1. Evolving Tariffs: Building Supply Chain Resilience

Tariffs on steel, aluminum (up to 50%) and other construction goods have pushed effective tariff rates to a 40-year high (25%-30% in 2025), driving steady material price hikes. With E&C firms operating on thin margins, these increases have spurred an 88.2% YoY jump in project abandonments in August 2025. Autodesk’s survey finds nearly half of E&C executives view supply chains as "fragile due to geopolitics."

To adapt, firms are shifting from ad hoc procurement to systematic strategies: strategic stockpiling, material substitution, domestic sourcing, supplier diversification, outsourced procurement, and digital platforms integrating tariff and forecast data. Many include tariff-adjustment clauses in contracts, while fixed-price contractors absorb full cost pressures. Through 2026, U.S. sourcing, cloud-based supply chain visibility, and indexed pricing will remain priorities.

2. Shifting Priorities: Data Centers and Energy Infrastructure

Construction focus is moving from sustainable energy to data centers and supporting infrastructure, driven by AI and hyperscale computing growth. While overall 2025 commercial construction slowed, data center and energy infrastructure activity surged—Deloitte projects U.S. data center power demand to grow fivefold by 2035 (to 176GW), with AI data centers rising 30x (to 123GW).

Large E&C firms are targeting mega-projects and emerging technologies, using digital tools and modular construction. Mid-market firms focus on operations and digital adoption. August 2025 saw 30% YoY growth in commercial planning activity. 2026 outlook is cautiously optimistic, with data centers fueling momentum, while interest rates and policy shifts will impact other sectors.

3. Embracing Digital Transformation

Surging demand (data centers, grid modernization) and cost pressures are pushing E&C firms to adopt digital tools. Key technologies include: agentic AI for scheduling and risk management; computer vision for real-time safety monitoring; BIM, 3D printing, and digital twins (cutting timelines by 20%); IoT for asset tracking; and autonomous equipment addressing labor gaps.

Poor data quality undermines these tools—robust data governance is critical. By 2026, cloud-native digital twins and AI agents will become standard. Firms must invest in data governance, workforce development, and ecosystem partnerships to capture value.

4. Persistent Talent Shortage

The industry needs 499,000 new workers in 2026 (up from 439,000 in 2025), with construction wages rising 4.2% YoY by August 2025. A projected 2 million skilled craft shortage by 2028 looms, as 41% of workers near retirement and only 7% of job seekers consider construction. AI and tech firms are siphoning engineering talent.

Responses include automation, AI-driven design tools, and revised HR strategies (career pathways, onboarding). Federal workforce reforms aim to address gaps, but sustained action is needed to avoid project delays and $124 billion in lost output.

Thriving in 2026

Success will hinge on resilience (supply chains, costs), flexibility (shifting priorities), and innovation (digital tools, talent). Firms maintaining liquidity, leveraging incentives, and pursuing digital-focused M&A will be best positioned to capitalize on opportunities amid uncertainty.