By Evan Milberg
The US construction industry has an unusual balance of optimism and unease. Here are five of the biggest economic and technological trends to help contractors navigate the current climate.
It’s a bit of a weird time to be a general contractor in the US. On one hand, the Trump administration has vowed to streamline permitting and implement a business-friendly deregulatory environment that will allow the construction industry to capitalize on burgeoning markets. On the other hand, the industry’s ongoing labor shortage doesn’t appear to be abating any time soon, and an escalating trade war could force contractors to significantly raise prices and potentially spook owners into canceling or delaying projects. Contractors are also navigating major shifts in the energy landscape and a great deal of uncertainty regarding paused federal aid programs.
It makes sense, then, that this week, as contractors gather in Columbus, Ohio, for the Associated General Contractors of America’s annual conference, there will undoubtedly be a palpable undercurrent of optimism and unease. It’s a similar combination of feelings contractors expressed in SmartBrief’s late 2024 report, Future Focus: The AEC Industry Outlook for 2025.
A few weeks before the conference, SmartBrief caught up with two experts who contributed to that report: Ken Simonson, chief economist at the Associated General Contractors of America; and Kris Lengieza, global technology evangelist at Procore Technologies.
Here are a few key takeaways from the conversation:
In a separate post-election survey by AGC, contractors on net were positive about the prospect of increased dollar value of projects available to bid on for 15 out of 17 construction markets. Unsurprisingly, data centers emerged as the most promising market, but contractors also expressed optimism about water and sewer projects, as well as highways and transportation facilities, Simonson said.
However, within just a few months, much of that confidence has started to wobble. Market dynamics have shifted dramatically with uncertainty around federal aid, tariff announcements and mixed messaging on regulation.
Even before new tariffs took effect, the mere threat of them influenced pricing and purchasing decisions. Contractors are seeing increased costs across key materials like steel, copper and aluminum, as well as early movement in futures markets. Simonson notes AGC has observed “major price increases already” for hot rolled coil for steel products, and copper futures have risen drastically since late last year.
The market volatility is adding risk and making project planning harder—especially for longer-term or complex builds. Owners are hesitating, delaying start dates or renegotiating scopes, Simonson says.
“I think there’s much greater uncertainty than there was three months ago about what will be allowed to go ahead either by private owners or … a pause or a cutback on federal spending, even contracts that have already been awarded,” Simonson said. “So many owners we’re hearing in the press and from direct conversations I’ve had with architects and some with contractors, many are saying, ‘Wait a minute. We need to see what the demand is going to be for this project. And most important, perhaps what tariffs are going to hit, what are those going to do to cost and the supply chain, our projects [are] going to be delayed unacceptably.”
The effects of tariffs are especially acute in residential construction. Softwood lumber from Canada has been a longstanding pressure point for the single-family housing market. While AGC members tend to focus more on nonresidential construction, the ripple effects are significant.
“Single-family [construction] … has a huge effect on both the demand for other kinds of projects and in some cases the supply of workers and of materials. The threatened or actual tariffs on lumber, particularly softwood lumber from Canada, have the potential of drastically driving up the cost of home building lumber,” Simonson said.
For nearly three years, a severe shortage of transformers and switchgear has plagued electrical and power infrastructure builds. Recent natural disasters have exacerbated this issue by diverting available equipment toward emergency recovery efforts.
“Those have caused emergency demand for some of that equipment that may have pushed other projects even farther out into the future,” Simonson said.
The bottleneck is especially concerning for data centers, which require immense power capabilities and specialized equipment.
“I haven’t heard of any owners canceling projects, but the demand from data centers just keeps growing and growing, and that’s a major user of transformers, certainly of generators of utility scale, battery storage of many other types of electrical equipment and of the specialized workers to put those things in place,” Simonson said. “So that is adding the pressure, making it more difficult to get other projects done and to get the pricing and timing.”
Meanwhile, despite the Trump administration’s willingness to weaken offshore wind and solar incentives, the demand for clean energy is still growing, particularly from data centers and manufacturers seeking stable, self-generated power sources. That’s led to an uptick in interest for solar fields, battery storage and even reviving nuclear plants.
According to a new report by Procore, a desire for better efficiency and safety is the top reason contractors adopt construction technology. The report notes that 18% of project time is currently lost searching for data, and 28% is wasted due to rework. More than half of the 1,100 construction leaders Procore surveyed for the report believe automation will disrupt the industry within the next five years.
“A lot of that is being driven by the fact that they believe they can get more efficiency in the workforce that we have today in a future state so that they can start to combat some of the labor shortages that we are having along the way,” Lengieza said.
The report notes that with 53% of the construction workforce expected to retire by 2036, companies are taking action to address this shift, with 47% of companies having upskilling programs in place, while 41% plan to implement them in the next year.
Procore believes AI is going to play a major role in optimizing tasks like scheduling and workforce allocation, while human expertise will remain essential in applying these insights effectively. But that will require builders to make better use of their data. According to the report, more than 80% of construction executives agree that connected historical data is crucial to project success, but 76% of civil and infrastructure builders acknowledge they are not yet fully harnessing the potential of their data.
Many firms are unsure about where AI fits into their workflows, but preconstruction has emerged as a viable on-ramp, particularly in estimating and bid management. However, Lengieza stresses that contractors who want to make the best use of AI need to focus more on the “why” than the “what.”
“Don’t go look for an AI solution,” Lengieza said. “Figure out what problems you’re trying to solve in your business today. So whether it’s the labor shortage, heightened risk, supply chain visibility. And then go find tools that may use AI to help you solve that problem.”
The conversation around labor isn’t just about not having enough workers—it’s also about needing different kinds of workers, Lengieza said. While the industry still desperately needs carpenters, welders and electricians, there’s a rising demand for data scientists, tech-savvy project managers and even construction roboticists. And the places contractors may find these people might come as a surprise. Lengieza gave one example of a Procore customer who hired a project engineer from a gas station.
“This was a gas station attendant that a superintendent literally interacted with every day on his way home and was looking for a new opportunity and was able to basically say, ‘Hey, have you ever thought about construction?’”
While the industry’s biggest concern is still filing craftworkers, data indicates that more of those jobs have moved away from the actual job site and into office positions of various types.
“I think the trend will continue to be that way as more robotics, more offsite production, more ways of either reducing the number of workers, the time workers have to spend doing a certain task or the skill level needed to get to that position,” Lengieza said. “Those things keep evolving in a direction that says the greatest opportunities going forward may be outside of traditional craft positions.”
Despite a rollback in government-led green building programs, sustainability is still top-of-mind for owners, especially those looking to manage life cycle costs or meet investor expectations. Tracking tools, environmental product declarations and material-level data are becoming more embedded into project workflows.
A big reason for that, Lengieza says, is that businesses are seeing sustainability through the lens of business ROI and less through the lens of policy.
Lengieza added that while some clients once pursued ESG metrics to meet investor or government requirements, many now see financial incentives in going green—like improved energy performance, reduced material costs, or even smoother permitting.
Moreover, technology is making it easier to measure and report on sustainability metrics, Lengieza notes, turning previously labor-intensive tracking, such as waste reduction or carbon accounting, into a more automated, real-time process. With better tools, more owners and contractors are now able to quantify the ROI of sustainability, reinforcing its business case.
To watch the full conversation and read more, visit Smart Brief at: 5 things contractors need to know about business in 2025 – SmartBrief.