Administrators from Deloitte said that they intend to continue to trade two of the three main contracts within the group while a deal is negotiated to transfer them to anther contractor. This would save 990 jobs, the administrators said.
The group turned over £117m in the year to October 2011, down from £136m the previous year.
Joint administrator Bill Dawson said: "We are in discussions with the key stakeholders and interested parties of the group in an attempt to sell all or parts of the businesses and we will be briefing the employees about the situation."
According to local newspaper reports, 150 jobs have alreayd been saved after Enterprise Utility Services took over a Welsh Water maintenance contract.
Daniel Contractors was founded in 1994 by brothers George and Conal Daniel. They acquired the business and assets of Land & Marine Engineering 10 years later from Smit International.