Risk management specialists are warning that the number of failed construction firms will rise during the rest of this year and into 2011.

Latest figures show almost 1,000 construction companies became insolvent during the last three months.

Construction currently accounts for a quarter of all firms going to the wall.

And the situation is set to get worse according to Alan Harris, founding partner of commercial risk specialist CR Management.

He said: “While the insolvency figures back up what we have experienced with the main and subcontractors we work with, I think the true picture is yet to emerge and we will see a significant rise in insolvencies before the year is out.

“At the moment many contractors and subcontractors are supporting their businesses with cash generated when the market was healthy, however these reserves will not last forever and with no short term recovery in construction I anticipate that we will see a rise in insolvencies before the end of the year and into 2011.

“Alongside it I also expect to see a rise in disputes as companies are forced to take more desperate measures to get cash and stay in business.”