December 8, 2025
As we approach the end of the year, stakeholders across the construction industry are bracing for the perfect storm of demands that hover over their bottom line, in addition to their ability to deal with clients’ expectations. Yes, positivity remains for continuing demand in the long run, but a combination of labor shortages, unstable material costs, economic fuzziness, everchanging trade policies and growing demands for sustainability are creating an atmosphere that will demand flexibility and strength.
Let’s look at several key issues to keep an eye on in the coming year.
Labor Shortage: The construction industry requires 439,000 additional workers in 2026, according to Associated Builders and Contractors. However, hiring such a high number of workers is quite challenging.
This impending challenge is due in large part to the fact that the most burning issue remains the absence of skilled labor, a concern that has doggedly continued year in and year out. Contractors are realizing that it’s increasingly tougher to recruit and retain critical tradespeople, including carpenters, electricians and plumbers, plus other dedicated specialists.
This deficiency, a result largely due to an aging labor force and reduced interest from younger generations, is further intensified by competition from other trades that offer unique career pathways in other lines of work such as technology and manufacturing, among others. To pour gasoline onto the fire, the Covid-19 pandemic saw many senior workers pushed into early retirement, further worsening the skills gap.
As firms struggle to hire reliable employees, projects take longer to complete. This, in turn, increases the cost of completing a single project because hiring an expert tradesperson, such as an HVAC technician, at certain stages of the project is often required.
To remain competitive, contractors are obliged to boost wages and benefits, driving costs up while pressuring profit margins. Many companies are looking at innovative solutions such as flexible schedules, tuition reimbursement and apprenticeship programs, to grab the attention of fresh talent. Others are affiliating with trade schools, colleges and various local workforce programs to promote interest among students and appeal to workers displaced from other sectors.
The availability of labor in different regions also varies. Construction workers in larger communities are in short supply thanks to the number of thriving projects. This translates to higher labor costs and negligible returns to the contractors. Conversely, smaller markets and rural areas have fewer projects, leading to a less significant increase in labor costs.
Emerging labor trends: Everyone in the industry knows that technology is changing the way construction sites function, from digital blueprints to automated equipment as prime examples. But it’s also producing new opportunities for workers who are willing to learn. Skill trades won’t disappear, but roles such as “site technologist,” ‘robotics operator,” “data analyst,” or “digital foreman” will become commonplace. Even tiny steps, such as becoming comfortable with digital tools or learning to work alongside the latest equipment, can make a huge difference in job security and pay.
At the same time, demand is also rising for workers who understand sustainable building practices. As more projects aim to meet “green” standards, crews that can manage recycling, work with energy-efficient materials or handle environmental clean-up are in great demand.
Sustainability: Speaking of sustainability, it’s no longer non-compulsory, it’s a requirement. The call for green buildings is intensifying, driven by environmental concerns and regulatory mandates. There is a growing shift towards employing practical, lower-carbon materials such as bio-based insulation, solar panels and recycled content.
Investors and developers are giving precedence to projects that support Environmental, Social and Governance (ESG) criteria. Tools that offer data on sustainable projects, such as Building Radar’s construction project database, are instrumental for those planning to invest in or develop green infrastructure.
Moreover, by the coming year, low-carbon materials will be mandated in design, tracked throughout purchasing and confirmed at closeout. Federal and state “Buy Clean” agendas now oblige Environmental Product Declarations (EPDs) and Global Warming Potential (GWP) limits for concrete, steel and asphalt.
Real-time safety, health monitoring and motion capture: Safety is evolving much further than simply checklists and helmets. In 2026, systems will include wearables that identify fatigue, incorrect posture or hazardous areas; motion capture systems to study worker movements and lower musculoskeletal strain; site cameras coupled with AI that signal PPA noncompliance or dangerous behavior; and real-time analytics that will help thwart accidents before they take place.
Materials: Material costs, while somewhat steadier than the frenzied years of 2021 and 2022, stay on a roller coaster. Supply chain interruptions, once the rule, have recovered but have not disappeared. Plus, postponements in shipping, labor shortages in transportation and production holdups rear their heads now and then. Furthermore, contractors are now dealing with fresh uncertainties, including the possibility of new tariffs and enduring global economic unpredictability that keeps prices of imports including steel, lumber and electrical components on edge.
The challenge is especially severe for firms working on longstanding projects where material requirements could extend for months, even years, into the future. Contractors are gradually opting for substitute materials, local sourcing and modular construction methods to lessen risk and better manage costs.
“Smart materials” will also play a greater role in 2026: Concrete with embedded sensors to detect stress, cracks and corrosion; self-healing polymers; dynamic glazing; bio-based composites; and even living building materials that will self-generate or sequester carbon will become more routine. It appears that recycled, reclaimed or low-carbon materials are turning into the standard, not the premium.
Impact of remote work on commercial spaces: The transformation to remote and hybrid work models has altered the intention of commercial spaces. Conventional office layouts are giving way to flexible, collaborative environments. Companies are reexamining their real estate requirements, leading to a boost in the need for flexible spaces that serve both in-person and remote labor forces.
This conversion demands makeovers and retrofitting current structures. Understanding these trends is critical for developers and investors.
AI takes the next leap: Artificial intelligence is no longer simply a buzz, having moved far ahead of testing. By now, it has transformed how contractors assess, plan and supervise projects. But, a number of industry experts predict that 2026 will be the year it goes totally agentic, meaning it can accomplish complicated tasks and formulate decisions without continual human prompting, nothing like traditional AI. Artificial Intelligence will be implanted into nearly every phase – appraising, timetabling, site monitoring and risk prediction. By 2026, contractors will rely on AI for real-time decision support, predictive analytics and generative design rather than manual estimation.
Obviously, the next generation of project leaders will need data fluency to interpret and act on these insights.
Moreover, construction industry onlookers advise that artificial intelligence will begin to work with you, not simply for you. When that takes place, AI will connect the dots across each project phase, getting rid of waste and allowing professionals to focus on strategy and decision-making rather than routine everyday tasks.
“We’ll see a rise in AI systems that can observe, plan, reason and make decisions,” explains Aviad Almas, Vice President of Technology innovation for construction giant Trimble.
Trimble’s 2026 Outlook makes one thing clear-cut: Technology is no longer just an option, it’s foundational. From AI to training and data sharing, the industry’s opportunities will take its place with contractors who view technology not simply as a cost, but as a tool for progress.
Panelists recently presented the annual Futurecast 2026 economic outlook at Indiana University Kokomo. Kyle Anderson, clinical assistant professor of economics, revealed to the audience that he foresees that AI will drive growth next year, but he also warned of concerns about over-investment similar to the early 2000s dot-com bubble.
Let’s take a closer look at some additional essential technologies that will be reshaping the 2026 construction jobsite.
Modular and offsite construction: What was once a niche method is swiftly becoming commonplace. Faster cycles, enhanced quality control and less on-site labor stipulations make modular construction more attractive for affordable housing and repeatable product types. Truth is, factory-built methods now cover most multifamily and healthcare projects, cutting timelines by as much as 60 percent.
According to the Gould Construction Institute, we should expect more factory-built, multifamily and rapid response projects. Mordor Intelligence forecasts that the modular construction industry is expected to grow from $104 billion in 2024 to $140.8 billion by 2029.
For hiring managers, that means finding superintendents and project engineers with the essential know-how in logistics, factory integration and module assembly.
Robotics, automation and 3D printing: With the labor shortage, automation will move from experimental to everyday. From bricklaying robots to large-format concrete printing to the employment of drones onsite, these technologies are shifting from the strictly demonstration period to selective production, especially where labor is inadequate or speed is essential. As a prime example, robotic bricklayers can finish a masonry job up to 400 percent faster than human crews, and drones can expand measurement accuracy by 61 percent. The construction robotics industry is on track to reach $3.6 billion by 2020. (Tech Radar, Gould Construction Institute, Globe Newswire)
Procurement plans: Longer lead times (e.g., HVAC, specialized steel) demand speedy ordering. Construction Dive discusses using index-linked contracts or escalation clauses where appropriate.
Investment in productivity tech: Modular partnerships, the development of BIM and field automation will produce results by cutting the risks to schedules and lowering dependence on those trades in short supply. (Exploding Topics, Gould Construction Institute)
Workforce strategy: The Association of Builders and Contractors reviews upskilling, apprenticeship programs, and flexible crew models as turning into a competitive advantage.
How can contractors better prepare or these technological waves rather than be overwhelmed by them?
Contractors should:
The bottom line: The next decade belongs to contractors who consider change as a strategy. 2026 offers a clear-cut opportunity to streamline operations, improve safety and catch the attention of the optimum talent in construction.
For those wanting to investigate how to best take advantage of some of the opportunities presented here, contact the professionals at PDDM Solutions.
Let’s look at several key issues to keep an eye on in the coming year.
Labor Shortage: The construction industry requires 439,000 additional workers in 2026, according to Associated Builders and Contractors. However, hiring such a high number of workers is quite challenging.
This impending challenge is due in large part to the fact that the most burning issue remains the absence of skilled labor, a concern that has doggedly continued year in and year out. Contractors are realizing that it’s increasingly tougher to recruit and retain critical tradespeople, including carpenters, electricians and plumbers, plus other dedicated specialists.
This deficiency, a result largely due to an aging labor force and reduced interest from younger generations, is further intensified by competition from other trades that offer unique career pathways in other lines of work such as technology and manufacturing, among others. To pour gasoline onto the fire, the Covid-19 pandemic saw many senior workers pushed into early retirement, further worsening the skills gap.
As firms struggle to hire reliable employees, projects take longer to complete. This, in turn, increases the cost of completing a single project because hiring an expert tradesperson, such as an HVAC technician, at certain stages of the project is often required.
To remain competitive, contractors are obliged to boost wages and benefits, driving costs up while pressuring profit margins. Many companies are looking at innovative solutions such as flexible schedules, tuition reimbursement and apprenticeship programs, to grab the attention of fresh talent. Others are affiliating with trade schools, colleges and various local workforce programs to promote interest among students and appeal to workers displaced from other sectors.
The availability of labor in different regions also varies. Construction workers in larger communities are in short supply thanks to the number of thriving projects. This translates to higher labor costs and negligible returns to the contractors. Conversely, smaller markets and rural areas have fewer projects, leading to a less significant increase in labor costs.
Emerging labor trends: Everyone in the industry knows that technology is changing the way construction sites function, from digital blueprints to automated equipment as prime examples. But it’s also producing new opportunities for workers who are willing to learn. Skill trades won’t disappear, but roles such as “site technologist,” ‘robotics operator,” “data analyst,” or “digital foreman” will become commonplace. Even tiny steps, such as becoming comfortable with digital tools or learning to work alongside the latest equipment, can make a huge difference in job security and pay.
At the same time, demand is also rising for workers who understand sustainable building practices. As more projects aim to meet “green” standards, crews that can manage recycling, work with energy-efficient materials or handle environmental clean-up are in great demand.
Sustainability: Speaking of sustainability, it’s no longer non-compulsory, it’s a requirement. The call for green buildings is intensifying, driven by environmental concerns and regulatory mandates. There is a growing shift towards employing practical, lower-carbon materials such as bio-based insulation, solar panels and recycled content.
Investors and developers are giving precedence to projects that support Environmental, Social and Governance (ESG) criteria. Tools that offer data on sustainable projects, such as Building Radar’s construction project database, are instrumental for those planning to invest in or develop green infrastructure.
Moreover, by the coming year, low-carbon materials will be mandated in design, tracked throughout purchasing and confirmed at closeout. Federal and state “Buy Clean” agendas now oblige Environmental Product Declarations (EPDs) and Global Warming Potential (GWP) limits for concrete, steel and asphalt.
Real-time safety, health monitoring and motion capture: Safety is evolving much further than simply checklists and helmets. In 2026, systems will include wearables that identify fatigue, incorrect posture or hazardous areas; motion capture systems to study worker movements and lower musculoskeletal strain; site cameras coupled with AI that signal PPA noncompliance or dangerous behavior; and real-time analytics that will help thwart accidents before they take place.
Materials: Material costs, while somewhat steadier than the frenzied years of 2021 and 2022, stay on a roller coaster. Supply chain interruptions, once the rule, have recovered but have not disappeared. Plus, postponements in shipping, labor shortages in transportation and production holdups rear their heads now and then. Furthermore, contractors are now dealing with fresh uncertainties, including the possibility of new tariffs and enduring global economic unpredictability that keeps prices of imports including steel, lumber and electrical components on edge.
The challenge is especially severe for firms working on longstanding projects where material requirements could extend for months, even years, into the future. Contractors are gradually opting for substitute materials, local sourcing and modular construction methods to lessen risk and better manage costs.
“Smart materials” will also play a greater role in 2026: Concrete with embedded sensors to detect stress, cracks and corrosion; self-healing polymers; dynamic glazing; bio-based composites; and even living building materials that will self-generate or sequester carbon will become more routine. It appears that recycled, reclaimed or low-carbon materials are turning into the standard, not the premium.
Impact of remote work on commercial spaces: The transformation to remote and hybrid work models has altered the intention of commercial spaces. Conventional office layouts are giving way to flexible, collaborative environments. Companies are reexamining their real estate requirements, leading to a boost in the need for flexible spaces that serve both in-person and remote labor forces.
This conversion demands makeovers and retrofitting current structures. Understanding these trends is critical for developers and investors.
AI takes the next leap: Artificial intelligence is no longer simply a buzz, having moved far ahead of testing. By now, it has transformed how contractors assess, plan and supervise projects. But, a number of industry experts predict that 2026 will be the year it goes totally agentic, meaning it can accomplish complicated tasks and formulate decisions without continual human prompting, nothing like traditional AI. Artificial Intelligence will be implanted into nearly every phase – appraising, timetabling, site monitoring and risk prediction. By 2026, contractors will rely on AI for real-time decision support, predictive analytics and generative design rather than manual estimation.
Obviously, the next generation of project leaders will need data fluency to interpret and act on these insights.
Moreover, construction industry onlookers advise that artificial intelligence will begin to work with you, not simply for you. When that takes place, AI will connect the dots across each project phase, getting rid of waste and allowing professionals to focus on strategy and decision-making rather than routine everyday tasks.
“We’ll see a rise in AI systems that can observe, plan, reason and make decisions,” explains Aviad Almas, Vice President of Technology innovation for construction giant Trimble.
Trimble’s 2026 Outlook makes one thing clear-cut: Technology is no longer just an option, it’s foundational. From AI to training and data sharing, the industry’s opportunities will take its place with contractors who view technology not simply as a cost, but as a tool for progress.
Panelists recently presented the annual Futurecast 2026 economic outlook at Indiana University Kokomo. Kyle Anderson, clinical assistant professor of economics, revealed to the audience that he foresees that AI will drive growth next year, but he also warned of concerns about over-investment similar to the early 2000s dot-com bubble.
Let’s take a closer look at some additional essential technologies that will be reshaping the 2026 construction jobsite.
Modular and offsite construction: What was once a niche method is swiftly becoming commonplace. Faster cycles, enhanced quality control and less on-site labor stipulations make modular construction more attractive for affordable housing and repeatable product types. Truth is, factory-built methods now cover most multifamily and healthcare projects, cutting timelines by as much as 60 percent.
According to the Gould Construction Institute, we should expect more factory-built, multifamily and rapid response projects. Mordor Intelligence forecasts that the modular construction industry is expected to grow from $104 billion in 2024 to $140.8 billion by 2029.
For hiring managers, that means finding superintendents and project engineers with the essential know-how in logistics, factory integration and module assembly.
Robotics, automation and 3D printing: With the labor shortage, automation will move from experimental to everyday. From bricklaying robots to large-format concrete printing to the employment of drones onsite, these technologies are shifting from the strictly demonstration period to selective production, especially where labor is inadequate or speed is essential. As a prime example, robotic bricklayers can finish a masonry job up to 400 percent faster than human crews, and drones can expand measurement accuracy by 61 percent. The construction robotics industry is on track to reach $3.6 billion by 2020. (Tech Radar, Gould Construction Institute, Globe Newswire)
Procurement plans: Longer lead times (e.g., HVAC, specialized steel) demand speedy ordering. Construction Dive discusses using index-linked contracts or escalation clauses where appropriate.
Investment in productivity tech: Modular partnerships, the development of BIM and field automation will produce results by cutting the risks to schedules and lowering dependence on those trades in short supply. (Exploding Topics, Gould Construction Institute)
Workforce strategy: The Association of Builders and Contractors reviews upskilling, apprenticeship programs, and flexible crew models as turning into a competitive advantage.
How can contractors better prepare or these technological waves rather than be overwhelmed by them?
Contractors should:
- Pilot emerging technologies on certain projects: This signifies the exercise of testing new and innovative technologies on a small, controlled scale within an organization. This method is intended to assess the technology's viability, potential value, and related risks prior to committing to a full-blown implementation.
- Invest in training and upskilling teams: Training doesn’t necessarily have to imply costly and time-consuming classroom attendance. Simple on-the-job tutoring, mentorship from veteran leaders or an opportunity to progress into higher paying roles can keep workers motivated to stay and improve.
- Create an upbeat job culture: A “thank you” and a courteous workplace are respected and make your workers feel part of the team. They turn up, work harder and take pride in their job, no matter how big or small the task.
- Create a digital backbone with open standards: Devise systems with a modular approach, employing open architectures that permit the backbone infrastructure to stay in place, while edge technologies can develop and be updated minus any major interruptions.
- Partner with vendors and trendsetters: Partnering with vendors and trendsetters consists of moving past conventional transactional associations to create strategic, two-way relationships. These partnerships are frequently devised to share know-how and resources, as well as risks, showing the way to shared growth, better efficiency, and quicker innovation.
- Access to Specialized Expertise and Technology: Vendors often enjoy specialized skills, cutting-edge technologies, and industry-specific know-how that your company might lack.
The bottom line: The next decade belongs to contractors who consider change as a strategy. 2026 offers a clear-cut opportunity to streamline operations, improve safety and catch the attention of the optimum talent in construction.
For those wanting to investigate how to best take advantage of some of the opportunities presented here, contact the professionals at PDDM Solutions.