Sinkholes are difficult and expensive to detect in advance, which is one reason why they cause so much damage.  Large sinkholes in limestone (Karst) formations can form without providing obvious warning, and are usually prohibitively expensive to remediate.  Regardless of the value of damaged property, it is usually even more costly to repair large sinkholes in Karst formations, and there may not be an obvious responsible person or agency to which you can send the bill for it.

However, smaller sinkholes in the immediate vicinity of buried water and wastewater utilities are frequently caused by the utilities themselves. This is particularly true of sinkholes under public streets, due to the fact that public rights-of-way are used as utility corridors.

What causes a sinkhole like this?

Water leakage from an underground utility can wash the soil away. The soil may be washed into the interior of an adjacent non-pressurized utility (see below), or the water can form an expanding cavity under a street or building which washes soils away and then collapses. The stability of buried underground utilities is dependent on the backfill around them. If a small leak is allowed to continue, the utility may eventually be destabilized which will lead to a complete utility failure and probably a sinkhole as well.
Most buried utilities are supposed to be watertight in accordance with accepted industry standards. A non-pressurized utility with cracks, holes, or leaking joints can result in the loss of backfill material surrounding the utility. Soil from outside the pipe can flow into the utility and get washed away. Without backfill, the utility will fail and a sinkhole may form around it. Then, streets, vehicles, and buildings in the vicinity may fall into the hole.
A complete list of defective construction methods is too large to include here. However, the following defective construction methods are the most frequent causes of sinkholes in the vicinity of buried utilities: Defective trenchless construction methods: Trenchless methods are used to install utilities by drilling or boring without excavating the entire utility alignment. Defective trenchless practices can over-excavate underground areas without providing sufficient replacement material to fill voids thereby created. The ground surface may subsequently settle to fill the voids. The settlement may not become apparent until years later. Trenchless construction methods can cause settlement and sinkholes which are not traced back to the original construction. This will be very difficult to prove unless a sinkhole opens up immediately. Using the wrong material for pipe bedding or trench backfill, and poor compaction of the trench backfill: The support of the pipe and what is above it is critical to the longevity of the installation. The pipe bedding and backfill material is supposed to serve this function. There are a number of incorrect materials and methods, and they are all violations of standards which are well-known to those who design and install underground utilities. Incorrect materials and methods are quite common, because doing it the wrong way is initially cheaper for somebody. Later on, when the street caves in, public officials will blame storm damage, earthquakes, or global warming, and nobody will know the difference. Using the wrong pipe couplers, and incorrect assembly of pipe joints: The long-term performance of joints in utilities is very important. The joining materials must remain leak-free and corrosion-resistant during the entire service life. This requires the correct couplers with the correct gaskets and the correct assembly methods. Once again, these are all covered by industry standards which are frequently ignored.