Survey on Cost Management in the Construction Industry: Approximately 70% See Profit Margin Decline Due to Soaring Material Prices, Less Than 10% Able to Pass on Costs
A survey by IPIA Co., Ltd. reveals that approximately 70% of construction companies have experienced a decline in profit margins due to soaring material prices, with less than 10% successfully passing on these costs. The findings highlight the urgent need for real-time cost management.
📋 Article Processing Timeline
- 📰 Published: May 11, 2026 at 19:00
- 🔍 Collected: May 11, 2026 at 10:31
- 🤖 AI Analyzed: May 12, 2026 at 04:58 (18h 26m after Collected)
IPIA Co., Ltd. (Headquarters: Kobe City, Hyogo Prefecture; Representative Director: Teruaki Mori; hereinafter "IPIA") conducted a "Survey on Soaring Construction Material Prices and Cost Management" targeting individuals engaged in the architecture and construction industry.
Currently, the construction industry is facing continuous pressure on its management due to rising labor costs associated with the "2024 Problem" and intermittent increases in material prices.
This survey aimed to clarify the actual situation and challenges regarding cost management and profit assurance under these circumstances.
**Key Points of This Survey**
This survey revealed the following trends regarding the actual state of cost management and profit assurance in the construction industry:
* Approximately 70% of companies experienced a 10% or more increase in construction material prices in the past year.
* Approximately 70% of companies saw a decrease in profit margins per completed project due to soaring material prices.
* Less than 10% of companies were able to sufficiently pass on the increase in material prices.
* Cost management primarily focuses on monthly closing and post-completion checks, with real-time grasp remaining at around 20%.
* Challenges exist in establishing management systems, such as visualizing costs and profits and sharing the latest unit prices.
* Strong vigilance against further material price hikes and labor cost increases in the future.
* Approximately 70% of companies responded that real-time management through IT utilization is necessary to secure profits.
**Detailed Survey Results**
**Approximately 70% experienced a "10% or more price increase," indicating widespread impact of soaring construction material prices.**
Regarding the procurement prices of construction materials in the past year, "increased by less than 10% to 20% (39.5%)" was the most common response, followed by "increased by 20% or more (32.0%)", with approximately 70% (71.5%) of companies experiencing a price increase of 10% or more. On the other hand, companies that responded "unchanged (12.5%)" or "decreased (0.8%)" remained a minority.
**[Analysis]**
The increase in construction material prices is not localized but widespread across the entire industry. Given that an increase of 10% or more has become the norm, the situation cannot be handled with conventional cost assumptions.
In such an environment, a system that can quickly reflect fluctuations in procurement prices into costs is required. If the management system cannot keep up, there is a risk of decreased estimation accuracy and pressure on profits.
**Approximately 70% experienced a decline in profit margins, with soaring material prices squeezing profits per completed project.**
Regarding changes in "profit margins per completed project" due to soaring material prices, "slightly decreased (less than 1% to 5% decrease) (48.9%)" was the most common, followed by "significantly decreased (5% or more decrease) (19.2%)". Companies with decreased profit margins accounted for 68.1% of the total, indicating that approximately 70% of companies experienced a deterioration in profitability. On the other hand, "unchanged from before (25.2%)" and "appropriately passed on prices, maintaining or improving profits (6.8%)" remained a minority.
**[Analysis]**
Many companies are seeing material price increases directly lead to a decline in profit margins, suggesting that the difficulty of price pass-through is an industry-wide challenge. In the construction industry, where contract prices at the time of order and procurement prices at the time of construction often differ, it is not uncommon for profits to be compressed more than expected.
Furthermore, with less than 10% of companies maintaining or improving profit margins, it can be said that companies capable of securing appropriate prices during periods of rising costs are still limited.
**Approximately 40% unable to sufficiently pass on costs, facing challenges in securing profits.**
Regarding whether the increase in material prices could be appropriately reflected in the estimated prices for clients (owners), "partially reflected (53.7%)" was the most common, followed by "hardly reflected (32.5%)". "Fully reflected (9.5%)" remained below 10%, indicating that approximately 40% (36.8%) of companies were unable to sufficiently pass on prices.
Additionally, there was a response of "cannot reflect at all due to competition with other companies (4.3%)", revealing the reality that intense competition for orders affects pricing.
**[Analysis]**
Many companies are absorbing cost increases themselves, as they are unable to sufficiently reflect material price increases in their estimated prices. This is particularly true in the construction industry, where competitive bidding often leads to price comparisons, making it difficult to present appropriate prices due to competition.
As a result, there is a risk of falling into a structure where orders can be secured, but little profit remains.
**Approximately 40% grasp discrepancies monthly, with real-time management remaining at around 20%.**
Regarding the timing of grasping discrepancies between the "execution budget" and "actual payments (results)" for each project, "monthly closing (37.3%)" was the most common, followed by "after project completion (24.0%)", and "each time a payment occurs (real-time) (23.7%)". Companies capable of grasping discrepancies in real-time remained at around 20%, indicating that many companies confirm them monthly or after project completion.
There was also a response of "not grasping at all (15.1%)", suggesting that discrepancy management itself is a challenge.
Currently, the construction industry is facing continuous pressure on its management due to rising labor costs associated with the "2024 Problem" and intermittent increases in material prices.
This survey aimed to clarify the actual situation and challenges regarding cost management and profit assurance under these circumstances.
**Key Points of This Survey**
This survey revealed the following trends regarding the actual state of cost management and profit assurance in the construction industry:
* Approximately 70% of companies experienced a 10% or more increase in construction material prices in the past year.
* Approximately 70% of companies saw a decrease in profit margins per completed project due to soaring material prices.
* Less than 10% of companies were able to sufficiently pass on the increase in material prices.
* Cost management primarily focuses on monthly closing and post-completion checks, with real-time grasp remaining at around 20%.
* Challenges exist in establishing management systems, such as visualizing costs and profits and sharing the latest unit prices.
* Strong vigilance against further material price hikes and labor cost increases in the future.
* Approximately 70% of companies responded that real-time management through IT utilization is necessary to secure profits.
**Detailed Survey Results**
**Approximately 70% experienced a "10% or more price increase," indicating widespread impact of soaring construction material prices.**
Regarding the procurement prices of construction materials in the past year, "increased by less than 10% to 20% (39.5%)" was the most common response, followed by "increased by 20% or more (32.0%)", with approximately 70% (71.5%) of companies experiencing a price increase of 10% or more. On the other hand, companies that responded "unchanged (12.5%)" or "decreased (0.8%)" remained a minority.
**[Analysis]**
The increase in construction material prices is not localized but widespread across the entire industry. Given that an increase of 10% or more has become the norm, the situation cannot be handled with conventional cost assumptions.
In such an environment, a system that can quickly reflect fluctuations in procurement prices into costs is required. If the management system cannot keep up, there is a risk of decreased estimation accuracy and pressure on profits.
**Approximately 70% experienced a decline in profit margins, with soaring material prices squeezing profits per completed project.**
Regarding changes in "profit margins per completed project" due to soaring material prices, "slightly decreased (less than 1% to 5% decrease) (48.9%)" was the most common, followed by "significantly decreased (5% or more decrease) (19.2%)". Companies with decreased profit margins accounted for 68.1% of the total, indicating that approximately 70% of companies experienced a deterioration in profitability. On the other hand, "unchanged from before (25.2%)" and "appropriately passed on prices, maintaining or improving profits (6.8%)" remained a minority.
**[Analysis]**
Many companies are seeing material price increases directly lead to a decline in profit margins, suggesting that the difficulty of price pass-through is an industry-wide challenge. In the construction industry, where contract prices at the time of order and procurement prices at the time of construction often differ, it is not uncommon for profits to be compressed more than expected.
Furthermore, with less than 10% of companies maintaining or improving profit margins, it can be said that companies capable of securing appropriate prices during periods of rising costs are still limited.
**Approximately 40% unable to sufficiently pass on costs, facing challenges in securing profits.**
Regarding whether the increase in material prices could be appropriately reflected in the estimated prices for clients (owners), "partially reflected (53.7%)" was the most common, followed by "hardly reflected (32.5%)". "Fully reflected (9.5%)" remained below 10%, indicating that approximately 40% (36.8%) of companies were unable to sufficiently pass on prices.
Additionally, there was a response of "cannot reflect at all due to competition with other companies (4.3%)", revealing the reality that intense competition for orders affects pricing.
**[Analysis]**
Many companies are absorbing cost increases themselves, as they are unable to sufficiently reflect material price increases in their estimated prices. This is particularly true in the construction industry, where competitive bidding often leads to price comparisons, making it difficult to present appropriate prices due to competition.
As a result, there is a risk of falling into a structure where orders can be secured, but little profit remains.
**Approximately 40% grasp discrepancies monthly, with real-time management remaining at around 20%.**
Regarding the timing of grasping discrepancies between the "execution budget" and "actual payments (results)" for each project, "monthly closing (37.3%)" was the most common, followed by "after project completion (24.0%)", and "each time a payment occurs (real-time) (23.7%)". Companies capable of grasping discrepancies in real-time remained at around 20%, indicating that many companies confirm them monthly or after project completion.
There was also a response of "not grasping at all (15.1%)", suggesting that discrepancy management itself is a challenge.