When a female cockatiel is ready to lay eggs, she will lay them on the floor of her cage if she has no other location -- and it is highly unlikely that eggs laid out in the open will hatch. The female needs a nesting box in which she can safely incubate her eggs.
How to Make a Nesting Box for a Female Cockatiel
You can make an appropriate box for nesting many ways. You can build an actual box out of wood if you are handy. A large basket with a lid might work. Another option is a cardboard box. Regardless of what material you make the box from, it should be small enough to fit in the cage while still leaving plenty of room for both the female cockatiel and her mate -- it needs to be a minimum of 10 inches high and 10 inches wide to leave room for both adult birds and the chicks.
Cut a hole in the front of the box at least 3 inches in diameter for the birds to enter. Ensure that the opening is smooth, with no jagged edges that could hurt or irritate the cockatiels. If your container does not have a removable lid, cut a hole in the back or side of the box that will allow you to peek in and check on the birds.
Choose a nesting material that will be comfortable for your female and will stay relatively clean. Some good choices include sawdust, shredded paper and wood chips. Make sure that any material you use is not treated with any type of chemical and that wood chips are too large for the mother to mistakenly feed to her hatchlings. Lay the bedding 2 inches deep in the bottom of the box.
Placing the Nest
If possible, place the nest on the inner wall of the cage. This makes it easier for you to check on the parents and babies, and it takes up less room in the cage. If you decide to mount the box in the cage, use strong items such as zip ties to hold it in place to lessen the risk of the box falling.