Thailand’s construction industry continues to expand despite facing high costs and liquidity challenges. In 2024, the industry’s total value is projected to grow by 2% year-on-year, reaching USD 38.30 billion. This steady growth highlights the sector’s resilience even as builders face pressure from material prices, labor shortages, and financing hurdles. So, how does Thailand Construction Cost Management affect the industry? Let’s take a closer look!
Industry Outlook: Growth Amid Pressure
Public construction remains a key driver, expected to grow by 2% YoY to USD 22.15 billion, mainly supported by mega transportation projects. At the same time, private construction is projected to rise 3% YoY to USD 16.34 billion, powered by new residential, commercial, and industrial projects.
This combined growth shows confidence in Thailand’s long-term development. But behind the optimism, companies are battling tighter margins, delayed payments, and higher operational costs.
Key Factors Behind Rising Construction Costs
Several factors are pushing up construction costs across Thailand.
Imported Materials:
Construction materials are becoming more expensive due to global supply chain disruptions and local shortages. Thailand relies heavily on imported machinery, which increases exposure to currency fluctuations and logistics costs.In 2023, data from the Ministry of Commerce showed that 46% of imported construction machinery came from China, 22% from Japan, and 3.4% from the U.S. This dependence makes prices sensitive to global market changes.
Labor Shortages:
Skilled labor remains limited, especially in large urban projects. Contractors are being forced to increase wages or adopt more automation and machinery to offset workforce shortages. This shift helps maintain productivity but requires upfront investment in equipment and training.Liquidity Risks:
Many firms struggle with cash flow as project payments are often delayed. Thailand Construction Cost Management involves managing working capital and ensuring timely project completion, which are now crucial for financial stability.
Read Also: Can We Fix Construction Financing Challenges in Southeast Asia?
Strategies for Effective Thailand Construction Cost Management
Contractors across Thailand are adapting with practical and forward-thinking strategies.
Performance Improvement Programs:
Companies are tightening operations through better planning, productivity tracking, and technology adoption. The goal is to reduce waste and shorten project timelines.
Read Also: Digital Urban Planning Tools Drive Projects Transformation Across Southeast Asia
Cooperative Bidding:
Instead of undercutting competitors, some contractors are using collaborative bidding to share risk, improve pricing efficiency, and ensure fair margins. This helps prevent price wars that can lead to financial strain.Financial Liquidity Management:
Balancing public and private sector contracts helps stabilize cash flow. By completing projects on time, firms can secure timely fund disbursement and reinvest quickly into new work.Technology and Sustainability:
A growing number of companies are investing in eco-friendly materials and construction technology to reduce CO₂ emissions. This shift not only supports Thailand’s environmental goals but also lowers long-term operating costs. Monitoring greenhouse gas emissions has become part of strategic cost management, aligning profit with sustainability.
Thailand Construction Cost Management: Looking Ahead
Despite global uncertainties, Thailand’s construction sector shows strength through innovation and adaptability. The industry’s gradual shift toward technology, cooperation, and sustainability is setting a new standard for competitiveness.
By managing imported material costs, addressing labor shortages with automation, and improving financial discipline, the sector can continue to grow steadily while protecting profitability.
For businesses seeking expert guidance on Thailand Construction Cost Management, Eurogroup Consulting offers global consulting experience tailored to local challenges. Contact EGC to explore customized strategies that help your projects succeed even in complex market conditions.
