Latest Insolvency Service figures reveal the true impact of suicide bidding with the number of construction companies forced into compulsory liquidation up 24% to 244 in the last quarter.

The failures mean almost 1,000 construction companies went out of business in the last three months with administrations up 38% year on year.

Alan Harris, founding partner of construction risk management firm CR Management said: “In the last quarter we have seen established names such as Holloway White Allom and Linford Construction cease trading, a trend that looks like it will probably continue for some time.

“Competition is still very cut throat with many projects being won at negative margins, putting growing pressure on companies’ cash flow indicating that insolvency figures may continue to rise.

“In the best position are the larger contractors who have overseas opportunities, who can move staff about both nationally and internationally as the work requires.

“Smaller companies need to become more efficient and cost effective, considering outsourcing options, looking at new ways of procuring work that is less resource hungry than competitive tenders, and considering contracts very carefully at the beginning of a job so that there are no nasty surprises that could potentially put a company out of business later down the line.”