This article is sponsored by AvidXchange.
The construction industry, a cornerstone of economic growth, is no stranger to cyclical shifts and external pressures. Yet, the current landscape presents a unique confluence of challenges demanding proactive and innovative strategies.
From evolving technological landscapes to persistent labor shortages and fluctuating material costs, construction management professionals are tasked with navigating a complex terrain to ensure project success and sustained growth.
Drawing parallels to broader economic uncertainties, the construction sector is experiencing tariffs, talent gaps, and market volatility. However, these challenges also present opportunities for those willing to adapt, embrace technology, and prioritize strategic partnerships.
Bridging the Skills Gap: Investing in Future Talent
The skilled labor shortage remains a critical concern for the construction industry. The Associated Builders and Contractors (ABC) reported in January 2025 that the construction industry needs to attract an estimated 439,000 net new workers in 2025 to meet anticipated demand.
While ABC also noted that the median age of a construction worker is now younger than 42, potentially leading to a slower pace of retirements this year, RedHammer's February 2025 analysis indicates that the industry continues to face significant hiring challenges, with most contractors struggling to find qualified workers.
The ABC Rocky Mountain Chapter highlighted in a January 2025 article that the National Center for Construction Education & Research (NCCER) estimates about 41% of the current construction workforce will retire by 2031, underscoring the long-term nature of the skills gap.
Addressing this requires a multi-faceted approach that includes partnerships with educational institutions, investing in upskilling and reskilling initiatives, and creating a more attractive work environment. Construction management associations play a vital role in facilitating these efforts by connecting industry professionals with training resources and advocating for workforce development policies.
Weathering the Economic Storm: Strategic Cost Management
Fluctuations in material prices and broader economic uncertainties can significantly impact project budgets and profitability.
JLL's 2025 Construction Outlook anticipates overall construction cost growth of 5-7% due to these factors, while Mastt's 2025 insights suggest that material prices are expected to remain elevated in 2025, with steel and electrical components being particularly volatile.
In April 2025, KOW Building Consultants reported significant tariff-related price increases since January 2025, including steel up 15-25%, aluminum up 8-10%, and Canadian lumber tariffs at 34.5%, with prices up 17.2% year-over-year.
Home Depot's February 2025 Pro Forecast also predicts that the costs of building materials will increase faster than the overall U.S. inflation rate in 2025.
Effective cost management requires diversifying supply chains, utilizing data analytics for forecasting, implementing robust change order management processes, and exploring innovative financing solutions. Integrated payment automation solutions can provide better control over outgoing payments and potentially unlock early payment discounts.
The Digital Blueprint: Embracing Technological Transformation
Just as businesses across all sectors are leveraging digital tools, the construction industry is undergoing a significant technological evolution. Embracing platforms that streamline processes — from procurement and invoicing to project scheduling and communication — can lead to significant cost savings and improved project timelines.
Consider the impact of automated accounts payable (A/P) solutions, which can drastically reduce manual paperwork, minimize errors, and provide real-time visibility into cash flow. This not only boosts operational efficiency, but also frees up valuable time for project managers to focus on strategic decision-making and supplier relationships.
Building a Resilient Future: The Power of Collaboration
Navigating these challenges effectively requires a collaborative spirit across the construction ecosystem. Construction management associations serve as vital hubs that help professionals stay on top of industry trends, expand their professional network, boost business acumen, and advocate for the industry.
GoCodes points out that construction associations offer professional recognition, networking opportunities, access to education, and help with hiring. By fostering connections between contractors, suppliers, technology providers, and financial institutions, associations empower industry professionals to stay informed, adopt best practices, and collectively address industry-wide challenges.
Investing in talent, implementing strategic cost management practices, and embracing technology are not just responses to current headwinds; they are fundamental shifts toward a more resilient and efficient future for the construction industry. By working together and embracing innovation, construction management professionals can not only navigate today's challenges, but also build a stronger foundation for tomorrow's success.