What Will Have the Biggest Impact on Construction in 2026?

Donna Laquidara-Carr, Ph.D., LEED AP
Industry Insights Research Director
Dodge Construction Network

Uncertainty will continue to impact the construction industry in 2026. In 2025, Dodge’s research suggested that contractors felt increasingly uncertain about the construction market in general. We saw their confidence in the market drop and concerns about workforce, supply chain and other factors rise, even as other Dodge data suggested that most companies were not experiencing major downturns or worsening workforce or supply chain issues. The two items of greatest concern — tariffs and inflation — are more focused on what they think will happen to the industry as a whole than specific negative impacts experienced at their companies and on their projects.

In 2026, I think the focus will shift to learning to live with that uncertainty. That sense of uncertainty is likely to be exacerbated 
in the short term by rise of artificial intelligence (AI). A recent Dodge study reveals AI use by contractors is still limited, but that most think it will be a major force in the industry in the next few years. The rapid pace of adoption, though, means that contractors will need to figure out where they stand on a technology that is itself changing rapidly in order to avoid being left behind. The introduction of AI may have major impacts on the industry down the line, but in 2026, it will add questions about what contractors should invest in and how they should prepare to the uncertainty they already feel about the market.

Chaitanya NK
CEO & Co-Founder
Track3D

The defining issue in 2026 will be the widening productivity gap. With limited labor availability and tighter margins, teams can no longer afford reactive decision making. AI-driven field intelligence such as automated progress tracking, issue detection and schedule insights will shift from being an innovation to becoming essential project infrastructure.

This shift will separate teams that operate with guesswork from teams that operate with clarity. With a clearer view of what is actually happening in the field, teams can align earlier, address issues sooner and avoid the slow drift that turns into major schedule and cost impacts later. It also reduces the reliance on manual reporting and inconsistent updates, which is where a lot of avoidable rework and delay starts.

In practice, AI will become the bridge between what is happening on-site and the decisions being made in the office, helping projects move faster, safer and more predictably.

Joseph Leiva, P.E.
Co-Founder & CEO
Kaster

We can expect a surge of activity in Q1 and Q2 of 2026 as jurisdictions, owners, developers and contractors push to get wind and solar projects underway before the July 4, 2026, federal deadline under the Inflation Reduction Act’s Section 48E rules. States are already expediting large-scale renewable and storage projects, and we will likely see a rush in permitting, engineering, procurement, and early site mobilization and construction activity to show significant physical work before the cutoff and avoid the tight placed in service deadline of Dec. 31, 2027. This push should increase demand for skilled labor and experienced crews, followed by a potential slowdown after the deadline passes. Many owners, developers and contractors will also be scrambling to understand prevailing wage requirements, apprenticeship programs and ratios, and bonus credit qualifications to ensure their projects remain eligible.

Michael Pink
CEO & Founder
SmartPM Technologies

The biggest issue shaping construction in 2026 is the growing misunderstanding of what AI can actually do — and what it can’t. There’s enormous promise, but many companies overlook the foundation required to use AI effectively. You can’t just throw raw project data into a model and expect meaningful insights. If the data isn’t clean, structured and understood, AI will misinterpret it and create a false sense of confidence.

The real momentum we’re seeing in the industry comes from something far simpler: more contractors taking scheduling seriously and unlocking the rich data behind it. When firms build disciplined processes, clear standard operating procedures (SOPs) and a repeatable data strategy, the analytics become far more powerful — AI included.

The companies that will pull ahead in 2026 won’t be the ones chasing headlines. They’ll be the ones who treat data like a craft, 
train their systems deliberately and use analytics to drive smarter planning, better controls and more predictable outcomes.

Ryan Staub, CPA, CCIFP
Managing Director & Central Region Construction Co-Leader
CBIZ

A major concern heading into 2026 is the continued disruption to project timelines and build schedules due to the trifecta of material costs and procurement challenges, rising interest rates and general economic uncertainty. We continue to see unprecedented backlogs across many sectors of the construction industry here in the Midwest. However, those backlogs still carry the frustrating uncertainty of when project owners will give the green light for projects to commence.

One response to these timeline disruptions is increased competition within the competitive bid market. Historically, you 
might see five to 10 firms competing on a project, but now those numbers have grown to 10 to 15 firms, with more competitors coming from larger upstream firms, as well as many out-of-market companies looking to expand their footprint and maintain production rates. This is shaping up to make 2026 a very interesting year for the industry.

Patrick E. Murphy
Founder & CEO
Togal.AI

In 2026, the construction industry will be defined by pressure and innovation. High interest rates, uncertainty around tariffs and immigration, and continued talk of a market bubble are forcing builders to rethink how they work. This volatility is accelerating the shift Deloitte highlighted in its latest outlook: Firms are moving from incremental improvement to transformational change.

AI will play a central role. We’re entering an era where AI is no longer just a tool but an outcome. With agentic AI, construction professionals will simply state the result they want — a completed bid, revised specs or approvals routed to the right contractors — and the system will take the steps, learn and iterate autonomously. That level of automation is becoming essential as the labor gap widens.

At the same time, companies will experiment with new ways to build faster and with less skilled labor. One promising solution is composite systems like RENCO, where blocks stack together like Lego bricks to reduce complexity and speed up schedules.

All these forces point to the same future: a more resilient, tech-driven industry evolving because it has no choice.

Grant Hilton
Technical Director, Construction Risk Management
Nationwide

One of the most pressing challenges for the construction industry in 2026 is a shrinking workforce amid rising demand for skilled labor. Accelerating retirements are leaving critical gaps in specialty trades: The National Center for Construction Education and Research (NCCER) and RAND research shows that roughly 40% of skilled workers will retire by 2031, and nearly 1 in 10 current workers are already 62 or older.

This demographic shift is compounded by fewer qualified workers entering the trades, low apprenticeship completion rates, complicating immigration policies and persistently low unemployment. At the same time, demand for housing, infrastructure and data centers continues to surge. The U.S. needed an estimated 439,000 additional construction workers in 2025 just to keep pace — pressure that will continue in 2026.

The consequences are clear: longer timelines, compressed schedules, reduced supervision and elevated safety risks as less-experienced crews take on complex tasks. First-year employees already account for nearly half of all construction injuries.

To address this, contractors must broaden recruitment, invest in upskilling and leverage technology — such as wearables, exoskeletons and automation — to reduce physical strain. But long-term resilience requires a true safety culture, one that lowers injuries, boosts morale and retention, improves productivity and demonstrates an employer’s commitment to protecting its people.

Kirk Matthews
Vice President
Frampton Construction

The Southeast industrial market is entering 2026 in a more balanced phase after several years of extreme swings. For construction firms, this means stability. Interest rate cuts and steadier pricing are giving owners and developers the confidence to move forward with projects that stalled during the peak of cost volatility.

Population growth is setting the pace for construction, especially across the Carolinas, Florida, Texas and Tennessee. Areas with rising populations are driving demand for industrial facilities, from small-bay infill projects near population centers to larger bulk distribution buildings on metro outskirts. National retailers are also reshaping the landscape, adopting dual-structure networks that combine smaller, fast-moving nodes with larger buffer facilities.

We also expect to see redevelopment and build-to-suit manufacturing projects gain momentum to address land constraints in key labor and transportation corridors, while reshoring and manufacturing investments are creating demand for specialized, purpose-built facilities.

Overall, 2026 is less about boom-and-bust cycles and more about steady, sustainable growth. Contractors and developers who can plan with intention and respond to population- and logistics-driven trends will find the most opportunity.