ISG Administration Bulletin from Barbour ABI
Following the ISG Administration, Barbour ABI is providing a free bulletin series for project specific and macro-market analysis of how the ISG collapse will affect the UK construction industry.
Understanding the ISG Administration
Get access to our latest insights of the ISG Administration to understand:
- The ongoing summary of the collapse
- The total number and value of projects that ISG were working on
- The split of affected projects across regions and sectors
- A profile of some of the largest projects affected by the collapse
The November Update
Ed Griffiths
Head of Business and Client Analytics
Our in-house research team is continuing to follow-up on each project that ISG were contracted awarded to keep you updated with the latest changes to the industry and who has taken over the major projects that have been left in limbo after ISG’s collapse.
ISG Administration Infrastructure Impact
The Infrastructure sector was one that ISG were heavily involved with. Our latest Construction Industry Monthly Snapshot data shows that the Infrastructure sector has continued unabated since the collapse.
Figures show approval of infrastructure projects increased by 298% in October, the second consecutive month the sector has posted triple digit gains.
The huge gains are driven by big movements in green energy projects. Five renewable energy projects, all over £100m in value, drove the October gain.
We are also now starting to see several of the Education sector jobs that ISG were involved with being taken up by new contractors, suggesting that there is light at the end of the tunnel for some of the projects that were stuck in limbo after the collapse.
Barbour ABI Project Updates
We will continue to update on the status of selected large projects that ISG were working on in these briefings.
We’ve confirmed that Universal Civils & Build is the new contractor on the £24m Former Sharley Park Leisure Centre project (ID: 12647561) based in Derbyshire.
Kier are the preferred bidder for the £79m HMP Guys Marsh project in Dorset (ID: 12529076).
Three contractors (Galliford Try, Tilbury Douglas and Roberston Construction) are through to round two of the tender process for the £8m Blackley Fire Station (ID: 12684050).
CMB Engineering, originally the M&E Contractor on the £100m Fairwater Campus Development (ID: 12255958), has been appointed as Interim Contractor to manage the project until a replacement contractor is found. The tender process is expected to begin this month and appointment is expect in March 2025.
Updates from the Industry
University College London has selected Mace to replace ISG as main contractor for the £300m neuroscience facility that it is building at 256 Grays Inn Road, London. Read the full story here.
Cardiff Council is making £7m of payments to subcontractors and suppliers for completed work on the £108m Fairwater Community Campus job which came to a halt when main contractor ISG collapsed. Learn more here.
Data from the Live Briefing
If you’ve not yet downloaded the slides from September’s live briefing on the ISG administration, then please do so by clicking here.
The October Update
Ed Griffiths
Head of Business and Client Analytics
Our in-house research team is continuing to follow-up on each project that ISG were contracted awarded to keep you updated with the latest changes to the industry and who has taken over the major projects that have been left in limbo after ISG’s collapse.
Planning Applications, Approvals, & Contract Awards Update
Our latest Construction Industry Monthly Snapshot data shows that any change in industry sentiment or confidence levels is yet to be reflected in contract award or planning approval data.
Contract awards for September were over £10bn. Even once removing the two major infrastructure projects worth over ~4bn from the data, this is still comfortably above September 2023’s figure of £4.9bn.
Planning approvals data was also strong almost across the board in September.
As planning application data is presented one month in arrears, it is still too early to spot any trends in that dataset yet.
Barbour ABI Project Updates
We will continue to update on the status of selected large projects that ISG were working on in these briefings.
We’ve confirmed that two fire stations in Greater Manchester (Whitefield and Blackley stations) have gone back out to tender, with several new bidders on each project.
There are no further updates yet on the status of two of the major projects that we discussed in our live briefing (HMP Ford Open Prison and HMP Guys Marsh).
We have enquired into the status of further prison contracts that ISG held, such as the House Block Expansion of HMP Birmingham, with it confirmed to us that there is no update on this project yet.
We’ve had it verified to us that several education projects (including the Millbay Academy Extension and the Melksham Pathfinder Primary School Project) will be reviewed by the Department for Education in the next 2-4 weeks.
Updates from the Industry
Several school projects have been confirmed by clients to be on hold, with no further updates yet stated. Read the full story here.
Tech firm Yondr have stated that they will be taking control of construction of a major data centre at a former Akzo Nobel site in Slough, assuring the industry that works on the site will continue “without disruption”. Learn more here.
And finally, the Fujifilm Diosynth Vaccine Plant has been reported to be in talks with Sisk to replace the contract. Discover more detail here.
Data from the Live Briefing
If you’ve not yet downloaded the slides from September’s live briefing on the ISG administration, then please do so by clicking here.
ISG Collapse: Overview of the Live Briefing
Megan Pounds
Marketing Manager
On 27 September, Barbour ABI’s Head of Business and Client Analytics, Ed Griffiths, hosted a live briefing highlighting the ISG administration and the immediate impact on the UK construction industry.
ISG Administration: Background and Industry Impacts
On the 20th of September 2024, ISG, the sixth largest construction firm in the UK, entered administration. Thousands of employees have been affected as well as hundreds of subcontractors and more throughout the industry.
Barbour ABI works closely with many of these subcontractors. We’re here to help and we hope that all those involved can weather the storm.
The collapse of ISG has been one of the most prolific since Carillion entered administration in 2018.
Key Reason’s for ISG’s Collapse
In the briefing, Ed highlighted several critical issues that led to ISG’s financial downfall:
- Challenging Market Conditions: Post-Brexit material costs surged by 52% since 2018, compounded by labor shortages and weak investment inflows.
- Profit Margin Challenges: ISG’s profit margins struggled to reach even 1% over the past four years, well below the 3% industry average.
- Declining Bid Success: Since 2021, ISG’s win rate dropped from 25% to 16%, with significant high-value bids failing to secure wins.
Project Pipeline and Regional Exposure
ISG’s active and pending projects are valued at over £4 billion, with considerable exposure in the infrastructure and industrial sectors, especially for major projects like the XLCC Subsea Cable Factory. Regions like London, the South East, and Scotland face significant disruptions due to high project concentrations.
Sector-Wide Consequences
With the UK prison system near full capacity, the delay in ISG-led prison projects could require government intervention. The broader construction industry faces a potential ripple effect, with an estimated £700 million impact on the supply chain and increased insolvency risks among subcontractors.
Full Overview of the Live Briefing
In order to wholly understand the reasons and impact behind the ISG collapse read the full overview of the live briefing here.
