{"id":66902,"date":"2026-09-04T08:00:52","date_gmt":"2026-09-03T23:00:52","guid":{"rendered":"https:\/\/norimen.net\/?p=66902"},"modified":"2026-09-02T20:35:29","modified_gmt":"2026-09-02T11:35:29","slug":"construction-bankruptcy-subcontractor-pricing","status":"publish","type":"post","link":"https:\/\/norimen.net\/en\/construction-bankruptcy-subcontractor-pricing\/","title":{"rendered":"Why Bankruptcies in the Construction Industry Keep Happening | A Story About Rejecting an Excessively Low Bid and How to Approach Minimum Unit Prices"},"content":{"rendered":"

Hello, everyone.<\/p>\n

This is Enta.<\/p>\n

The other day, when I went back to Kagoshima, I stopped by a job site run by an old friend of mine who works in slope stabilization.<\/p>\n

\"Supervising<\/p>\n

Back then, he and I were both site representatives working on projects for the Ministry of Land, Infrastructure, Transport and Tourism, but now he\u2019s a supervising engineer, managing the site alongside a younger representative.<\/p>\n

It really hit me that I'm at that age now, lol.<\/p>\n

It was about 22 years ago.<\/p>\n

All you fellow civil engineers and slope engineers out there\u2014go on and make something of yourselves!!!!<\/p>\n

I kind of feel a little left out, lol.<\/p>\n

\n

But that's beside the point.<\/p>\n

In this post, I\u2019ll be discussing bankruptcies in the construction industry and unit prices for subcontractors. I\u2019ll be sharing my personal experiences while also incorporating some figures.<\/p>\n

Large companies are growing, while small and medium-sized companies are going out of business one after another.<\/h2>\n

Teikoku Databank: Trends in Bankruptcies, Suspensions, Closures, and Dissolutions in the Construction Industry (First Half of 2026)<\/a>According to [source],<\/p>\n

There were 1,043 bankruptcies in the construction industry in the first half of 2026 (January\u2013June)<\/strong>This represents a 5.8% increase compared to the same period last year. Furthermore, 4,894 cases of business closures, suspensions, or dissolutions were identified during the same period, marking a 27.8% increase compared to the same period last year.<\/p>\n

The total number of \"withdrawals\"\u2014which includes bankruptcies, suspensions of business operations, and dissolutions\u2014reached 5,937, surpassing the 5,811 recorded in the first half of 2009, immediately following the Lehman Shock, and marking a record high for the first half of the year.<\/p>\n

The survey noted that, in addition to soaring prices for construction materials and labor costs, while major general contractors and homebuilders receive priority supply of materials, small and medium-sized construction firms and small-scale contractors have reported that \u201cmaterials aren\u2019t even reaching us in the first place.\u201d The analysis suggests that this situation stems from the business disparity between the so-called \u201chaves\u201d and \u201chave-nots.\u201d<\/p>\n

Looking at these figures, I realized once again that my gut feeling\u2014that \u201cbig companies keep growing while small and medium-sized businesses keep going out of business\u201d\u2014wasn\u2019t entirely wrong after all.<\/p>\n

\"Graph<\/p>\n

The Story of How I Received a Quote for a Limit Order<\/h2>\n

The other day, I received a request from a client on-site asking, \u201cPlease do this for this amount\u201d\u2014what\u2019s commonly known as a fixed-price quote. While I appreciate the offer, I had to decline.<\/p>\n

The reason is simple: it was too cheap.<\/p>\n

With the machinery included, six of us go, and it comes to just under 4.5 million per month. At this rate, we can\u2019t even cover the company\u2019s expenses.<\/p>\n

There was a time when people used to say, \u201cFor a slope construction crew, making 4 million yen or more (including expenses) with a team of five would be more than enough.\u201d<\/p>\n

This happened 10 to 20 years ago. To be honest, I was totally shocked that a major company would just release it at today's prices lol.<\/p>\n

 <\/p>\n

The other day, I sent my rock drill in for repairs and was stunned when I received a bill for nearly two-thirds of what I\u2019d paid for it.<\/p>\n

Even just looking at maintenance costs, I feel like they\u2019ve gone up by about 20 percent over the past three years.<\/p>\n

Prices keep going up, but the asking price hasn't changed since way back when.<\/p>\n

And that includes the equipment. This is just too much to ask.<\/p>\n

I want you to have the courage to say no.<\/p>\n

Subcontractors, in particular, tend to push themselves to take on the work, figuring, \u201cWell, it\u2019s better than sitting around doing nothing\u2026\u201d<\/p>\n

\"I<\/p>\n

The Psychology of Buying Something Even When You Know It's Cheap<\/h2>\n

This is where it gets really difficult.<\/p>\n

If you\u2019re worried that \u201cif I turn down this job, I don\u2019t know when the next one will come along,\u201d you\u2019ll end up taking it even if the pay is a little lower. It\u2019s the mindset that \u201cit\u2019s better than having no work at all.\u201d<\/p>\n

However, if you take on low-paying jobs, you may end up without the capacity to take on more substantial work.<\/p>\n

After all, people, machines, and time are all finite.<\/p>\n

There was a time in my past when I used to take on work just because I was grateful to have it. However, if you keep doing that, you may find that the company\u2019s resources have been worn down before you even realize it.<\/p>\n

\"A<\/p>\n

Subcontractors, in particular, should know their own rates.<\/h2>\n

Ultimately, most businesses go bankrupt because they don't have enough money.<\/p>\n

The reason I don't have any money is that the contract price is too low.<\/p>\n

I believe the reason the contract price is so low is that we haven\u2019t thoroughly understood the unit prices and have simply accepted whatever prices the major companies or general contractors have set.<\/p>\n

That\u2019s exactly why this experience has made me realize once again how important it is for subcontractors to know their minimum unit price.<\/p>\n

Next time, I\u2019d like to use the example of lathing\u2014which is part of the preparatory work for slope construction\u2014to calculate the minimum unit price based on the total cost.<\/p>\n

Let's take a look together to see if the unit price you're charging is high or low.<\/p>\n

\"Status<\/p>\n

There are no flashy solutions to bankruptcy.<\/p>\n

Keep a close eye on your unit prices, and firmly turn down jobs that pay too little.<\/p>\n

That's all there is to it, but it's actually quite difficult.<\/p>\n

I don't think this trend will change unless we subcontractors refine our quotes further.<\/p>\n

I\u2019d like to keep thinking about ways for subcontractors to survive, even if only a little.<\/p>\n

 <\/p>\n

See you later.<\/p>\n

Public works contracts are cheap\u2014way too cheap! That\u2019s why we can\u2019t put a stop to bid-rigging and the labor shortage!<\/a><\/p><\/blockquote>\n