A RISE in administration cases among builders such as Brymor Construction could bring the risk of “contagion” to the wider economy, an expert has warned.

All 107 jobs were saved when the assets of Brymor – which was working on Poole Quay’s Vespasian development – were sold out of administration.

But the sale to a new venture set up by Winchester-based Portchester Equity left £16million owed by the Hampshire-based Brymor companies to unsecured creditors, who are unlikely to see any of their money.

Days later, the Poole-based civil engineer Woodmace Ltd and sister company and Woodmace Plant Ltd also went into administration and were sold in a pre-pack deal, to the business’s founder and former owner.

The deal saved more than 100 jobs at the business, which was also involved with Vespasian, as well as Bournemouth’s BH2 development and Bournemouth University’s Gateway buildings.

Garry Lee, chair of R3’s Southern and Thames Valley region, said: “There have been a number of high-profile administrations in the construction industry over recent months.

“Insolvency practitioners are anticipating an uplift in insolvency related activity as inflation hits record levels and is expected to rise further.

“Cost pressures and shortages in materials are being keenly felt along with increasing fuel prices while the legacy of Covid continues to impact some businesses.

“Clearly, the administration of a main contractor will have repercussions in the supply chain and carry the risk of contagion to the wider economy.”

He advised suppliers and subcontractors to “prioritise contract management” to guard against payment delays and service level disputes, as well as ensuring any additional work is agreed and confirmed in writing.

“If financial problems do begin to manifest themselves, the best advice is to take charge of the situation at the earliest available opportunity,” said Mr Lee, an associate director at professional services firm Evelyn Partners in Southampton.

“The sooner advice is taken from a qualified and regulated insolvency professional, the greater options there are for a more positive outcome, whether that involves restructuring or some form of administration, voluntary arrangement or liquidation.”

Administrators for Brymor Group and Brymor Construction said the business had suffered "difficult trading conditions due to the impact of Brexit, Covid-19 and cost inflation in the construction sector”.

It had been losing money in 2020 and its banker, to whom it owed £2.85m, refused further lending.