Commercial due diligence following contractor insolvency

We supported a main contractor assessing a potential takeover of a mixed-use refurbishment after the original contractor became insolvent. The developer needed reliable information on the value and progress of work completed, materials on site and the position of subcontract accounts. A four-day survey, supported by around 2,300 photographs, provided the physical record for our commercial assessment and informed the developer’s decision about how to complete the project.

Background

The original contractor’s insolvency had interrupted a development combining commercial and residential accommodation across several buildings. Progress varied considerably: some areas were close to completion, while others remained stripped out or part-way through structural alterations.

Before a replacement contractor could assess its involvement, the work completed and its valuation needed to be accurately documented. Historic valuations, subcontractor applications and payment records described different positions. There were also concerns that subcontractors had not been paid, making it necessary to establish who appeared to be owed money and what each package account would mean for the proposed takeover.

Our approach

We structured the assessment around the physical progress achieved and the valuation of work to date, then reconciled these with the available subcontract account information. Urgent enabling activities and pre-construction services were considered separately from the eventual completion works, so that the immediate decisions could be made on a defined basis.

Our team surveyed accessible areas over four days. The resulting report organised the photographic record by building and floor, with camera locations plotted on plans so that each observation could be traced to a specific part of the development. Materials on site were recorded using corresponding locations, photographs and measurements where these could be obtained.

The inspection limits were recorded explicitly. Restricted access, missing keys and construction hazards meant that approximately two-thirds of the site could be accessed, with many roof and terrace areas excluded. Materials seen on site were documented without treating their presence as proof of ownership, condition or suitability.

In parallel, we reconciled subcontract packages against the employer’s valuation. The working schedules distinguished forecast final account, value claimed, assessed progress and amounts paid. This made it possible to examine differences between the recorded financial position and the work observed on site, rather than rely on a package’s reported percentage complete.

That reconciliation was particularly important in the insolvency context. The team needed to understand the potential outstanding balance on each package, the basis of any amount claimed and what remained to be established about payment. We identified differences at package level and prioritised further supply-chain enquiries, keeping outstanding information visible in the assessment.

We also supported the commercial definition of the immediate works and pre-construction services through scope documents, budget estimates, contract comments and the cost submission for the assessment period. Specialist design, safety and legal reviews were coordinated with the wider team, with those responsibilities kept distinct from our quantity surveying work.

Outcome

The developer ultimately chose another contractor to complete the project. Our work informed that decision by documenting the work completed and its valuation, recording materials on site and reconciling the available subcontract account information.

The resulting assessment connected the financial records with evidence of physical progress and identified where further information was required. It provided the reliable, detailed information needed to assess the commercial position following contractor insolvency and make an informed decision about completing the development.