Construction Insolvencies and Supply Chain Risk: Protecting Project Delivery in a Volatile Market

The UK construction sector is facing a sustained period of contractor insolvencies, creating significant risk for clients delivering housing, regeneration and mixed-use schemes.

When a contractor fails, the impact is immediate. Works stop, sites must be secured, and clients are left managing cost uncertainty, programme disruptions and complex legal processes. In this environment, successful delivery depends not only on design quality, but on robust risk management, procurement strategy and proactive project control.

At Potter Raper, we support clients through every stage of this challenge, form early risk mitigation to recovery and re-procurement when issues arise.

Why contractor insolvency risk matters

Contractor failure can occur at any stage of the project, and the consequences are rarely straightforward:

Immediate suspension of works and site security risks
Complex valuation of completed works and identification of defects
Re-procurement under changing market conditions
Increased costs and extended programmes

These risks reinforce the importance of early due diligence, strong contract management and clear contingency planning.

Our approach to managing risk

We apply three core principles to safeguard project outcomes:

Rigorous due diligence and contractor assessment

We evaluate financial standing, technical capability and delivery track record to reduce the risk of appointing unsuitable contactors.

Procurement strategies aligned to risk profile

Selecting the right procurement route and contract structure ensures appropriate risk allocation and greater resilience if challenges arise.

Proactive cost control and project oversight

Our teams monitor performance, identify early warning signs and intervene quickly, protecting programme, budget and quality.

Our experience: Managing contractor failure and recovery

Lower Lodge Farm – Optivo

Early-stage contractor performance issues highlighted the importance of due diligence and contract management. We supported the client in evidencing non-compliance, leading to contract termination and enabling re-procurement with a more capable contractor.

Beaumont Rise – Islington

A mid-programme contractor change required careful coordination to maintain momentum. Through integrated Quantity Surveying, Employer’s Agent and Health & Safety services, we ensured continuity, protected quality and supported a smooth transition to completion.

How we support Clients