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Medium-sized firms 'facing biggest risk'

Medium-sized construction businesses presently face the largest risk of all companies operating in the UK's building sector, it has been claimed.

Tom Fitzpatrick, deputy news editor at Construction News, said at present, it remains difficult to make accurate predictions regarding the future state of UK construction as the major attractions taking place across the country - such as the efforts involved in preparations for this month's London 2012 Olympic and Paralympic Games - have taken much of the focus off the fundamentals of recovery.

However, what is clear is that there is an overriding feeling across the industry that the present situation is likely to get worse before it gets better.

He commented: "The latest forecast figures show that people aren't really expecting a comeback until 2013 or early 2014.

"We are getting contacted about insolvencies and administrations on a daily basis at the moment, so while quarterly figures are affected by the winter and that kind of thing, I am not sure that there is generally a feeling that things are getting better at the moment."

As a result, Mr Fitzpatrick argued smaller companies are typically in a better position to diversify when times get tough and therefore it is generally the medium-sized firms that run the greatest risks during uncertain economic periods, such as those we now find ourselves in.

He added that large companies tend to survive these difficult patches intact, as they have the turnover to smooth out any turbulent financial periods.

Medium-sized firms on the other hand do not have such luxuries and therefore it is likely that this portion of the market will see the worst insolvency rates over the coming months.

According to the latest figures from PricewaterhouseCoopers, 644 construction insolvencies took place during the second quarter of 2012. However, this was 15.5 per cent fewer than were registered in the first quarter of the year. 

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