The future of a number of building projects in Devon and Cornwall is under question following the collapse of the Exeter-based firm Rok.
There are now fears some sub-contractors employing people in the South West could go out of business.
The building services company, which employs about 4,000 people around the UK, went into administration on Monday.
Administrators are trying to find a buyer but said job losses would probably be in the hundreds.
Ian Rankin, a site manager for Rok, said workers were demoralised.
"It's come as a massive great shock to me and this site," he said.
Rob Lewis, one of Rok's administrators from Price Waterhouse Coopers, said building projects would be mothballed while discussions regarding the sale of the company were ongoing.
Work to build 30 affordable homes in Paignton has already come to a halt.
Jill Gregg, from the Westward Housing Group, said: "There will be a delay but we will provide those homes."
Rok is currently contracted to build 200 affordable homes across Devon and Cornwall and do repair, refurbishment and maintenance work to hundreds of other houses.
Devon County Council also has a number of building contracts with Rok, including the Pinbrook Recycling Centre in Exeter.
The leader of the council, Councillor John Hart, said: "We are extremely sad to hear news that Rok, which has long-established local connections with the West Country, has announced that it is to place itself into administration, and we are obviously concerned about this impact on the Devon economy."
Trelawney Landscaping, which is based near Bodmin in Cornwall, is owed about £80,000 by Rok and had future contracts worth between £300,000 and £400,000 with the company.
Director John Vokes said Rok's collapse had had a "devastating" effect.
"We've had to lay off our staff... obviously there's no work for the men to do.
"We had 65% of our work come from Rok... my main concern at the moment is to keep the company going."
He said he thought the company, which employs local staff, would be able to keep operating until Christmas.