UK contractor ISG Ltd. entered administration on September 20, mirroring bankruptcy in the US, leaving the construction industry scrambling to respond. The sudden collapse of the company, which ceased all UK operations, sparked calls for reform in the way the UK’s construction sector manages risk and profit margins. ISG laid off 2,200 of its 2,400 employees, and Ernst & Young LLP was appointed to oversee the administration of its eight subsidiaries, including ISG Fit Out Ltd. and ISG Construction Ltd.

Despite posting a profit of $15.3 million on $2.9 billion in revenue in 2022, ISG’s financial struggles stemmed from losses on large contracts signed between 2018 and 2020 in the residential, logistics, and data centre sectors. ISG’s CEO, Zoe Price, who took the role in February, said these legacy issues had severely impacted the company, ultimately forcing it to stop trading, even though it was profitable this year. Efforts to sell the company or secure refinancing fell through.

ISG’s sudden shutdown left subcontractors and suppliers scrambling to secure equipment, document work, and pursue payments, while project owners, like Alliance Leisure, reassured investors they would work with other contractors to minimise disruption. The Construction Leadership Council announced plans to meet and offer guidance to those affected by ISG’s collapse, acknowledging that changes since the Carillon insolvency in 2018 had been insufficient to protect the sector.

Industry leaders highlighted ISG’s downfall as a symptom of deeper issues in the UK construction sector, where companies operate under high risk and narrow margins. Data from the Construction Products Association revealed 4,373 UK contractors went out of business between January and July—a 4% increase from the previous year. Build UK criticized the long-standing practice of shifting risk and maintaining unsustainable margins, calling for industry reform.