Only 34% of Construction Companies 'Always' Able to Revise Contracts Amid Material Cost Surges, Even After Full Enforcement of Revised Construction Business Act

The revised Construction Business Act, fully enforced after its amendment in December 2025, includes significant changes to business practices in the construction industry. These changes include the prohibition of contracts with remarkably low labor costs or below-cost prices, strengthened measures against work-period dumping, and clarification of rules for contract changes during surges in material prices. However, while the system is being established, many point out that responses in on-the-ground practice have been inconsistent.

To understand this situation, the Construction Industry Research Institute of Japan Consultant Group, Inc. (Shinjuku-ku, Tokyo) conducted a questionnaire survey on the 'Status of Response to the Revised Construction Business Act' targeting construction contractors nationwide.

■ Survey Overview

Survey Name: Questionnaire Survey on the Status of Response to the Revised Construction Business Act Survey Target: 1,300 construction companies nationwide (randomly selected) Number of Respondents: 95 companies (Response rate: 7.3%) Survey Period: February 9, 2026 – March 6, 2026 Survey Method: Mail (Collection: Mail, FAX, Email, Web)

■ Survey Result ①: Only 34% 'Always' Able to Revise Contracts During Material Surges

The revised Construction Business Act requires that the 'method of change' for contract prices, etc., during material price surges be clearly stated in the contract, and that parties negotiate price changes in good faith.

However, when material prices soared, only **34%** of companies responded that they **'always conduct contract change negotiations with the client and sign a revised contract with the reflected amount.'**

On the other hand:

'Able to change about half the time': 30% 'Almost always perform work at the original contract amount': 27%

This reveals that a **gap still exists between the law and actual practice.**

■ Survey Result ②: 24% Experienced Below-Cost Contracts 'Occasionally'

-- A once-common practice now carries legal violation risks.

When asked about the situation with below-cost contracts before the law's enforcement:

'Almost never / Never happened': 74% **'Happened occasionally': 24%**

Factors contributing to below-cost contracts included competition with other companies, rising material and labor costs, and relationships with clients/ordering parties.

The revised Construction Business Act prohibits below-cost contracts not only for the ordering party but also for the contractor. This means that transactions previously conducted as a matter of custom now carry **significant compliance risks.**

■ Survey Result ③: About 60% Received Labor Cost Review Requests from Subcontractors

-- The structure of prime contractors being 'caught in the middle' becomes clear.

Regarding the response from subcontractors, **about 60% of companies reported 'receiving a request from a subcontractor to review labor unit prices.'**

Meanwhile, in many cases, passing these costs on to the client has not been sufficient, suggesting that prime contractors are adjusting by cutting into their own gross profit.

The data shows a clear picture of **prime contractors being caught between the supply side and the client side**, facing rising labor and material costs while finding it difficult to revise contracts.

■ Structural Issues Indicated by the Survey Results

This survey revealed that while the intent of the revised Construction Business Act is becoming recognized within the industry, its **establishment in practice is not yet sufficient.**

Particularly concerning contract changes during material surges, although the law requires good-faith negotiations, a certain number of companies are unable to execute them due to power dynamics with clients and traditional business practices.

To achieve the original purpose of the revised Construction Business Act, it is essential to:

- Clarify estimation and contract rules based on the law. - Establish internal systems to 'ensure' contract change negotiations take place. - Implement organizational operation and management that does not rely on individuals.

Moving forward, a **polarization between companies that can adapt and those that cannot** is likely to proceed.

■ About the Full Survey Report

The full survey report (20 pages) includes detailed aggregate results and analysis on:

- Specific response situations regarding standard labor costs. - The actual state of response to using estimate sheets that detail material costs, etc. - The situation and background of work-period dumping.

▶ **Click here for the full survey report (PDF)** [Link to the report]

### ■ Company Profile

**Japan Consultant Group, Inc. Construction Industry Research Institute** Location: 3-22-15 Shimo-Ochiai, Shinjuku-ku, Tokyo Business: Management support, business process improvement support, human resource development/education for the construction industry, etc. TEL: 03-3950-1178 Mail: [email protected]

Keywords: Construction Industry, Construction Business Act, Revised Construction Business Act, Below-cost contract, Material cost surge, Standard labor cost, Subcontractor, Work-period dumping, Design labor unit price, Prime contractor