Some builds become economically unviable due to the additional costs; some are so delayed that market windows are missed, and the effect on investors, financiers and developers can be disastrous.

Although part of the problem is the general economic climate, and one bad contract can take down an otherwise-profitable contractor, there are a number of strategies that can be put in place to protect the funders and investors.

The most important action is for developers to pre-qualify potential contractors, undertaking rigorous credit-checking and taking references.

Funders and investors should be undertaking due diligence too, reviewing the developer’s findings and engaging a project monitoring surveyor to review both the technical and commercial proposals — novel technologies, start-ups and companies moving outside of their core work areas are all unnecessary additional risks.

The other important issue is the contract documents, the developers need to ensure, first, that these are supplied in full and in the greatest detail possible to tendering contractors, and that they properly address and allocate the various risks to the party able to manage them — agreeing a deal and then sending out the legal documents is the quickest way known to mankind of the price going up.

The documents themselves need to be clear, consistent and certain, contracts don’t have to be fair — the contractor will simply price for the risks — but they should not contain loopholes, and particularly in the termination clauses.

It is essential that the insolvency is a reason for termination, without notice, and that the definition of insolvency is not limited to the contractor entering into formal insolvency proceedings.

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Developers and their funders need to be able to terminate on reasonable grounds for suspicion of insolvency, to minimise both delays and losses, keeping their ears open for a sub-contractor not being paid, or materials not being available, are a sign of trouble.

Finally, the documents need to include the best forms of security that can be agreed. These should include collateral warranties, which give the beneficiary the right to sue sub-contractors and designers for defects in the event of the developer or main contractor going under, and a range of bonds and/or guarantees.

At the one end of the scale are manufacturers’ product guarantees for goods or systems, and at the other are parent company guarantees, performance bonds, advance payment guarantees and personal guarantees.

Of these the most likely to be poorly-drafted or lacking the backing of a solid insurance policy are the product guarantees, which also often cannot be assigned or are dependent on particular maintenance protocols.

Parent company guarantees from contractors or sizeable specialist sub-contractors are excellent — if a parent exists of course — and can be in the form of a cash payment or the parent company completing the works.

The risk with an insolvency scenario, of course, is that the parent company may also go under. Performance bonds, backed by commercial bondsmen such as banks or insurers, are therefore more reliable but getting the wording right is essential to ensure that they can be called in.

Ultimately, the reason why financiers and investors get involved in property development is that the rewards can be significant, but high yields are always balanced by high risk, and it is not possible to prevent insolvency from affecting any project completely — all that can be done is to take all steps possible, and keep a close eye on the build.