker than ever to take formal action to recover old debts.”

Freddy Khalastchi, business recovery partner at accountancy and advisory firm Menzies, told CN that the uptick in administrations since January is a “red flag”.

He added: “Insolvencies tend to lag economic pressures, so the spike in March suggests cashflow is tightening and working capital is being squeezed – particularly for subcontractors and firms tied into fixed-price contracts.”

Khalastchi also flagged up the NIC rise and an increase in the minimum wage from 1 April as the likely cause of “further strain, especially among labour-intensive businesses”.

He said: “These additional costs can be difficult to absorb or pass on to customers in an industry already operating on thin margins, and could push more firms over the edge in Q2 if they’re not proactively managing their cost base and forecasting ahead.”

Allan Kelly, restructuring advisory partner at specialist business advisory firm FRP, said construction insolvencies are at high levels, affecting firms throughout the supply chain.

But he told CN that delivery costs are now more stable than they have been in recent years, and most contractors are managing their way through any fixed-price legacy contracts that had hung heavily over their balance sheets.

“However, with the minimum wage increasing alongside NIC from this month, overheads will increase again and will further impact margins,” he warned.

“This at a time when we are awaiting the repercussions of Trump’s recently announced trade tariffs on an already sluggish economy.”

The tariffs and their response “may hit [construction] material costs and reduce demand among developers as investors and financiers wait to see the longer-term impact,” Kelly added, saying the government’s commitment to infrastructure spending “is an important silver lining”.