Despite optimistic reports from authorities, Sri Lanka’s construction sector has yet to fully recover from the 2022 crisis, according to an industry expert. The sector experienced a contraction of 20.8 percent in 2023 following a 20 percent collapse in 2022, which was driven by an economic crisis and sharp currency depreciation that increased construction costs for customers.
In 2024, the sector expanded by 19.4 percent as the economy began to recover from its previous contraction. Additionally, the first nine months of 2025 showed a 10.5 percent increase in the construction sector.
Romali Tudawe, CEO of Tudawe Brothers (Pvt) Ltd., attributed the discrepancy between official data and the actual situation to construction companies offering prices significantly lower than the Engineer’s Estimates provided by the government. “The Engineer’s Estimate, particularly in government procurement, is the government’s professional assessment of a fair and reasonable construction cost based on market rates,” Tudawe explained at a forum in Colombo last week.
She noted that before the economic crisis, even the lowest bidders for most government construction projects were submitting bids at least 10 percent above the Engineer’s Estimate. However, the situation has since reversed. The reduction in pricing is largely due to a scarcity of contracts available to the construction industry post-crisis.
“We observed growing desperation as more procurement opportunities emerged, yet companies struggled to secure these projects,” Tudawe stated. She added that by August 2025, some contractors had lowered their bids to as much as 50 percent below the Engineer’s Estimate.
“This deviation is gradually decreasing,” Tudawe remarked. “What you’re witnessing is desperation and survival pricing. They are currently building at 35 to 40 percent below the Engineer’s Estimate, which is unsustainable. It’s a very challenging balance to maintain.” (Colombo/February 12/2026)
