It happened fast. One minute, ISG (Interior Services Group) was the undisputed heavyweight of the UK fit-out scene, and the next, thousands of workers were locked out of sites. If you’ve spent any time in London’s commercial real estate world, you know ISG wasn't just another contractor. They were the ones doing the massive Google headquarters at King’s Cross. They were the ones handling the sensitive refurbishment of Old Admiralty Building.
Then, in September 2024, the floor fell out.
Honestly, the shockwaves are still rattling the industry. When a £2.2 billion turnover company goes into administration, it’s not just a corporate filing; it’s a mess of unpaid subbies, stalled hospitals, and half-finished offices. People keep asking if ISG was "too big to fail." Well, apparently not.
Why ISG Interior Services Group Hit the Wall
The math didn't add up. Most people think big companies fail because they don't have enough work, but for ISG, it was almost the opposite. They had a massive pipeline. The problem was the legacy contracts—specifically those signed before the world went crazy with inflation and supply chain snaps.
Imagine bidding on a multi-million pound data center project in 2021. You lock in your prices. Then, suddenly, the cost of steel triples. Concrete goes up. Labor disappears. You’re still legally bound to that 2021 price, but your costs are 30% higher. You’re basically paying for the privilege of working.
EY, the administrators, pointed toward "large loss-making contracts" in the 2018-2020 era. It wasn't just bad luck; it was a systemic failure to account for the volatility of the post-pandemic market. They tried to find a buyer. A mysterious American investor, Andre Ishestenko, was supposedly in the mix for months. Everyone waited for the "done deal" that would save the day. It never came. By the time the administration was official, the cash was gone.
The Human Cost of a Construction Giant’s Exit
Over 2,000 people lost their jobs instantly. Think about that. No redundancy pay from the company, just a government portal link and a "good luck."
But the ripple effect is even scarier. ISG relied on a massive web of subcontractors. We're talking about small electrical firms, family-owned plumbing businesses, and specialist joinery shops. When ISG went down, they owed these small players millions. For a small firm, a £200,000 unpaid invoice isn't just a "bad quarter"—it’s bankruptcy.
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There's a specific kind of chaos on a "dead" site. Security guards show up to change the locks while tradespeople are still trying to get their tools out of the van. In the days following the ISG interior services group collapse, there were reports of subbies literally ripping out installed materials because they knew they weren’t getting paid. It’s desperate. It’s messy. And it's totally understandable when your livelihood is on the line.
What happened to the big projects?
- The Prisons: ISG was a huge partner for the Ministry of Justice. They were building and upgrading cells that the UK desperately needs. The government had to step in immediately to secure these sites.
- The Offices: Tech giants and banks had to scramble. Some projects, like the fit-out for Linklaters, had to find new contractors mid-stream.
- The Schools: This is where it gets emotional. Several school projects were left in limbo, forcing local councils to find emergency funding to get the doors open.
The "Low Margin" Trap in UK Construction
We need to talk about why this keeps happening. Carillion, then ISG. Who’s next?
The UK construction industry operates on razor-thin margins. We’re talking 1% to 2% profit. If a single project goes south, it eats the profit of ten other successful ones. It’s a race to the bottom. Clients want the lowest price, and contractors are so hungry for "volume" that they take risks they shouldn't.
ISG was deeply involved in the "fit-out" world, which is traditionally higher margin than heavy civils, but they expanded so aggressively into large-scale construction that the risk profile changed. They weren't just painting walls anymore; they were building complex, high-tech infrastructure.
What This Means for the Future of Fit-Outs
If you’re planning a commercial project today, the landscape has changed. You can’t just look at a firm’s portfolio. You have to look at their balance sheet—really look at it.
The "ISG effect" has made developers terrified of "single-stage" tendering. Now, everyone wants "two-stage" tenders where the contractor is involved early, and costs are adjusted as the design evolves. It’s more expensive upfront, but it prevents the kind of "sudden death" we saw here.
Also, expect a lot more scrutiny on "Parent Company Guarantees." In the past, these were often treated as checkboxes. Now, lawyers are sweating over the fine print. People want to know that if the main contractor vanishes, there is a literal pot of money to finish the job.
How to Navigate the Post-ISG Market
If you were a client of ISG or you’re worried about your current contractor, there are some blunt realities you have to face. First, the talent hasn’t disappeared. The people who made ISG great—the project managers and site leads—are now at firms like Mace, Overbury, or BW. The expertise is still there; it just has a different logo on the vest.
Practical steps for project owners:
- Audit your supply chain. Don't just trust the main contractor. Who are they hiring? If their subbies are unhappy or getting paid late, that’s your first red flag.
- Project Bank Accounts (PBAs). These are becoming a godsend. A PBA ensures that money goes directly to the people doing the work, rather than sitting in the main contractor’s account where it can be "absorbed" by their other failing projects.
- Diversify. Don't put all your eggs in one massive contractor’s basket. If you have a £100m portfolio, maybe split it between three firms. It’s more admin, but it’s a lot safer.
The Reality of "Rescue" Rumors
There’s always talk about someone "buying the brand." But in construction, the brand is just the people. Once the people leave and the contracts are terminated, "ISG" is just a name on a piece of paper and some old hard hats.
The industry is moving on, but it’s doing so with a limp. The collapse of ISG interior services group wasn't a fluke; it was a warning. It told us that the old way of doing business—chasing massive turnover with tiny margins—is a suicide mission.
Going forward, "stability" is the new "innovation." You’ll hear a lot of firms bragging about their "cash-rich" status and their "conservative growth" strategies. It might sound boring, but after the ISG disaster, boring is exactly what everyone is looking for.
Immediate Action for Affected Parties
If you are still owed money or have an unfinished ISG site, your first stop isn't a new contractor—it's your legal team. You need to ensure all warranties and collateral warranties are still valid. Without those, your building is essentially uninsurable. Then, you need a "snagging audit" immediately. You need to know exactly what state the site was left in before a new firm takes over, or you’ll spend the next three years arguing over who broke what.
The ISG story is a tough lesson in the fragility of the "big" players. Growth is great, but in construction, cash is the only thing that keeps the lights on.