Norman List founded his Manassas excavating firm in 1971 with a single piece of equipment.

He built it into a company with 40 employees, 46 pieces of equipment and more than $4 million in annual sales. Bidding on several contracts a year, he won enough of them to sustain almost 20 years of growth.

Then came the downturn last spring of the real estate market. Having ridden the Washington area's building boom to steady growth, List Excavating now has seen the downward slope.

The company was among more than 44 area firms in construction and related industries that filed for protection under Chapter 11 of the bankruptcy code in the second quarter, fueling a 61 percent increase in such filings over the same period last year.

In the second quarter, 47 corporations and partnerships filed for Chapter 7 liquidations in local bankruptcy courts. Of these, 18 were in some way related to construction or real estate.

Under Chapter 11 of the bankruptcy code, a company is protected from claims by creditors while it tries to reorganize its finances under a court-approved plan. In a Chapter 7 liquidation, a court trustee sells assets to pay creditors' claims. The company then ceases operations.

"From what I understand, people can't get their construction loans -- money's so tight," List said. "It's like someone cut off a switch."

List lost some customers, and some of those he kept repeatedly postponed projects, disrupting his work schedules and idling equipment. Three months ago, List made his own cutbacks. He laid off half his work force and made his filing with the Alexandria Division of the U.S. Bankruptcy Court.

"We're struggling now with a few jobs. We're making enough to pay taxes and insurance and make our payroll," he said. "We're going to bid on some good jobs soon, and we hope we can be out of Chapter 11 this fall."

The huge presence of construction and real estate firms among those seeking bankruptcy court protection is one more sign of the real estate market's weakness. They aren't the only ones feeling the pinch -- their suppliers and subcontractors also are being hurt.

Among the businesses filing for bankruptcy protection in the second quarter were mortgage services companies, heating and plumbing contractors, building supply firms, office furniture retailers and a window installation firm.

"It's just something that snowballs," said one excavation company manager who did not want to be identified. "One contractor gets in trouble with his bank, and then all the subcontractors beneath him begin to get in trouble."

"It filters all the way down to the small businesses that provide services to contractors," said Richard Gins, a bankruptcy attorney whose firm has seen an increase in clients asking for help with both bankruptcy cases and refinancings.

"The construction industry is showing a decline of employment and that matches up with the {bankruptcy} data," said Richard Groner of the D.C. Employment Services. He noted that in May, employment in the area construction industry fell to 142,700 from 149,500 in the same month a year before.

Area bankruptcy courts received 132 petitions for Chapter 11 reorganization in the three months ended June 30, up sharply from the 82 filed in the second quarter of 1989.

"That's a lot bigger increase than we are seeing on a national level," said Ed Flynn of the Administrative Office of the U.S. Courts.

Second-quarter Chapter 11 filings grew fastest in the Alexandria Division, rising 80.5 percent, to 65 from 36 in last year. In Rockville, Chapter 11 filings grew 23 percent, to 48 from 39, and in the District, they were up 137 percent, to 19 from eight. The biggest filing in the District came from a Washington retailing institution brought low by its competition and a series of takeovers: Garfinckel's.

Bankruptcy filings of all types in the Rockville, Alexandria and D.C. courts grew 11 percent, to 2,394 from 2,050 in the second quarter of 1989.

For the first six months of the year, there were 264 Chapter 11 filings in the three courts, a 61 percent gain from the 164 filings in the first half of 1989. Bankruptcy filings of all types rose 12 percent in the first half, to 4,371 from 3,887 in the 1989 first half.

For the local economy in general, said Maurice Whalen, a senior partner with Grant Thornton, "These figures confirm that we are in a slowdown."

For the building industry in particular, Whalen and Gins echoed List's observation that tighter bank credit policies are a major problem.

With the Federal Reserve Board's recent moves to ease the cost of credit, List and Whalen hope that credit may become more available in general, with beneficial results for the construction industry.

But no one thinks the Fed's moves will do much for companies now skirting the edge of bankruptcy. Whalen and Gins fear the filings will continue to grow or to remain at high levels.