There's a hard truth sitting behind the headlines about construction insolvencies in Australia right now: many of the businesses that have gone under didn't fail because they were bad builders. They failed because the number they signed up to deliver a job for turned out to be wrong.
That's a sobering thought for anyone who prices work for a living. And in the current market, the margin for error has never been thinner.
The numbers behind the pressure
Construction remains the highest-risk sector for insolvency in Australia, and the causes are well documented. In the 12 months to March 2025, 2,636 construction companies became insolvent for the first time, a 23% increase from the year prior.
The root cause keeps coming back to the same place. Fixed-price contracts signed during 2020-22 locked in prices that were obliterated by subsequent cost escalation, with construction costs rising by 40% over the past five years. To put that in real terms, a builder who signed a $450,000 fixed-price contract in 2021 might have needed $630,000 to actually deliver the build. That gap is what drove so many failures.
And the pressure hasn't gone away. RLB forecasts construction cost growth in 2026 of 4.0 per cent in Sydney and Melbourne, 5.0 per cent in Brisbane, and up to 6.0 per cent in Townsville. Costs are still climbing, just at a different pace in different places.
Why this makes estimating a frontline defence
When margins are healthy, a small estimating error gets absorbed. When margins are as thin as they are now, that same error can be the difference between a profitable job and one that quietly sinks the business.
The industry has started adapting on the contract side. Some principals are accepting rise and fall clauses on new contracts, some contractors are refusing to price without escalation allowances, and some government agencies are engaging on cost sharing. These are sensible shifts. But contract clauses only protect you if your underlying estimate was accurate in the first place.
The reality is that good estimating in 2026 isn't about padding numbers to be safe. Estimating best practice is about turning cost drivers into clear allowances, not padding numbers, with the focus on understanding where risk sits, when to lock pricing, and how procurement challenges affect timing and margins. Over-padding loses you the job. Under-pricing loses you the business. The skill is precision.
Where estimators are getting caught out
A few specific pressure points are worth calling out for anyone pricing work right now:
Volatile packages. Not everything is moving at the same rate. Projects exposed to electrical, freight-intensive or energy-linked inputs face escalation risk, while some material categories remain relatively stable. A flat project-wide escalation percentage misses this entirely — the risk needs to be priced package by package.
Labour and productivity. Labour cost isn't just about the hourly rate. If output per hour drops through rework or poor sequencing, the labour bill climbs even when rates look steady. Trade shortages are also giving surviving subcontractors stronger pricing power, which flows straight into tender prices.
Preliminaries. The cost of running the site - supervision, setup, scaffolding, program duration - rises whenever a job takes longer. With build times having stretched significantly, prelims are a growing and often underestimated line.
The case for tighter estimating systems
Here's where the tools you estimate with genuinely matter. When every percentage point counts, the way you build, check and revise your estimates stops being an admin detail and becomes a commercial safeguard.
Consider what actually protects a builder in this environment:
Being able to price escalation and risk at the package or trade level rather than applying a single blunt percentage across the whole job. Being able to update an estimate quickly when a supplier rate changes, and see the impact roll through instantly rather than manually rebuilding a spreadsheet. Being able to compare a revised estimate against the original and see exactly what moved, so nothing slips through before a price goes out the door. And being able to produce a clear, professional quote that reflects your real costs, not a reformatted spreadsheet with a margin bolted on at the end.
None of that is exotic. But it's very hard to do reliably in a spreadsheet built years ago and patched together job by job — which is exactly where a lot of estimating still happens.
The takeaway
The construction market in 2026 is unforgiving of estimating errors in a way it simply wasn't a decade ago. Costs are still rising, margins are still thin, and the businesses that survive will be the ones that price work accurately and can respond quickly when conditions shift.
That starts with taking estimating seriously — treating it as the commercial frontline it has become, and giving it the tools it deserves.
Dindo is a cloud-based estimating and takeoff platform built for builders and quantity surveyors — bringing takeoff, pricing and reporting into one connected workflow so your estimates stay accurate and easy to update as conditions change.
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