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: 20/04/2026
Construction firms accounted for 16.9% of all insolvencies in England and Wales in February 2026, according to The Insolvency Service(1), with 301 registered construction businesses becoming insolvent.
This was 24 more than had been recorded in January 2026 and was 66 fewer than the 367 recorded in February 2025.
By rough 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 157 recorded in February – 29 fewer than those recorded in January.
The total number of construction firms becoming insolvent in the 12 months to the end of February 2026 was 3,851. This was a 4.9% decrease on the 4,050 insolvencies recorded in the year ending in February 2025 and a 19.6% increase on the 3,221 in pre-pandemic 2019.
Source: The Insolvency Service – Company Insolvency Statistics February 2026, Table 1c
Dr David Crosthwaite, chief economist at BCIS, said: ‘Construction insolvencies are showing tentative signs of stabilising, with annual totals easing slightly. That said, the sector remains disproportionately exposed.
‘While the worst of the post-pandemic cost shock has passed, pressures have not disappeared. Ongoing geopolitical tensions, including instability in the Middle East, continue to create uncertainty around energy and materials costs, while subdued construction output and weak project pipelines are weighing on cash flow.
‘In this environment, insolvency risk remains elevated and firms will need to remain vigilant on cost control, contract terms and financial resilience as conditions evolve.’
Of all cases where the industry was captured in the statistics, construction experienced the highest number of insolvencies in the year to February 2026.
The Insolvency Service said 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 March 2026 was 51.6 per 10,000 companies(3).
In Scotland, there were 24 construction company insolvencies in March 2026, 12 more than in February 2026, accounting for 18.3% of all insolvencies in the country. This took the total number of construction insolvencies in 1Q2026 to 44, four higher than the previous quarter’s total and the same as in 1Q2025.
The number of Scottish construction insolvencies for the 12-month period to March 2026 was 191. This was a 1.6% decrease on the 194 recorded in the year to March 2025 and a 7.8% decrease on the 207 in pre-pandemic 2019.
Source: The Insolvency Service – Company Insolvency Statistics February 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.
Analysis by EY-Parthenon(4) on profit warnings issued by listed construction companies has shown particular vulnerabilities in the industry.
In 2025, profit warnings issued by FTSE Construction and Materials firms in the UK were more than triple the number issued in 2024.
Over half of these cited weaker confidence, delays in contract starts or slippage in project timelines. Labour shortages, legacy liabilities, rising employment costs and increasing regulatory complexity were also highlighted as sources of disruption and pressure in the report.
Looking forward, EY-Parthenon’s summary said: ‘In 2026, stress is still broad-based. Many retailers are weighed down by rising costs, weak sentiment and increasing investment needs. Meanwhile, sectors such as chemicals and construction continue to struggle with high input costs, regulatory pressures and fragile demand.’
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.
Further data(5) released by The Insolvency Service showed that 267, or 23%, of self-employed or trader bankruptcies in the 12 months to October 2025 were in construction in England and Wales.
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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(1) GOV.UK – Company insolvencies, March 2026 – here
(2) Office for National Statistics – UK business; activity, size and location: 2025 - here
(3) GOV.UK Commentary – Commentary – Company Insolvency Statistics March 2026 - here
(4) EY-Parthenon – Analysis of UK Profit Warnings - here
(5) GOV.UK – Commentary – Individual Insolvency Statistics March 2026- here
