As the construction industry rounds the halfway mark of the decade, the rearview looks a bit blurry. In just five short years, a global pandemic upended the way the world works, a supply-chain crisis sent material costs soaring and social justice protests forced leaders to reexamine diversity and inclusion practices.
Will things finally start to calm down? Probably not. As 2025 kicks off, change and complexity continue to be constant forces. Construction leaders are keeping a close eye on new policy decisions and global trade conversations, while juggling concerns about finding workers and integrating new technologies. Construction Executive caught up with a range of voices involved in building the future to get a glimpse of the road ahead.
WHAT WILL A NEW ADMINISTRATION MEAN FOR BUILDING?
“The entire industry is waiting to see how the Trump administration may change the landscape,” David Pugh, partner at Bradley and 2025 chair of Associated Builders and Contractors’ board of directors, says. “Most of us believe there will be a fairly aggressive rollback of many of the regulations that slow or prohibit new projects—similar to what he did during his first term. There’s a prevailing spirit of optimism in the construction world. The next four years could look pretty good.”
Pugh’s biggest cause for a potential celebration is an end to government-mandated project labor agreements. Currently, nearly 90% of the U.S. construction workforce is unable to bid and work on large public projects due to an executive order from the Biden administration mandating the use of project labor agreements. Pugh believes those mandates may be rolled back by a similar executive order when Trump takes office, but says that a counter order isn’t going to provide what the industry truly needs: a permanent solution.
“We don’t want to keep going administration to administration with these orders,” Pugh says. “It’s like riding a yoyo.”
How does the industry turn a bright four-year period into a steady road for the foreseeable future? That may already be in the works. Pugh is keeping a close eye on a case filed by ABC and its Florida First Coast Chapter in Jacksonville. If a judicial decision rules in the plaintiff’s favor on constitutional grounds, Pugh believes it could be “the most permanent solution we could have.”
NEW CHALLENGES FOR RENEWABLE ENERGY
A second Trump term has created a jolt of excitement among much of the industry, but companies behind renewable energy projects appear poised for a rocky road ahead. For example, TotalEnergies pressed pause on plans for a $4.4-billion wind farm off the coast of New York shortly after the election.
However, it’s important to note that the financing struggles with these large-scale projects aren’t all due to a change in Washington, D.C. BP and Equinor terminated an offshore wind project at the beginning of 2024—a signal of the big hurdles on the path toward more sustainable power. Additionally, ABC Chief Economist Anirban Basu says that consumer demand for EVs has not been accelerating at the pace that anyone expected, which may lead to a postponement of battery and EV production facilities.
“We thought by now that EVs would be sweeping through the marketplace,” Basu says. “Instead, what Americans are feeling is range anxiety. Because we’re such a big country, I think there was a lack of appreciation for how enduring fossil fuel-powered vehicles would be.”
WILL THE BUSINESS ENVIRONMENT GET BETTER?
As Basu looks ahead to what 2025 has in store for construction, he’s focused on two words: interest rates. And after the Federal Reserve’s rate cuts in the back half of 2024 and the economic success of the first Trump administration, many presume lower rates—and a higher level of economic activity—are right around the corner. However, Basu isn’t so sure—and says that a potential increase in tariffs on imported goods, tax cuts and shifting immigration policies have the potential to increase inflation.
“My thinking is that interest rates will be higher for longer,” he says. “That makes the cost of capital more expensive, and that leads to more challenging project financing.”
Despite these uncertainties, Basu believes that a lot of leaders still have reason to feel rosy about the road ahead. Anyone involved in data centers and power plants is in for good news, thanks to growing needs for AI processing capabilities, and Basu says that contractors in the healthcare space are in an enviable position due to a rapidly aging population. Additionally, ongoing reshoring initiatives will maintain high levels of manufacturing-related development.
“The reason to be optimistic is that the U.S. economy is being transformed so quickly,” Basu says. “When the economy is being transformed so quickly, that creates new demands on the built environment.”
IS THE LABOR SHORTAGE EVER GOING TO BE SOLVED?
Despite all the potential for change in 2025, one piece of the construction profession remains, unfortunately, the same: There simply aren’t enough people to get the job done. Like just about everyone in the industry, Pugh is worried about attracting the next generation of the workforce. The long term, he says, requires a marketing messaging overhaul that makes young people more aware of the appeal of a career in construction. In the short term, he believes the industry must focus on connecting with a wide range of audiences: individuals looking for a career change, people transitioning from the armed services to civilian work and traditionally underrepresented groups including women and certain minorities.
“We cannot afford not to turn over every stone,” Pugh says. “We’ve got to find the workers.”
In addition to trying to attract new employees, Steve Klessig, vice president of architecture and engineering and co-owner of Wisconsin-based Keller Inc., says the company is asking the ones it already has to stick around longer.
Part of that involves adjusting the demands of the job to make the thought of working longer feel more appealing. “On the construction side, we might ask someone if they’re willing to manage one project and stay in one place instead of being a full-time supervisor who needs to run across the entire state,” he says. “We’re trying to be as creative as possible to keep talent as long as we can.”
For designers, Klessig worries that a work-life imbalance is taking a big toll. “My people tell me that they’re coming in early and working until 10 o’clock at night,” Klessig says. “It’s because they’re not being given enough time to take the care they want to develop a design, think it through, scratch it out, throw it away and develop a new approach. That period of time we used to have just keeps shrinking, and I don’t know when it’s going to stop.”
UNDERSTANDING THE IMPACT OF UNDOCUMENTED WORKERS?
Some companies may face even bigger challenges with finding people to fill jobsites if plans for the largest deportation program in the country’s history—a central piece of Trump’s successful bid for a second term in the White House—become a reality.
“From a purely economic perspective, if one starts to punish or penalize employers who utilize undocumented migrants,” Basu says, “it’s going to affect a handful of segments of the economy with particular harshness.”
WHAT’S NEXT FOR THE AI REVOLUTION?
While artificial intelligence seems to be at the center of every conversation, humans have been spending a lot more time talking about AI than actually feeling any of its impacts. A study from Boston Consulting Group in the fall of 2024 shows that just 26% of companies have the ability to generate tangible value from AI. However, the number of businesses who can cash in on the AI boom is set to take off in the near future.
Consider the recent progress of technologists like Burcin Kaplanoglu, Ph.D., vice president, head of Oracle Industry Lab, Oracle Vertical Industries. Three years ago, Kaplanoglu began studying how to automate vision and data capture for large warehouses in the manufacturing industry. Today, the dream of a drone flying around to capture images and automatically share data with an inventory management system is no longer that: It is reality.
The construction industry, on the other hand, faces many more complexities in the ability to leverage this kind of technology. While it’s easy to control factors like climate and lightning in a warehouse or a factory, Kaplanoglu says that “construction environments are probably the most challenging environments to deal with” due to unpredictable weather patterns and other nuances.
Despite those challenges, he believes that the construction industry is only a few years away from AI-enabled vision detection becoming the norm. Already, Kaplanoglu is seeing big success with the ability to automatically detect safety issues in utility-focused development work. One of the Oracle Industry Lab locations near Chicago has a large steel structure with rust, misaligned bolts and other intentional defects. A 90% probability of rust leads to an automatic ticket in a work-order management system.
That kind of seamless process is exciting, but images are only part of the equation for understanding what’s happening on a jobsite. For a 360-degree understanding, Kaplanoglu says that researchers are working on multimodal AI that collects a wide range of sensory data.
“Multimodal AI means everything for construction,” he says. “Think about a project manager or a superintendent who uses all their senses at all times. They need to be hearing things, seeing things, carrying things and interacting with things. Multimodal AI will evolve over the next four to five years, and it will change how we work on jobsites.”
THE ‘FEAR FACTOR’
The AI revolution may sound exciting, but for a lot of people, it sounds terrifying. Research from Ernst & Young shows that 71% of employees in the U.S. are concerned about AI’s development. Ajoy Bhattacharya, senior director of technology strategy at Microsoft who works with architecture, engineering and construction firms, believes one of the industry’s biggest challenges is figuring out how to alleviate those worries. “It’s important to explain to your workers that AI is not here to displace you,” he says. “There is a fear factor that can get in the way of adopting it. How do we address that part of change management?”
Technologists aren’t the only ones who feel confident in the long-term need for the human touch, either. “Consider a brick mason using one of the automatic brick-laying devices,” Pugh says. “If something goes awry, you’re going to have a big liability on your hands with a big delay claim and plenty of additional costs to redo the work. The key will be the deliberate but careful integration of the new disruptive technologies supervised by experienced construction hands.”
That deliberate approach starts with one of the most important ingredients of any team: effective communication. Bhattacharya says the companies that are doing it well are articulating why AI is important and how it’s benefiting the people who will use it. The biggest perk is simple: saving time through efficiency. “If I can create agents for you whereby you may click a button and go retrieve today’s safety plan or pre-task plan, it makes your job easier,” he says. “The propensity for you to use the tool will be higher because it makes you more efficient.”
Another key benefit is AI’s ability to help curb some of the anxieties of a job in construction and help establish a better work-life balance, according to Oracle’s Kaplanoglu. “Our work is risky, complicated and stressful,” Kaplanoglu says. “Imagine a day when technology lets you go home at four o’clock in the afternoon, and things are predictable and manageable. That can have a tremendous impact on mental health.”
One strategy that companies can think to help drive AI value is to start with the right people. Bhattacharya lives by what he calls “the rule of one-thirds”. Essentially, there are three groups of audiences in a company: the group that wants to dive into the possibilities, the group that is on the fence and the group made up of the naysayers. Start with the group that wants to dive in and model the adoption around them.
AI may feel very new, but Bhattacharya believes that successfully integrating it into a company relies on looking in the rearview. “Think of when a company went from paper to computer-aided design,” he says. “The process moved faster. For the people who didn’t make the shift, they started getting less innovative and eventually got displaced.”
For anyone looking to make 2025 a year of AI adoption in their own company, Bhattacharya advises taking time to understand the culture of the organization and the other partners you work with to complete jobs. “Think about how they like to adopt technology, and identify ways to make it easier for them,” he says. “What are the incentives? What rewards will they monetize by overcoming their fears?”
“If you want to stay innovative, explore software such as [Microsoft’s] Copilot, where it’s embedded in the tools,” he adds. “Start using it. Start getting accustomed to it. Dive deeper to see how it can root out operational inefficiencies.”
IS ALL THIS TECHNOLOGY CHIPPING AWAY AT THE INDUSTRY’S FOUNDATION?
Despite all the promising potential of artificial intelligence, Klessig is concerned about what AI may do away from the jobsite. “You can very quickly just become a society of emails and texts,” Klessig says. “AI isn’t going to help that. I’m worried that we may lose our ability to connect with our clients if we put too much technology between us and them.”
As Klessig looks ahead to 2025, he is working to make sure that he and his peers can maintain that connection.
“We have to remember that we’re in the business of building relationships and building trust,” Klessig says. “And you can’t do all of that with a computer. Shaking a hand, having lunch, meeting face-to-face—those things are all still extremely important. And we have to be able to have that architect-client relationship if we’re going to be successful in having a long-term client come back to us time and time again.”
Howie Ferguson, executive director of Construction Owners Association of America, agrees on the need to recognize that this is “a people-driven business”—regardless of how much technology may manage to change the work environment. “Projects are often complicated and stressful,” Ferguson says, “so relationships matter, and authentic trust is vital.”
People, of course, also present problems, and Ferguson believes that project managers are facing bigger challenges when it comes to managing all the different personalities that want to weigh in on decisions. For example, someone working on a hospital may receive a lot of input from doctors, and someone working on a university may hear plenty of perspectives from Ph.D.s and deans.
“These are all smart people, so there is an art to helping them understand how to open their eyes and see the bigger picture,” Ferguson says. “I’ve noticed an uptick in well-intentioned governing bodies getting more involved with the detailed business of planning, design and construction. This is where the soft skills come in. It’s more important than ever before to understand how to coach everyone who wants to be involved.”
In addition to an elevated importance of soft skills for the people who work in construction, Ferguson has been impressed with the softening of the industry as a whole.
“Construction has a historical reputation as a testosterone-driven industry,” Ferguson says. “Now, some companies are devoting part of their toolbox talks to discussions about mental health. That would have been unheard of a decade ago. Maybe it’s a younger generation driving that, or perhaps it’s veterans wising up to the need to be able to talk about those kinds of concerns. Either way, it’s great to see the progress. I hope we continue taking baby steps forward to encourage that kind of openness on the jobsite.”
HOW CAN THE INDUSTRY PRESERVE THE PAST?
2025 holds heightened significance for the industry: It’s the 75th anniversary of Associated Builders and Contractors. What began in 1950 with just seven contractors at a meeting in Baltimore is today a nationwide association with 68 chapters and more than 23,000 members. And as many of those members inch even closer to retirement, there is a clear need to pass on their knowledge to the rising stars. Today’s leaders have decades of experience solving problems and managing conflict, and those stories will play a crucial role in fueling the future. While the industry looks ahead to the promise of what’s next, Pugh is equally committed to protecting the memories of what’s behind.
“Our members no longer face some of the challenges that they did in the 1950s, 60s and 70s,” Pugh says. “I don’t want those stories to get lost. During the organization’s 75th anniversary celebration, it’s constantly top of mind for me to think about how we can convey the lessons we’ve learned to the future generation.”
