The Fuel Crisis Isn't the Problem. It's a Mirror.
Rising fuel and material costs are exposing a deeper weakness in the Australian construction industry: poor construction supply chain visibility. When builders, trades and suppliers do not share project status, forward workload, and cost pressure early, short-term price shocks quickly become delays, disputes, and insolvencies.
A recent headline on news.com.au read: “Never seen anything like it: Tens of thousands of homes at risk as building costs soar.”
Rob Pelligra from NSW Cement, with 30 years in the industry, said it. And he’s right, in the narrowest sense. The Iran war fuel crisis has moved fast. Diesel is up 36 per cent in two weeks. Petrol is up 30 per cent. Reece Group has notified customers of price increases of up to 36 per cent on HDPE pipe, 31 per cent on stormwater drainage products, and 28.5 per cent on PVC from April 18. Cement is up 15 per cent on imports, 10 per cent on local manufacturing, with trucking adding another 12 to 15 per cent on top. CreditorWatch is already warning of another wave of insolvencies across construction, road freight, and every sector in between.
The numbers are serious. But what I keep coming back to isn’t the numbers. It’s how exposed the industry is when they arrive.
We’ve Been Here Before
Construction costs were already rising at 7 per cent annually before this crisis, nearly double the general inflation rate. The industry’s insolvency rate sits at 5.8 per cent, above the national average, and construction ranks second across all industries for payment defaults. That’s not a crisis statistic. That’s the baseline.
We came out of Covid with a 30.8 per cent increase in build costs. Timber up 40 per cent. Steel up 42 per cent. Hundreds of builders collapsed. And the post-mortems focused heavily on fixed-price contracts, the argument being that locking in a price before conditions shifted left builders exposed.
But I don’t think fixed-price contracts are the real problem. Plenty of industries operate on fixed-price contracts and survive cost shocks. What makes construction different isn’t the contract structure. It’s what doesn’t flow through the supply chain alongside it: information.
The Industry Keeps Its Cards Face Down
Construction has a deeply combative information culture. Builders don’t share weekly project updates with their trades and suppliers. Trades don’t share forward workload visibility with the subbies below them. Suppliers quote into a void, with no reliable sight of when a project actually starts, how it’s tracking, or whether it’s proceeding at all.
Everyone holds information close because information feels like leverage. If a supplier knows you’re three weeks behind schedule, maybe they deprioritise your order. If a builder knows a supplier is struggling for volume, maybe they squeeze the price. So the default position, at every level of the chain, is to share as little as possible and manage relationships transactionally.
The result is a supply chain that cannot forecast. At all.
When Reece Group announces price increases on April 18, they’re not doing it vindictively. They’re reacting to input cost changes that arrived without warning, across a pipeline of customer projects they have almost no visibility into. When a concretor puts fuel levies on an invoice, it’s because they’ve been absorbing rising costs for weeks with no mechanism to flag the pressure earlier. When force majeure clauses get invoked, it’s often the final act in a slow deterioration that nobody in the chain could see coming, because nobody was sharing the signals that would have made it visible.
Fixed-price contracts didn’t cause that. The absence of shared information did.
What Builders Are Dealing With
For builders, the pressure right now isn’t uniform. Where you sit in the construction cycle matters enormously.
Projects already under contract with fixed pricing are absorbing cost increases that weren’t in anyone’s budget three weeks ago. Concrete, pipe, civil works, anything moving on the back of a truck, the cost inputs have shifted materially and they’re still moving. Metricon’s Brad Duggan told news.com.au the business is largely insulated for now due to its 12-month fixed price arrangements, and that it’s considering extending credit terms to smaller trades to keep supply chains liquid. That’s a responsible position from a business with the balance sheet to hold it. Most builders don’t have that buffer.
The more vulnerable position is anything approved but not yet contracted. Master Builders NSW estimates around 50,000 building approvals in NSW alone are sitting in that window. The cost of delivering those projects has shifted under them. Some won’t proceed.
But here’s the thing: the trades and suppliers already in those pipelines have no idea which projects are proceeding and which aren’t. They’re holding capacity, ordering materials, and planning labour against jobs that may never start, or may start six months later than anyone indicated. They can’t make good decisions because they’re not getting the information they’d need to make them. And builders aren’t sharing it, not because they’re malicious, but because that’s just not how the industry operates.
That’s the problem. Not the contract. The silence around it.
What Suppliers Are Dealing With
For suppliers, the dynamic is different and in some ways more difficult.
You’re being squeezed from both ends. Input costs are up, fuel levies are up, freight costs are up on everything you move. At the same time, customers are pushing back, shopping around, or putting projects on hold. The big players are taking losses to keep volume, undercutting smaller independents who don’t have the margin to match them.
Reece Group’s decision to notify customers of April 18 price increases is operationally the right call. Give the market as much notice as possible, be transparent about what’s changing and when, and let builders plan accordingly. The suppliers managing this best right now are the ones with direct, active lines of communication to their builder customers.
But even the best-managed suppliers are navigating without a map. They don’t know which of their builder customers’ projects are on track, which are delayed, which are at risk of going on hold, or which builders are financially stable enough to keep moving. That information exists. It sits in builder scheduling tools, site supervisors’ heads, and project management software that nobody thinks to share downstream. The result is suppliers holding stock for projects that aren’t moving, and running short on projects that are. Poor service outcomes that look like supplier failure, but are actually an information failure.
Pipeline uncertainty is expensive in a normal market. In this one, it can be the difference between weathering the crisis and becoming another insolvency statistic.
What This Actually Calls For
CreditorWatch economist Ivan Colhoun identified the one potential upside: the government understands construction’s strategic importance and may intervene. Fuel tax relief for heavy vehicles, expedited payments on government projects, eased ATO recovery activity, some of that will come through.
But government support is a cushion, not a solution. The industry’s structural exposure to cost shocks isn’t fixed by policy relief.
The deeper fix is cultural as much as operational: the industry needs to move away from treating information as leverage and toward treating it as infrastructure. That means builders sharing project status updates with their key trades and suppliers on a regular cadence, not as a favour, but as standard operating practice. It means trades communicating forward workload so suppliers can plan. It means the supply chain having enough shared visibility to absorb shocks without everyone operating in the dark simultaneously.
When project updates flow weekly, suppliers can see that a job is running three weeks behind before they’ve over-ordered. Trades can flag cost pressure before it becomes a dispute. Builders can identify where their pipeline is at risk before a subcontractor walks off site. The information exists at every level. The habit of sharing it doesn’t.
The builders and suppliers who came through Covid with their businesses intact were, more often than not, operating with tighter, more connected relationships across their supply chains. Not just better contracts. Better communication. Consistent engagement rather than transactional quoting, and enough shared visibility to act on early signals rather than react to late ones.
That kind of relationship is harder to build under pressure than before it. But the current crisis is a clear signal that the industry’s default posture, hold information close, manage the chain at arm’s length, and hope conditions stay stable, carries a risk that is now very visible.
The government will do what it can. Suppliers will adjust. Builders will find a way through. They always do. But if the lesson from this is only about fuel prices, and not about the information habits that leave every level of the supply chain flying blind when conditions shift, then the next shock will find the same vulnerabilities waiting.
Thirty years in the industry and Rob Pelligra has never seen anything like it. With respect, neither have most of us. But the vulnerabilities this crisis is exposing, we’ve seen those before. The combative, closed-off culture that makes them worse? We built that ourselves.
Now would be a good time to try something different.