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Construction administrations soar

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The number of construction companies going under rose in the second quarter of 2012, data has revealed.

Figures from The Insolvency Service showed 89 companies in the industry went into administration in the three months to the end of June this year.

This was up from 83 in the previous quarter, and represented the highest second quarter figure since 2009.

Graham Bushby, restructuring and recovery partner at accountancy firm Baker Tilly, said: ‘The construction sector continues to be in the insolvency doldrums.

‘For the first time during the recession, Q2 administration numbers have increased on Q1’s expected seasonal high.

‘Increased tendering discounting, on fewer contracts overall, along with the unexpected poor weather conditions in the first half of 2012, are clearly beginning to take their toll.’

Released last month, the latest RIBA Future Trends survey also found that architects’ confidence over future workloads had taken a turn for the worst.

The survey’s workload index – which tracks architects’ expectations of future workloads – witnessed an 11-point drop from +13 in May to + 2 in June.

And accountancy firm Wilkins Kennedy last month warned that government spending cuts, effects of the Olympics on London sites and bad weather could see more construction insolvencies.

Nick Parrett, head of construction at Wilkins Kennedy, said: ‘The winter rise in construction firm insolvency was expected, but it probably won’t be a blip. It could well be the start of a new upward trend in construction insolvencies.’

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