Description
This session outlines the causes and consequences of contractor insolvency in construction and presents practical strategies, including financial tools, early warning signs, and recovery plans, to mitigate risk and protect project continuity.
Key Points:
- Insolvency Risks Are Real and Growing:
Contractor insolvencies are rising due to pandemic aftershocks, inflation, and delayed payments; overvaluation of work and cash-flow manipulation are common red flags. - Legal and Financial Protections Are Critical:
Tools like performance bonds, collateral warranties, and early contract terminations help manage risk, though bonds can be complex to claim and often misunderstood. - Recovery Planning Is Essential:
An effective insolvency plan includes identifying key suppliers, monitoring financial health, securing site access, and leveraging tech like 360° imaging to document progress and protect assets.
Learning Objectives:
- Recognise Financial Warning Signs:
Learn to detect contractor distress signals such as delayed payments to subcontractors, inflated valuations, high bond premiums, and staff turnover. - Understand and Utilise Performance Bonds:
Gain clarity on conditional vs. on-demand performance bonds, when and how to claim them, and their role in safeguarding against financial loss. - Implement a Practical Insolvency Recovery Plan:
Develop and apply a structured approach to dealing with insolvency events, including site lockdown procedures, subcontractor engagement, and recovery cost assessment.
