Construction faces a long-term “reckoning” as rising costs and interest rates bite, and the latest figures from the corporate regulator show a jump in collapses in the sector.
Insolvency experts warned that construction contracts signed before prices started rising and the risks sitting with contractors have put pressure on the industry, which has suffered collapses including those of contractor Clough and Probuild.
“They [have] multi-year contracts, the contracts were signed some time ago and the cash impacts of costs going up and delays start hitting towards the middle and back end of the contract. We’ve seen recently fallout in the space and I think we’ll see more,” he said. However, the experts cautioned the number of companies appointing external administrators for the first time was still down significantly compared with pre-COVID levels, and the statistics do not always tell the full story.
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