WT has partnered with The Urban Developer on The Construction Cost Crunch, a new white paper examining how developers are responding to rising costs, labour constraints and an increasingly challenging delivery environment.
Construction costs remain the leading pressure on project feasibility, but new industry research suggests the challenge facing developers extends well beyond escalation alone.
The Construction Cost Crunch, produced by The Urban Developer in partnership with WT, draws on the construction cost responses from its 2026 Industry Sentiment Survey.
The findings reveal an industry preparing for continued pressure:
- 92% expect construction costs to rise over the next 12 months
- 73% expect builder insolvencies to worsen
- 73% expect contractor and subcontractor capacity to deteriorate
- 59% expect the tendering environment to become more difficult
Labour has also overtaken materials as the leading cost pressure, reflecting the industry’s continuing challenges around workforce availability, productivity and specialist trade capacity.
Creating certainty in a challenging market
WT National Director James Ford contributed practical market insights to the research, examining what current conditions mean for feasibility, procurement and project delivery.
While material cost pressures have become more predictable in many areas, labour escalation remains elevated and contractors are becoming increasingly selective. For developers, that can result in longer lead times, thinner tender fields and greater program uncertainty.
According to James Ford, the developers continuing to progress are creating greater certainty from the outset.
“They stress-test assumptions early, quantify project-specific risks upfront, and adapt their pricing and procurement to current conditions rather than waiting for the market to improve.”
This means engaging the market early, developing realistic programs, resolving documentation and allocating risk to the parties best placed to manage it. There is no single procurement model or contingency allowance that will suit every project. The response must reflect the project, market and risks involved.
From cost escalation to delivery confidence
The research reinforces a broader shift in the market. While escalation remains an important consideration, the deeper question for developers is whether a project can be delivered with confidence.
Many of the pressures facing the industry are structural rather than short-term. Addressing them will require investment in workforce capability, prefabrication, digital engineering, industrialised construction and more productive delivery models across the construction value chain.
Viable opportunities continue to move forward across Australia. The projects best placed to succeed will be those where uncertainty is identified early, appropriately allowed for and actively managed.