Askival launches contractor insolvency toolkit

Askival has launched a new service to help those worried about their exposure to contractor insolvency, particularly in the urban regeneration and affordable housing sectors. 

Concerns about contractor insolvency have come increasingly to the fore, with the low margins, fixed price contracts and high capital costs of construction work continuing to make the sector especially vulnerable to bankruptcy.

According to the Building Cost Information Service (BICS), there were 4,263 contractor insolvencies in the UK construction industry in the year to August 2023, up from 3,938 the year before.

Contractor insolvency will nearly always add significant cost and delay to a development project, sometimes to the point where the whole scheme becomes unviable.

In a time of construction price inflation, as we have seen over the past few years, it is unlikely that a new tender process will return the same price as the one that secured the original contractor, particularly if that offer had been made on the low side.

With Askival’s skills and experience as a regeneration and project management agency, we have created a comprehensive Contractor Insolvency Toolkit.  This toolkit details the steps we take to protect a client’s position when dealing with or preparing for the possibility of contractor insolvency.

Askival’s chief executive Mike Nestor says:

“Contractor insolvency can pose significant risks for developers of affordable housing, usually causing delays and additional costs.

“Avoidance is better than cure, but that advice only works with the benefit of hindsight.

“We can help you to prepare an action plan ahead of time to minimise the damage but construction is a low-margin business, and sometimes even well managed contractors can be undermined through circumstances outside their control.

“When a contractor goes bust, there are a few basic steps you need to take immediately to secure your position.

“Moreover, it is important to appreciate that insolvent companies can initiate adjudication proceedings to secure money owed to them under a contract and the administrators will be on the lookout for any breach of contract that could give rise to a claim. It is essential, therefore, to act promptly but strictly in accordance with the terms of the contract.”

The Askival Contractor Insolvency Toolkit includes:

• A list of key documents to file at the outset
• Identification of key team members and record of communication
• Actions to take immediately on confirmation of a contractor’s insolvency
• Questions to inform an options appraisal
• Options to be explored
• Details of what you need to know and where to go for specialist help and advice
• Pre-Insolvency Audit Checklist

For more information contact us at contracts@askival.org  

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