BCIS CapX includes price adjustment formulae, a method of calculating the increase, or decrease, in contractors’ costs over any period. The formulae and indices (over 200 of them) are widely used in various sectors in the construction industry, including civil engineering contracts and facility management.
Published: 19/08/2026
Construction firms accounted for 17% of all insolvencies in England and Wales in July 2026, according to The Insolvency Service (1), with 343 registered construction businesses becoming insolvent.
This was 11 more than the 332 recorded in both June 2026 and July 2025.
By comparison, construction firms accounted for 14%(2) of all registered businesses in the UK as of September 2025.
The largest proportion of construction insolvencies were among firms providing specialised construction activities with 186 recorded in July.
The total number of construction firms becoming insolvent in the 12 months to July 2026 was 3,841. This was a 3% decrease on the 3,976 insolvencies recorded in the year ending in July 2025 but a 19% increase on the 3,221 in pre-pandemic 2019.
Source: The Insolvency Service – Company Insolvency Statistics June 2026, Table 1c
Dr David Crosthwaite, chief economist at BCIS, said: ‘Monthly construction insolvencies remain elevated and crept up again in July, reaching their third highest level of the year to date. The risk of insolvencies remaining at these levels is significant, particularly given the sustained geopolitical uncertainty surrounding the US-Iran conflict.
‘Oil prices rose again this week after the two-month window for negotiating a peace deal expired on Monday without a resolution. That adds another layer of uncertainty for construction businesses already operating under considerable cost and margin pressures.
‘For now, businesses remain in a difficult holding pattern. Volatility in oil and energy markets will keeping feeding through into fuel, materials, transport and wider operating costs, while uncertainty makes it harder for firms to plan and price work with confidence.
‘The situation is far from ideal for an industry where many businesses have limited capacity to absorb further cost increases. Until there is greater clarity over the geopolitical situation and the direction of energy prices, construction insolvencies are unlikely to recede substantially.’
Across all industry sectors, construction experienced the highest number of insolvencies in the year to July 2026.
The Insolvency Service said that while the insolvency rate has increased since the lows seen in 2020 and 2021, it remains much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession. This is because the number of companies on the effective register has more than doubled over this period. The rate in the year to the end of July 2026 was 50.3 per 10,000 companies(3).
In Scotland, there were 14 construction company insolvencies in July 2026, nine fewer than in June 2026, accounting for 17% of all insolvencies in the country.
The number of Scottish construction insolvencies for the 12-month period to July 2026 was 185, nine less than the 194 in the year to July 2025, and an 11% decrease on the 207 in pre-pandemic 2019.
Source: The Insolvency Service – Company Insolvency Statistics June 2026, Table 4b
Within the industry, firms classified as providing specialised construction activities are consistently the most affected across Great Britain. However, analysis shows that their numbers are proportional to their overall share within the construction sector.
This category includes companies providing a range of work, typically on a subcontract basis, from demolition and site preparation to electrical and plumbing installation, and finishing work like plastering, painting and glazing.
The Insolvency Service also publishes figures for Northern Ireland, but not with sector breakdowns.
The latest analysis of profit warnings issued by listed construction companies by EY-Parthenon suggests that housebuilders in particular are facing difficult trading conditions.
FTSE Household Goods and Home Construction firms, which include housebuilders, issued six warnings in 2Q2026, bringing the sector’s total to ten in the first half of the year.
Commentary pointed to the combined weight of higher energy and input costs, weaker consumer confidence and fading expectations of near-term interest rate cuts. EY-Parthenon also reported that measures to stimulate sales, including mortgage contributions, deposit support and part-exchange schemes, have come at the expense of profit margins.
A multitude of factors feed into company insolvency, though analysis of profit warning data by EY suggests the construction industry is particularly exposed to financial difficulty.
This is in part due to the nature of contract cycles and the challenges of cash flow management that contractors and subcontractors are subject to.
An effective way of mitigating the risks associated with fixed-price contracts when costs are so changeable is to use fluctuation clauses linked to work category and resource-specific inflation indices, such as those available in BCIS CapX.
BCIS Price Adjustment Formulae Indices (PAFI), covering more than 200 work activities across building, civil engineering, specialist engineering and highways maintenance, can also be used throughout the budgeting and procurement stages to plan cash flow more effectively.
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