Building Smarter – Strengthening Development Projects with Saible.

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Posted on 04 December 2025

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Building Smarter – Strengthening Development Projects with Saible.

 

Introduction

In the year to July 2025, nearly 4,000 construction businesses have gone into administration in the UK; the largest number of any sector in the UK. According to BCIS, construction firms accounted for 15% of all insolvencies in England and Wales in August 2025, with 290 registered construction businesses unable to settle their debts due to lack of funds.

Behind these numbers there lies a deeper issue: over 99% of these stricken firms were small to medium sized enterprises (SMEs) with limited financial resilience.

In the construction industry, this pattern of failure has become the accepted norm. Payment delays, cash flow instability and insolvency risks are becoming increasingly common.

 

Why is the industry so vulnerable?

The construction industry is particularly at risk for a number of reasons:

• The sector is notorious for its thin profit margins, made worse by the fact that many companies operate on fixed price contracts, and yet their input costs (labour, materials etc) are variable and often unpredictable.
• External factors, such as rising interest rates, cost push inflationary pressures, or debt burden can feed into this instability.
• Payment delays can occur along the supply chain. If other firms in the supply chain are less reliable and cause delays in the process, this can put a huge strain on construction companies.

Impact of a business becoming insolvent on other stakeholders…

If a business becomes insolvent and this results in project delays and disruption, this can impact other stakeholders. The failure of one firm in a supply chain can cause work to grind to a halt, increasing costs. If a replacement company is sought, the time it takes to employ them can extend the delays further. Completion dates may be pushed back and contractual penalties may be incurred.

There may be other suppliers in the chain who are reliant on the insolvency company for regular orders. Therefore, they may lose a significant proportion of their market and, consequently, a large proportion of their revenue. Smaller subcontractors may also struggle to reallocate their workforces or equipment to new projects quickly enough.

Insolvency can cause reputational damage to all firms. Delays or project failures can strain relationships with clients, financiers or public authorities, and any other companies involved in a project, to breaking point.

Finally, insolvency can lead to increases in administrative and legal costs for third party stakeholders, as they may need to engage with solicitors or insolvency practitioners to recover their debts or asset rights.

 

Mitigation techniques to reduce the risk of insolvency in the construction industry.

There are a number of ways of minimising the risks of construction companies becoming insolvent. Brodie's insights, in an article published on 11 March 2025, suggested that the following mitigation strategies could be employed:

• Collateral Warranties: contractual agreements whereby one party involved in a construction project guarantees that they have or will meet their obligations to an employer (in the form of a contract, a sub-contract or a professional appointment). This allows the employer to take over the project if the contractor or consultant becomes insolvent and affords the employer additional protection if this occurs.
• Vesting Certificates and Off-Site Materials Agreements: these allow for the ownership of materials to transfer to the employer upon payment, even if those materials remain off-site. The employer secures rights to the materials early, protecting them against the risk of losing them were the contractor to become insolvent.
• Retention Bonds: these act as a financial guarantee from the contractor to the employer, replacing the traditional practice of withholding (or retaining) a percentage of payments. These benefit the contractors by improving cash flow and are particularly valuable on large-scale or long-term projects, while not compromising on the employer's protection.
• Advance Payment Bonds: used when a contractor requires an advance payment before beginning the work. The advance payment bond  safeguards that payment for the employer, ensuring that if the contractor fails to deliver, the employer will still be able to recover the amount advanced.
• Project Bank Accounts: these are ring fenced accounts set up for managing payments within construction projects. They ensure that funds flow directly in at all levels of the supply chain on the agreed payment dates. The funds are safeguarded and allocated to reduce the risk of insolvency.

 

Here's a good example: Saible

Founded in 2023, Saible is a financial technology company with a clear objective: to transform the way money moves through the supply chain. Its revolutionary technology system, known as the digital parallel payment account (DiPPA), is designed to address the root causes of insolvency in the sector.

Traditional construction sector payment models are linear and hierarchical, and funds are typically released from the project owner to the main contractor, who then pays the subcontractors and suppliers in sequence. This system often causes delays, disputes, or insolvencies. Saible's 'dipper model' replaced this outdated approach with a parallel, transparent and secure payment infrastructure.

Each project is designed with a ring-fenced digital trust account, from which payments are distributed to all the parties involved, including contractors, subcontractors and suppliers, based on pre-agreed terms.

 

How can this help Land Attic subscribers?

For Land Attic subscribers, identifying viable development opportunities is often just the start of their development journeys. Whether you’re an investor, a developer or a local authority, Saible's technology can help safeguard the financial foundations of your projects once they begin.

By reducing project risk, enhancing trust and improving collaboration across the supply chain, these systems help to ensure smoother delivery timelines and stronger regulatory compliance, giving every stakeholder increased confidence throughout the process.

These mitigation strategies can be invaluable in addressing and solving the insolvency risks posed for construction businesses across the UK.

If you'd like to know more about how Saible can support your next development or land project, visit: Saible | Secure your project's financial foundations

In the meantime, discover more development opportunities at Empty Properties, Derelict Buildings and Development Opportunities - Land Attic

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