Total expenditure for construction was estimated at 7.7 percent of GDP in 1986. The sector was given a boost by the ambitious public investment program of the government that came to power in 1977. Between 1977 and 1980, construction expanded at an annual rate of 20 percent in real terms. It stagnated in the 1980s as the number of new projects dwindled and the early ones were completed.

The largest construction project of the post-1977 period was the Mahaweli irrigation program. Conceived in the 1960s as the Mahaweli Ganga Program, the project originally was expected to bring approximately 364,000 additional hectares of land under irrigation and to provide an extra 540 megawatts of hydroelectric power to the national grid. Completion of the program was to require thirty years. Construction of the first two dams was completed in 1977 and opened about 53,000 hectares of new land to irrigation in a general area south of the old capital of Anuradhapura in the dry zone. When the United National Party swept into power in 1977, the project was given renewed impetus and renamed the Accelerated Mahaweli Program. Construction work was undertaken at five new sites between 1979 and 1982, with the intent of increasing the hectares under irrigation and generating an extra 450 megawatts of hydroelectric power for the national grid. By the end of 1987, new dams and reservoirs had been completed at Kotmale, Randenigala, Maduru Oya, and Victoria. The operational power stations at Randenigala and Victoria together generated 330 megawatts of power, with an additional 147 megawatts expected when the Kotmale station came on line. All construction related to the Accelerated Mahaweli Program was scheduled for completion by 1989. The total cost of the entire project was estimated at US$1.4 to 2 billion.

The Urban Development Authority was established in 1978 to promote integrated planning and development of important urban locations. Its responsibilities have included the new parliamentary buildings and the reconstruction of St. John's fish market in Colombo. Total expenditure of the Urban Development Authority was Rs529 million in 1986, well under its annual budget in the early 1980s. The Million Houses Program was established in 1984 to coordinate both public and private housing construction. In early 1988 the government's policy was to subsidize private housing rather than undertake extensive public housing programs.

Data as of October 1988