More than 500 construction companies face going bust amidst the global credit crunch, according to Begbies Traynor.

The firm’s Red Flag Alert statistics shows 3,309 companies faced “critical problems” in the first quarter of 2008; with 565 of these companies working in construction.

The figure is more than double the number of construction companies showing signs of bankruptcy 12 months ago.

Companies with critical problems are those who have failed to make contract payments of more than £5,000 and/or those with wind-up petition related actions.

Overall Begbies estimates that approximately 15% of those companies experiencing the most difficult of circumstances will go bankrupt within 12 months.

Ric Traynor, Begbies executive chairman said companies are starting to feel the bite of the credit crunch with construction, property and retail sectors particularly feeling the pinch.

He said: “I would expect to see increasing numbers of companies facing insolvency in these sectors over the next 12 months.” 

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