The likely impact of ISG’s collapse last week is far worse than initially thought, warns construction analytics firm, Glenigan.
With the dust still settling, and the construction industry still coming to terms with ISG’s sudden bust, there has been much concern over the projects placed in peril, and the subcontractors left in a precarious position.
According to Glenigan, government projects have dominated assessments of the scale of the problem, however “with a few days hindsight”, the firm says “it’s clear to see the impact was significantly underestimated, and will be felt across the whole of the construction sector for months to come”.
Public sector work accounts for only a third of ISG’s pipeline, Glenigan says, while industrial, commercial, and private housing projects on ISG’s books total over £2.8bn.
Overall, ISG currently has projects totalling over £2.5bn on site, and has been awarded contracts on a further £1.7bn of work.
Glenigan says there are 33 awarded contracts, 57 projects in progress on-site, and three with imminent completion, that have been left “up in the air”. This includes:
- Fujifilm Diosynth Biotechnologies Facility in Billingham, Cleveland, in the North East of England, worth £200m
- Slough Data Centre Campus in Berkshire, worth £200m
- Institute of Neurology for UCL in London, worth £158m
- Data Centre for Vantage Data Centers in Ealing, London, worth £150m
- Data Centre for Colt Data Center Services in Hillingdon, London, worth £150m
ISG was also on 19 Construction Frameworks with a combined value of over £104bn, Glenigan adds..
This situation presents a “major problem” for both contractors and subcontractors, many of which will be left “seriously out of pocket”, the firm warns, putting a large number of jobs on the line.
However, there is a flipside, the company says; commercial opportunity for “agile” suppliers to step into the breach, ensuring many of these projects do not fall behind, and involved subcontractors are supported.
Allan Wilen, Glenigan’s economic director, said: “ISG’s demise is set to dampen overall industry workload in the near term as clients look for contractors to complete projects currently on site, and as recently awarded projects are re-tendered.
“Its subcontractors and suppliers will be under increased financial pressure, and contractors nationwide will need to review and work with their own supply chains to minimise financial stress and avoid any additional loss of industry capacity.”
Read next: Concern over “knock-on effects” after ISG’s collapse
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