With fewer contracts to go around and labour costs continuing to rise, construction firms are being squeezed from both sides.
The broader effect on the economy may not be dire, with the sector accounting for only about 5 per cent of GDP. But economists expect - and firms fear - that there will be casualties within the industry.
"Construction companies are facing a double-jeopardy situation from both slumping demand and harsh foreign labour measures," said Bank of America Merrill Lynch economist Chua Hak Bin.
Construction demand last year was the lowest since 2010, with $27.2 billion in contracts awarded.
Demand this year is forecast to be between $27 billion and $34 billion.
The fall is largely due to lower private sector building demand amid a weak property market.
Private sector building demand plummeted from $18.1 billion in 2014 to $11.58 billion last year, according to preliminary estimates.
It is expected to be even lower this year, with a Building and Construction Authority (BCA) forecast of $6.8 billion to $10 billion.
With fewer contracts, competition has intensified, said Nan Guan Construction managing director Akbar Kader.
And the shortage of jobs is causing large firms to jostle with smaller ones, putting more pressure on the latter. He added: "You're seeing the bigger boys going down the value chain, tendering for smaller jobs."
On the costs side, the good news is that materials costs have fallen.
Share of GDP (nominal value added) in 2015: 5.2 per cent
Sector employment as of June 2015: 495,400 (13.7 per cent), of which 322,400 are foreign Work Permit holders
Composition of sector: The top 5 per cent of firms contribute half of the total value-add of the industry, with most of the rest being small and medium-sized companies. Many layers of sub-contracting mean that small firms' fortunes may depend on larger players.
According to BCA, ready-mixed concrete cost $97.40 per cubic m last December, down from $103.30 a year before. Steel rebars cost $402 per tonne, down from $612.50. Copper and aluminium prices hit six-year lows at the end of last year.
But this creates risks of its own, pointed out Singapore Contractors Association president Kenneth Loo.
Firms might tender at a lower price now as materials prices are down, he noted. "But when you execute it later, if the prices rise, you'll be caught out."
Equipment costs are also down, with crane rental rates falling. The real pressure is labour costs, said bosses: not just wages, but also foreign worker levies and dorm rents.
The levy for basic skilled R2 workers is set to rise from $550 to $650 on July 1, and to $700 next year.
All this is bad news for firms - and more have been calling it quits.
In 2014, 51 firms filed petitions for compulsory liquidation, up from 27 the year before. A further 36 firms were wound up, up from 13 in 2013. The figures for both petitions filed and firms wound up were the highest in the past decade, according to data from the Ministry of Law's Insolvency Office.
But the Government's ability to boost demand with its own projects - something it is already doing - will cushion the sector's overall performance, say economists. "It's not all doom and gloom, in my opinion, as the public construction pipeline is still strong due to the Government's infrastructure investments in transport and other relevant sectors," said OCBC economist Selena Ling.
The private sector usually accounts for a larger share of demand, but the gap narrowed in 2014, with comparable demand from each sector. Last year, public demand outstripped private demand, and the gap is only set to grow this year.
Public sector demand is estimated at $18.5 billion to $21.5 billion this year, potentially more than twice the forecast $8.5 billion to $12.5 billion in private contracts.
But while public demand might boost overall numbers, another question is who benefits.
"Most local contractors lack the capabilities and track records to compete for major projects in Singapore," said HSL Constructor chief executive officer Charles Quek, who hopes the Government will consider creating more opportunities for local firms.
Another issue is that the long timelines of construction mean that a lot of potential pain still lies ahead. "In the construction industry, you tender now and you execute it over the next few years, so there's a lag," said Mr Loo.
And the impact will vary by trade, said Mr Akbar. Structural firms, which are involved at an early stage of construction, will be hit first.
But contractors which do finishing work may still have a pipeline of work due to projects which began earlier. "So they may be having problems later on."
As the current slowdown ripples downstream, its effects could echo well into the future.