After years of political turmoil at home and abroad, the UK construction industry’s financial fortunes appear to be firming up. But a gap is beginning to emerge between the major players and smaller firms, with the latter struggling to cope with a growing cost base.
Balfour Beatty remains the UK contractor with the largest revenue and profits, ahead of Morgan Sindall which is again ranked second on both measures.
Overall, in their latest available accounts, the companies in this year’s TCI Top 100 turned over a combined £81bn which is 9.1% up on their previous year’s trading. Two companies in the latest Top 100 did not include comparable figures for the previous year.
Top 100 Construction Companies 2026 (Click here to see the full table)
(**Data compiled by Company Watch)
A more meaningful comparison is with the total revenue for last year’s Top 100, which includes a slightly different mix of companies. This shows reduced but still growing aggregate revenue, up nearly 6% and a rise of 17% in total profits.
Turnover grew at 68 companies – down fractionally from 69 members of last year’s Top 100 – but pre-tax profits improved at 70 companies in the latest year, which is up from 68 in the
2025 table.
In the latest Top 100, 87 companies traded in the black compared to 83 in last year’s research. The average pre-tax margin across the 2026 Top 100 rose to just over 3% from 2.4% at both the same cohort in the preceding year and in the 2025 Top 100.
For contractors, retaining profits and strengthening balance sheets has become more important than ever and is a key factor in enabling these larger contractors to continue to grow.
Alastair Stewart, a construction analyst at Progressive Equities Research, explains: “The big guys are getting bigger, and the small guys are getting smaller because the big guys have strong balance sheets and are used to working on frameworks. That’s not a new phenomenon but every year the benefits to the clients are becoming more obvious and the entry requirements become higher because it’s based on the balance sheet.
“The big utilities, the housing associations, government departments and big private sector clients such as those in logistics, are moving more towards working with frameworks. The five to six big guys have been doing this for the past two or three decades.”
Those leading major contractors are gathering strength and yet construction as an industry remains the sector most haunted by company failures. Although the last big failure was ISG in 2024, several smaller but well-known main contractors have also gone bust over the past 12 months.
The biggest of these was Ardmore Construction, which called in the administrators in June this year. Other well-known main names to go included Blenheim House Construction and Jerram Falkus – in business since 1884 – while Torsion Construction, ranked 98th in the latest Top 100, called in the administrators in July.
Craig Evans, chief executive officer at Company Watch, which has supplied an exclusive financial health check on the industry for the latest TCI Top 100, says: “Construction has been the worst sector for insolvencies four years running and output is still contracting. Geopolitical tension is pushing up the cost of materials and shipping while keeping energy prices unsettled. And much of that has yet to reach balance sheets.”
The supply chain continues to suffer the most and is losing names across a range of specialisms, from Hampshire groundworks outfit Mackoy to Cheshire-based M&E firm Gilks and Manchester cladding specialist FK Group. After an improvement in the first quarter of this year, there was a 20% leap in insolvencies among specialist contractors during the second quarter.
While profit warnings in the FTSE Construction & Materials index are on the wane, according to research by EY-Parthenon, a rise in the house-building sector is a threat. Many specialist contractors supply both main contractors and house-builders.
Leading specialist contractors are growing but their margins are increasingly coming under pressure. The Top 20 specialists turned over £6.7bn – up nearly 17% on the previous year’s aggregate results – and profits rose by 24%. Only three of the top specialists lost money in their latest available results but average margins slipped back to 3.33% from 3.69% in the previous year as costs kept piling up.
Profit margins remain a key indicator, with five members of the latest TCI Top 100 working to a double-digit margin led by Bovis Construction; another 29 had a pre-tax margin of more than 4%. “For the big guys, profit margins are starting to edge up,” adds Alastair Stewart. “They are not high but what some people don’t get about margins is that a lot of revenue is passed through [to sub-contractors].”
In last year’s Top 100, only 28 companies had a profit margin of 4% or more, which suggests a continued strengthening. On the other hand, a quarter of the latest Top 100 still had a pre-tax profit margin of below 2%.
Any healthy construction firm should be enjoying profit margins higher than 2%, says James Mackenzie, chief financial officer at tier 1 contractor Willmott Dixon.
“If you are doing 3-5% that’s where people expect you to be. It’s not so much about profit margin, it’s about providing a service and evidencing that.”
Mackenzie argues that success ultimately comes from efficiency and good business relationships up and down the supply chain. He points to a continued shift away from the traditionally adversarial approach, particularly in the public sector.
“Government procurement is much more partnership based,” he adds. “On the hospital building programme for example, we have all been allocated a hospital and are sharing information. It’s smarter and better.
“When you are in an adversarial environment and where money is tight, everyone ends up losing money because they are fighting their corner. It makes the business less successful for everyone. Fundamentally, it’s still supply and demand and you have to trust your supply chain not to take too much margin.
“Some of the key messages are getting customers to understand the whole life strategy. Some pockets recognise that quality is more important than price but it’s very difficult to do that, particularly with local authorities. You will always have that battle, but I do think it’s changing.”
What has also been changing is the rate of cost increases impinging upon contractors and the full impact of the rise in employers’ National Insurance contributions has not shown up yet in the accounts of many companies in the latest Top 100.
National Insurance contributions rose from 13.8% to 15% in April 2025, when the threshold for employers to start paying NI was also cut from £9,100 to £5,000 per year. Only half of the companies in the latest Top 100 had posted results covering a meaningful period including the NI rise. For many companies within the Top 100, the current financial year is when the pressure will really show.
Bethan Evans, partner in restructuring & insolvency at consultants Menzies, explains: “The sector already runs on extremely tight margins, so any rise in employment costs feeds straight through to a firm’s ability to withstand shocks and retain financial resilience.
“An increase in employer National Insurance contributions, combined with a higher national minimum wage, adds to a cost base that has already climbed, with both labour and materials more expensive than ever before and overhead energy costs adding further pressure on top of this.
“When costs increase and working capital has to work harder, many firms tend to alleviate the pressure by delaying payment to HMRC. However, this catches up eventually and shows how little headroom most businesses have before a contract stops paying its way.”
The time between a company being lined up for a main contract and that contract being awarded can now be as long as 18 months says Mackenzie, which can mean having to protect elements of the supply chain.
“Suppliers going bust are the single biggest risk on a site,” he explains. “It’s hedging but if you are a smaller business with a limited cash supply to protect, then we have been advancing payments in some cases. We need to provide enough headroom for price inflation. When we come to the end of the design phase, we may need to do some formal procurement.
“We’ve moved away from the D&B [design and build] model. The benefits are protection for ourselves and the client, but you need to be much closer to the supply chain. What we are trying to deliver is price certainty to our customer and we also need to deliver that further down to lock in where we are.”
For all the concerns over the impact of cost on the bottom line, the construction industry remains a key part of the UK economy and sound businesses continue to attract foreign suitors.
Canadian-owned Multiplex, which has UK turnover of nearly £1bn and is ranked 26th in the latest TCI Top 100, is being acquired by Japanese construction behemoth Obayashi. Further down the Top 100, ground engineering specialist Van Elle is being bought by Austrian construction giant Strabag for £59m.
Strabag first moved to the UK in 2011 but last year a consortium led by the company secured a deal to build the Haweswater Aqueduct, a 110km pipeline from the Lake District, through Lancashire into Greater Manchester costing £3bn.
Strabag crept into the latest Top 100 in 94th place and Van Elle was just outside, at 108th, but the latest combined UK revenue of the two businesses would merit a spot in the Top 70. The Van Elle acquisition is not expected to be the Austrian company’s last in the UK and Strabag looks set to shoot up on next year’s TCI Top 100.
The two deals illustrate that for the world’s biggest contractors, the UK construction industry, despite tight margins and rising costs, remains a place in which it pays to be involved.
Insolvencies
The incidence of construction insolvencies is edging downwards but the industry still has the highest rate of company failures in the UK.
In the 12 months to the end of March 2026 there were 3,805 insolvencies in England and Wales (a fall of 6% against the same period a year earlier) but there was an increase in the second quarter. Insolvencies in the three months to June 2026 were up 9% on Q1 2026 and the short-term outlook remains difficult.
Bethan Evans, partner in restructuring and insolvency at consultant Menzies, explains: “While insolvency numbers have softened slightly compared with previous peaks, our research shows that the firms already failing only represent part of the picture. Our research found that 86% of construction and property firms are already in, or at risk of, serious financial distress.
“Ninety-three percent are experiencing late payments averaging 53 days overdue. That suggests that there is still a substantial pipeline of businesses facing financial strain sitting behind headline ‘failure’ figures, rather than a problem confined to firms that have already fallen.
“Several things will decide what happens next, starting with the cost of financing, which remains high,” continues Evans. “Many firms are still working through contracts agreed before inflation surged, leaving those projects far less profitable than the original tender assumed. The wider backdrop of unstable input costs and exposed supply chains has not gone away either.”
The supply chain continues to take a big hit and 56% of all insolvencies in the last year were at specialist contractors. These totalled 2,118 companies, around 7.5% fewer than a year ago.
The number of businesses going into liquidation – closing down in order to pay their debts – follows a similar trend to those falling into insolvency and effectively becoming bankrupt.
Overall, there was a 3% dip to 707 liquidations in the 12 months to March 2026 compared to a year earlier. But liquidations rose again in the second quarter, up 10% on the first three months of this year. Building contractors make up 49% of all liquidations with specialists contributing 44% and the balance in civil engineering.
A lot of these problems are caused by endemic issues such as late payment and tight margins locked in by fixed-price contracts. But these challenges are exacerbated by geopolitical instability, supply chain disruption, changing tax policy, building safety reform and rising regulatory burden.
“Just as firms begin to adjust to one set of rules, the landscape shifts again,” says Evans. “The result is that management teams spend their time firefighting, facing limited cash reserves and chasing overdue invoices, with new compliance demands layered on top. This leaves little room to step back and make the structural changes that would build resilience to mitigate these challenges.
“What we are seeing in the industry is not a failure to adapt, but businesses trying to manage multiple overlapping crises while continuing to deliver projects and maintain profitability.”
Evans, who co-authored the recent Menzies report, Fixing the Foundations, on the industry’s financial weakness, says there are reasons for cautious optimism but the industry’s financial problems will not disappear.
She concludes: “Proposed reforms around payment practices, greater powers for the Small Business Commissioner and plans to cap payment terms could improve cash flow across the sector if implemented effectively. Focusing on accelerating the planning process or simplifying the regulatory burden that businesses face would also help reduce the load.
“However, until we see substantial changes in payment culture, more accessible funding options and more stable input costs, financial distress is expected to remain stubbornly high across the sector.”
Company Watch
The financial health of the construction industry is improving but the gap between the position of most major players and the rest is widening according to exclusive analysis for The Construction Index by consultant Company Watch.
Company Watch uses published financial results to analyse a company’s financial position from a range of different angles including profit management, working capital management, liquidity and how assets are funded.
Company Watch’s core measure of financial health is the H-Score, which is scored from 0 for the weakest to 100 for the strongest based on seven key factors from each company’s latest published accounts.
Profitability is one factor. Others weigh up how the business is funded and the make-up of its assets. Any company with an H-Score of 25 or below is put in the Company Watch ‘Warning Area’.
Eleven companies in this year’s TCI Top 100 are rated as ‘high risk’ by Company Watch and eight sit in the Warning Area. Historically, one in four companies in the Warning Area have either failed or needed a major restructuring to survive.
Craig Evans, chief executive officer at Company Watch, said: “The hundred largest contractors in this year’s table turned over £81bn between them, 9.1% more than a year earlier, and their combined pre-tax profit rose to £2.3bn. On that reading the sector looks to be holding its ground. Company-by-company , the picture is harder.
“The aggregate pre-tax margin across the hundred is 3%, 13 of the firms are loss-making, and more than a quarter saw profits fall year-on-year. Turnover is growing at the top of the market while the reward for winning the work stays thin enough to leave little room for anything to go wrong.
“Our H-Score data shows the gap between the strong and the exposed widening. Fifty-three firms improved their score versus the previous reporting period, with an average H-Score improvement of 26%. So the businesses winning the profitable work are getting fitter, but the tail is another matter.
“Close to £12bn of the top hundred’s turnover, about a seventh of the total, comes from firms we rate as high risk. Ardmore Construction, a contractor turning over more than £300m, went into administration last August, having already fallen from 59 to 35 on our H-Score in the months before. Its collapse is still working through the supply chain beneath it, and on this evidence, it will not be the last of its size to go.”
Four of the bottom five companies by H-Score in the latest Top 100 are main contractors. Laing O’Rourke was the lowest-scoring in 2024, second lowest last year and is bottom again this year. In contrast, four of the five companies with the best H-Score are specialist contractors.
Company Watch’s Probability of Distress metric (PoD) estimates how likely a company is to fail, enter administration or face serious financial distress within the next three years, expressed as a percentage. The higher the figure, the higher the probability – and Laing O’Rourke again fares worst.
The Company Watch TextScore uses artificial intelligence to analyse the language and sentiment in company financial reports, comparing this with patterns found in companies that have previously failed. Regional contractor Lindum looks the healthiest with Enerveo at the opposite end of the scale. Going forward, Company Watch expects the strain on finances to continue.
“The pressure is not letting up,” concludes Evans. “The full weight of it, along with delayed starts and disruption down the supply chain, will land in the second half of the year. With the base rate held at 3.75%, the firms that come through will be the ones watching cash and protecting margin rather than chasing turnover for its own sake.”
Profit warnings
The number of profit warnings being issued by listed companies in the construction sector has eased back over the past year, but quoted house-builders are now coming under significant financial pressure.
Last year produced a swathe of profit warnings with research by EY-Parthenon identifying 18 companies in the FTSE Construction & Materials cautioning about lower-than-expected earnings. That torrent has slowed significantly with just two warnings in the second quarter of 2026 and three across the entire first half of this year.
“The fall in profit warnings from UK-listed construction companies suggests that some of the acute pressures that drove warning peaks in 2022-23 and again in 2025 have begun to ease,” says Tim Vance, partner for financial restructuring at EY-Parthenon UK&I.
“Materials inflation has moderated; supply chain disruption has largely normalised and long-term infrastructure, energy and defence projects have improved revenue visibility for many contractors,” he explains.
Although EY-Parthenon does not identify which companies have issued profit warnings, it is well-known that ground engineering specialist Van Elle issued a profit warning in May 2026. And a month later the company was swallowed up by Austrian construction giant Strabag.
Overall, 28% of the companies in the FTSE Construction & Materials sector have issued profit warnings in the past 12 months but this compares to 60% of constituents in the FTSE Household Goods & Home Construction sector, which includes house-builders.
The eight profit warnings issued by house-builders in Q2 2026 matches a peak not seen since 2008 as problems including weak buyer confidence, affordability pressures and regulatory issues continue to weigh on the sector.
“Conditions remain challenging – especially in house-building – with persisting geopolitical and policy uncertainty and renewed labour and materials cost pressures,” adds Vance. “Regulatory complexity, particularly related to the Building Safety Act, also continues to weigh on the sector.”
The only sector issuing more profit warnings than the FTSE Household Goods and Home Construction sector in Q2 2026 was Travel & Leisure, which has been hit by the conflict in the Middle East.
House-builders that have cut their profit forecasts so far this year include Bellway, Berkeley, Crest Nicholson, Gleeson, Taylor Wimpey and Vistry. Since the start of 2020, UK-listed house-builders have issued 47 profit warnings, which is almost double the 27 recorded by EY-Parthenon in the previous 13 years.
Longer term, EY-Parthenon believes that the house-building sector’s prospects are still positive but says that the “near-term outlook is challenging and traditional self-help options are harder to execute. Land disposals are more difficult to complete at attractive values, whilst discounting supports volumes at the expense of profitability.”
While cost pressures appear to be settling down in the construction sector, the rising problems in the house-building sector could easily prove contagious. Many companies in the house-builders’ supply chains – from specialist contractors to materials companies – also supply main contractors.
“The strain extends beyond house-builders with subdued transaction volumes and softer RMI spending reducing demand across the wider housing ecosystem,” warns Vance.
The Construction Rich List 2026
Construction might not be the most sure-fire way of becoming mega-rich, but there are a select few in the UK that have amassed huge fortunes from construction and related activities.
As in every previous review we have conducted, construction’s wealthiest UK family is the Bamfords – Lord Bamford and his household, owners of construction equipment giant JCB. Three years ago, the Bamfords were ranked outside the top 30 in the annual Sunday Times Rich List. But they are now the 14th richest family in the country.
The inexorable rise of the Bamford fortune has in fact slowed a little: it grew by a paltry £868m last year to just over £10.3bn. It grew by twice as much the previous year.
As we have previously noted, the Bamford clan is not really in the construction game: they’re manufacturers. And although most of the JCB product portfolio comprises construction equipment, the company is also a significant manufacturer of agricultural machinery.
There are 19 individuals and families among the 350 listed in this year’s Rich List whose wealth comes directly from construction – the same number as last year. However, the Bamfords are once again the only family within the Top 50.
The second-wealthiest construction-related member of the Rich List is John Bloor, who owns the house-builder that bears his name and the Triumph motorcycle business. Bloor remains at 53rd on the list after his wealth grew by £7m. Last year, Bloor saw his net wealth fall by £295m.
The Murphy clan is £209m better off than last year and thus moves up to 127th place on the Rich List. There are no other construction-related families in the Top 150.
Two house-builders – Redrow founder Steve Morgan and Charles Gallagher and his family – are the next-wealthiest construction magnates, ranked 165 and 167 on this year’s Rich List. However, they are heading in different directions with Morgan falling down the table as his wealth declined while Gallagher continues to edge up.
As previously, the highest-ranking contracting family is the Kirklands, whose fortunes are growing at pace. The owners of contracting giant Bowmer & Kirkland only broke into the Top 200 two years ago since when their wealth has expanded rapidly. Last year it grew by £49m to £877m putting the Kirklands in 183rd place on the Rich List.
Andy Hill and his family, owners of the house-builder that bears their name, are surging up the Rich List. Ranked 279 in 2024, a 17% rise in their riches in the latest research takes the Hill family into the Top 200.
Michael Ferncombe, who owns utility and infrastructure contractor Cappagh is a new entry on the list and John Kelly, who controls civils contractor MV Kelly, is once again one of the UK’s 350 richest people after an upturn in fortunes.
The Caddick and Hitchens families, owners of the construction businesses that bear their names, also saw their fortunes bouncing back from falls a year ago.
In total, 11 construction-related individuals and their families saw their wealth increase in the latest Rich List while two saw no change.
With fortunes diminishing elsewhere, the McCann family behind FP McCann and Keepmoat founder Terry Bramall crept up the list despite their own wealth remaining unchanged.
Four of the 19 construction families in the Rich List saw their wealth shrink and the owners of retirement house-builder Churchill came close to dropping out after their fortunes took a battering for a second consecutive year.
The combined wealth of Clinton, Spencer and John McCarthy shrank by £100m a year ago and a thumping £237m in the latest research.
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