The Insolvency Service has published fresh statistics that revealed that an estimated 3,617 companies in England and Wales entered insolvency between April and June this year. In the first quarter of 2016 a total of 3,840 companies became insolvent, according to the data.

A breakdown of the number of insolvencies recorded per sector, available only for the first three months of the year, showed that there were 672 insolvency appointments involving construction businesses, more than in any other industry. There were a further 29 construction insolvencies in Scotland while the three month period.

The fresh figures are in line with previous data which showed that insolvency levels in the construction industry were higher than in any other industry across Britain in 2015.

“Construction insolvencies will persist to be a portion of the economic cycle for the industry so drawnout as profit margins for contractors, sub-contractors and suppliers persist to be squeezed to virtually zero especially while recession times,” said construction law expert Martin Roberts of Pinsent Masons, the law firm behind Out-Law.com. “The respond has to be a recognition that lowest price does not necessarily denote either design and construction excellence or best whole life cycle worth for the client. However, this needs to be combined with a fundamental propel away from the current price driven procurement models which too repeatedly results in blame and claims.”

“The industry needs to propel towards procurement models and contractual structures in which the client and entire members of the core construction team benefit from working collaboratively to accomplish the client’s desired drawnout term outcome with entire members sharing in risks and rewards. It will not be easy to vary the habits of several generations but the advances in building information modelling technology (BIM), the digitisation of the construction process and the recognition that a collaborative approach is essential in order to grab advantage of this fresh technology may fair be the driver the industry needs,” he said.

Roberts is the co-author of a recent report issued by Pinsent Masons which identified barriers to more collaborative ways of working in the UK construction industry and made recommendations for vary.

The report called for greater employ of BIM; changes to standard shape contracts and solution performance indicators (KPIs) to better incentivise collaboration rather than allocate risk and penalise poor performance; and fresh insurance models to reflect the diverse risk profiles of collaborative projects.

Carl Allen, expert in restructuring at Pinsent Masons, said that there are some steps construction companies can grab to minimise the risk of insolvency.

“It continues to be a very tough trading environment for the construction sector,” Allen said. “Those that can preserve already wafer slender margins, manage labour costs effectively and leverage market intelligence through their commercial, financial and legal advisors will fare better in the turbulence.”

Allen said it remains to be seen how the effects of the UK’s vote to goaway the EU will impact on construction firms.

“Further turbulence is expected for the construction sector resulting from increased pressure on labour costs, the price of foreign sourced materials and a potential decline in business investment, particularly from overseas, in commercial property,” he said.

Restructuring specialist Steven Cottee of Pinsent Masons said the Insolvency Service’s latest statistics point to a greater number of businesses entering administration in the coming months.

Between April and June an estimated 340 businesses across entire sectors in England and Wales entered administration. This represented an 8.2% increase on the number of administrations recorded in the first three months of the year.

“This is evidence that numerous businesses were already struggling financially pre-Brexit and we can only assume that the number of administrations will increase post-Brexit,” Cottee said.