Construction Industry Challenges: 2025’s Top 15 Issues + Solutions 

Construction in 2025 isn’t slowing down, but the challenges are stacking up. Construction industry challenges like labor shortages, economic uncertainty, rising costs, and an urgent push for sustainability reshape how firms plan, build, and manage projects. Add in rapid tech adoption, tighter regulations, and evolving client demands, and the industry is in the middle of a major shift. 

To stay competitive, construction businesses need more than just the right tools. They need smart strategies, agile teams, and better ways to manage complexity. In this blog, we break down the top issues shaping the construction industry in 2025 and how leading companies are solving them. 

1. Labor Shortage and Skilled Workforce Gap 

The construction industry faces a critical challenge: a significant labor shortage and a lack of skilled workers. According to the Associated Builders and Contractors (ABC), the industry needs to attract an estimated 439,000 new workers this year to meet demand. This shortage is about workforce quality and readiness to meet modern construction demands. 

Training and Development Needs 

The skills gap is another major challenge, with many available workers lacking the necessary qualifications. 

A report by Arcoro highlights that 62% of construction firms find that candidates lack required skills or certifications. This gap requires a strong focus on training and development to equip workers with the skills needed for today’s construction projects.

Fortunately, training programs are evolving to address these needs. For example, On Site Medical emphasizes the importance of safety training, including OSHA 10 & 30-hour courses, excavation and trenching safety, and MEWP (Mobile Elevating Work Platform) training. These programs are crucial for ensuring skilled, safe workers on each job site. 

Additionally, specialized programs are helping close the gap by offering hands-on training in trades like painting and other construction-related skills. These initiatives are key to building a steady pipeline of workers who are equipped to meet project demands. 

Workforce Aging and Retirement 

The aging workforce adds another layer to the labor shortage issue. More than 20% of American construction workers are aged 55 and older, leading to more retirements shortly. This trend could leave the industry short on experienced workers, so it’s more important than ever to pass down knowledge to the next generation. 

The challenge is amplified by fewer younger workers entering the construction industry at the necessary rates. 

Efforts to attract younger talent include promoting the benefits of a construction career and providing clear pathways for advancement. Additionally, leveraging technology and modern construction methods can make the industry more appealing to the younger generation. 

Solutions: How Construction Companies Are Responding 

• Expanding hands-on training and safety certification programs 
• Partnering with trade schools and community programs 
• Creating mentorship pipelines to transfer knowledge from older workers 
• Promoting the benefits of construction careers to younger talent 
• Modernizing workflows and tech to attract the next generation
  

2. Construction Industry Tariffs and Economic Uncertainties 

In 2025, the construction industry faces significant challenges due to new tariffs and economic uncertainties. The U.S. has implemented broad tariffs on imported materials, including steel, aluminum, and lumber. This is leading to increased costs for construction projects. These tariffs have raised consumer prices by an average of 2.3%, equating to a loss of $3,800 per household. 

Additionally, global trade tensions have disrupted supply chains, causing delays and further cost increases. For example, tariffs on Canadian lumber have increased from 14.5% to 34.5%, significantly impacting the availability and price of this essential building material. 

These economic factors contribute to an unstable market, making it challenging for construction firms to plan and budget. The uncertainty surrounding trade policies and material costs requires proactive strategies to reduce risks and manage expenses. 

Increased Material Costs and Inflation 

Material costs have surged in 2025, driven by tariffs and inflation. According to Workbar, steel prices have risen by 15%–25 %, aluminum by 8%–10 %, and lumber by 17.2% year-over-year. These increases affect project budgets and can lead to delays or scope reductions. 

Inflation is expected to keep pushing construction costs up in 2025, with 4.4% for nonresidential projects and 5% for residential ones. Construction companies must plan for these rising costs to keep their projects on track and profitable. 

Global Economic Trends 

Global economic trends further complicate the construction landscape. Trade tensions, particularly between the U.S. and other major economies, have led to increased tariffs and retaliatory measures, affecting the availability and cost of construction materials. 

Additionally, changes in currency exchange and interest rates impact the cost of imported goods and financing for construction projects. These changes make the economy harder to predict, so construction firms should stay flexible and informed to handle challenges. 

Budgeting and Cost Overruns 

The combination of tariffs, inflation, and economic uncertainty increases the risk of budgeting inaccuracies and cost overruns in construction projects. Common causes of overruns include unexpected material price hikes, supply chain disruptions, and labor shortages.

To reduce these risks, construction firms should implement robust budgeting practices, including contingency planning and real-time cost tracking. Leveraging technology for project management and financial oversight can help keep projects on schedule and within budget. 

Solutions: How Firms Are Staying Ahead of Uncertainty 

• Using real-time cost tracking and forecasting tools 
• Locking in material prices early when possible 
• Building flexibility into project budgets and timelines 
• Diversifying suppliers to avoid single-source risks 
• Following economic trends to adjust procurement strategies quickly
  

3. Technology Is Driving Big Changes in Construction 

In 2025, construction technology is transforming how projects are designed, managed, and delivered. From AI-powered planning to 3D printing, firms use digital tools to boost efficiency, safety, and sustainability. 

For example, Building Information Modeling (BIM) has become a staple of modern construction. According to the Associated Builders and Contractors, BIM adoption is growing due to its ability to streamline project workflows and improve accuracy. 

Moreover, Artificial Intelligence (AI) in construction is also leaving its mark. A 2025 AGC survey found that 44% of contractors plan to increase investment in AI, recognizing its potential to optimize scheduling and resource allocation. 

Lastly, 3D printing is enabling faster, more cost-effective building methods. The global market for 3D printing in construction is quickly growing and expected to top $523 billion by 2030. 

Solutions: How Firms Are Embracing Construction Tech 

• Implementing BIM for improved collaboration and reduced errors 
• Investing in AI to optimize scheduling and resource allocation 
• Adopting 3D printing to accelerate construction timelines and reduce costs 
• Utilizing drones for site inspections and progress monitoring 
• Training staff to effectively use new technologies 

4. Construction Safety and Compliance 

Safety remains a top priority in the construction industry. In 2025, firms are focusing on proactive measures to protect workers and ensure compliance with evolving regulations.

According to the Bureau of Labor Statistics, the construction industry continues to experience a high rate of workplace injuries, emphasizing the need for robust safety protocols.

Moreover, Construction Safety Week 2025 highlighted the importance of jobsite culture and planning. Events across the country emphasized the role of leadership in promoting safety and the need for continuous training. 

Building Codes and Standards 

Building codes are shifting to meet today’s challenges, focusing on sustainability and resilience. California’s 2025 code update, for example, includes changes aimed at boosting energy efficiency and lowering environmental impact. 

Still, some in the industry are pushing back on the pace of these updates. A proposed freeze on new standards through 2031 is gaining traction to create more stability and help control construction costs.

Permits and Approvals 

Permits and approvals continue to be one of the most time-consuming parts of any construction project. Delays can throw off timelines and inflate budgets, so having a smooth process is key.

For example, Assembly Bill 1308 moves things forward by requiring building departments to complete inspections within 30 days of a project’s completion notice—an effort to speed up approvals and reduce costly bottlenecks. 

Solutions: How Firms Are Improving Safety and Compliance 

While there are ongoing challenges, many firms are finding ways to control safety and compliance, turning these high-pressure areas into strengths. Here are a few things firms can do to boost safety and compliance: 

• Conducting regular safety training and drills 
• Implementing comprehensive safety management systems 
• Using wearable tech to monitor worker health and safety 
• Engaging leadership to build a culture of safety 
• Staying updated on new regulations and best practices 
• Participating in code development discussions to stay ahead 
• Collaborating with code officials to understand requirements 
• Using digital platforms to track permits and inspections 
• Hiring dedicated staff to manage documentation and compliance 
• Building strong relationships with regulatory agencies 

5. Environmental Challenges and Sustainability in Construction 

In 2025, sustainability in construction is essential. With the industry responsible for nearly 40% of global energy-related emissions, there’s a pressing need to adopt eco-friendly practices. 

Meeting Green Building Standards

Green building certifications like LEED and BREEAM are becoming standard benchmarks. LEED-certified buildings, for instance, produce 34% fewer CO₂ emissions and consume 25% less energy than traditional structures. The global green building market is projected to reach $1.37 trillion by 2034, reflecting the growing demand for sustainable construction. 

Innovations in materials, such as carbon-capturing concrete and bio-based options like hempcrete, are also gaining traction, helping to reduce the environmental footprint of new constructions. 

Waste Management and Recycling

Construction and demolition waste account for a significant portion of landfill content. In response, the industry is embracing circular economy principles—prioritizing the reuse and recycling of materials. Practices like deconstruction, which allow for the recovery of up to 70% of building materials, are becoming more common. 

Additionally, smart waste management technologies, including AI-driven sorting systems, are being implemented to enhance recycling efficiency and reduce on-site waste. 

Managing Environmental Impact

Beyond construction, there’s a growing emphasis on building operational sustainability. Passive house designs, which focus on energy efficiency and thermal comfort, are being adopted more widely. These designs not only reduce energy consumption but also enhance occupant well-being. 

Renewable energy sources, such as solar panels and geothermal systems, are also becoming standard in new developments, further minimizing environmental impact. 

Solutions: How Firms Are Building Greener 

• Pursuing certifications like LEED and BREEAM to meet green building standards 
• Utilizing sustainable materials, including carbon-capturing concrete and bio-based options 
• Implementing deconstruction practices to maximize material reuse and recycling 
• Adopting smart waste management technologies for efficient recycling processes 
• Designing buildings with passive house principles to enhance energy efficiency 
• Incorporating renewable energy systems, such as solar and geothermal, into projects

6. Managing Construction Documents 

Construction firms are navigating an increasingly complex landscape of document management. With projects generating large amounts of data, efficient document handling is more critical than ever. 

A significant challenge is ensuring all team members have real-time access to the latest documents. According to Procore, construction document management systems can significantly streamline project workflows, but can present challenges for teams when adapting to these systems. 

Moreover, mobile-friendly platforms allow field teams to send and receive data quickly, optimizing resource management. However, user adoption remains a struggle, as some workers stick to traditional methods. 

Solutions: How Firms Are Streamlining Document Management 

• Implementing centralized, cloud-based document management systems for real-time access 
• Ensuring mobile compatibility to facilitate on-site data handling 
• Providing comprehensive training to encourage user adoption of new systems 
• Automating routine tasks like document approvals and expiry alerts to boost efficiency

7. Project Management and Scheduling 

Effective project management and scheduling are pivotal to the success of construction projects. In 2025, firms face challenges such as coordinating complex schedules, managing resources, and ensuring timely decision-making.

Poor scheduling often leads to delays. When planning falls short, tasks overlap, things get missed, and the whole project gets thrown off track.

Additionally, the lack of real-time data integration exacerbates inefficiencies. McKinsey reports that 95% of construction data goes unused, leading to miscommunication and delays that cause budget overruns averaging 28%.  

Solutions: How Firms Are Optimizing Project Management and Scheduling 

• Utilizing advanced project management software for real-time data integration 
• Implementing AI-driven tools to automate scheduling and resource allocation 
• Conducting regular training sessions to enhance team proficiency with new technologies 
• Establishing clear communication channels to ensure all stakeholders are aligned 

8. Win New Business With Smarter Proposals 

In AEC, the speed and quality of your proposals can make or break your chances of winning new business. 

As noted in OpenAsset’s 2024 State of Proposals report, 79% of proposal teams say their firm has lost work due to proposal delays. Yet over half of marketers say it still takes more than a week to pull together a single proposal. This lag is costing firms. 

Clients expect tailored, visually compelling submissions—and fast. But when marketers are stuck chasing down resumes, formatting project sheets, or searching for the latest images, quality decreases. 

In fact, 42% of AEC marketers say they struggle with disorganized content and inconsistent branding across proposals.

This is where OpenAsset comes in.

Solution: OpenAsset 

OpenAsset is a Digital Asset Management (DAM) solution that gives your team the tools to work faster without sacrificing quality. With templates that auto-populate the latest project data, headshots, and branded visuals, your team can shift from formatting to storytelling. That means fewer bottlenecks, more standout proposals, and a real edge in competitive pursuits. 

If your goal is to win more work in less time, OpenAsset is the proposal partner built to help you do it.

9. Supply Chain Disruptions 

In 2025, construction supply chains are under significant pressure due to geopolitical tensions, economic instability, and environmental challenges. New tariffs, worker shortages, and extreme weather are causing delays and driving up project costs across the industry.

Geopolitical unrest, such as the Russia-Ukraine conflict and trade tensions in the Red Sea region, has led to unpredictable supply chain dynamics. These factors have compelled construction firms to reassess their sourcing strategies and supplier relationships. 

Economic instability remains a concern. According to the World Economic Forum, most chief economists (56%) expect the global economy to weaken over the next year, compared to 17% anticipating improvement. This uncertainty makes it challenging for construction companies to plan effectively. 

On top of that, environmental risks, including extreme weather events, pose significant threats to supply chain continuity. The World Economic Forum’s 2025 Global Risk Report ranks extreme weather as a top risk, emphasizing the need for resilient supply chain strategies.  

Solutions: How Firms Are Strengthening Supply Chains 

• Diversifying supplier portfolios to mitigate regional risks 
• Implementing index-linked contracts for price stability 
• Increasing inventory buffers for critical materials 
• Leveraging AI and digital twin technologies for predictive analysis 
• Enhancing compliance protocols to navigate regulatory complexities

10. Cash Flow Management Challenges 

Effective cash flow management is crucial for construction firms, especially with rising costs and payment delays. In 2025, many companies struggle with maintaining liquidity, impacting their ability to meet project deadlines and invest in growth opportunities. 

A significant challenge is the delay in client payments. As outlined in Business Wire, 70% of contractors are experiencing payment delays, some extending beyond 30 days. In turn, this is inflating bids by 8% and stalling projects. These delays force firms to rely on credit lines or adjust bid amounts to maintain operations. 

Moreover, managing multiple projects at once can make cash flow unpredictable. Without solid planning and financial oversight, firms risk delays and losing money. 

Solutions: How Firms Are Optimizing Cash Flow 

• Implementing robust cash flow forecasting tools 
• Establishing clear payment terms with clients and suppliers 
• Utilizing progress billing to align cash inflows with project milestones 
• Exploring financing options to bridge cash flow gaps 
• Investing in financial management software for real-time monitoring

11. Communication Breakdowns in Construction

Good communication is key to any successful project. But in 2025, many construction teams still deal with scattered messages that cause mistakes and slowdowns. 

A study by Pollack Peacebuilding highlights that poor communication can result in a demotivated workforce and lead to defects in constructed works. The construction industry’s mix of different teams and moving parts makes communication problems even harder to manage.

Solutions: How Firms Are Improving Communication

• Implementing centralized communication platforms to streamline information sharing 
• Conducting regular team meetings to ensure alignment and address concerns 
• Providing training programs focused on effective communication skills 
• Establishing clear protocols for information dissemination and feedback

12. Project Delays and Their Impact 

Project delays remain a significant concern in the construction industry. Supply chain disruptions, labor shortages, and unforeseen site conditions contribute to schedule overruns. SpeedChain reports that a 30-day delay on a $10 million project can result in additional labor costs exceeding $300,000, not including productivity losses. 

Solutions: How Firms Are Mitigating Project Delays 

• Utilizing advanced scheduling tools to anticipate and address potential delays 
• Establishing contingency plans to manage unforeseen challenges 
• Enhancing collaboration with suppliers to ensure the timely delivery of materials 
• Implementing proactive risk management strategies

13. Improving Business Efficiencies 

In an increasingly competitive market, construction firms want ways to improve operational efficiencies. Streamlining processes educes costs and enhances project outcomes. Adopting lean construction principles and leveraging technology can significantly boost productivity. 

Solution: How Firms Are Enhancing Efficiencies 

• Implementing lean construction methodologies to eliminate waste 
• Adopting digital tools for project management and documentation 
• Investing in employee training to improve skill sets and adaptability 
• Regularly reviewing and optimizing business processes

14. Cybersecurity Threats in Construction 

As construction firms increasingly adopt digital technologies, they become more vulnerable to cyber threats. In 2025, the industry faces heightened risks from ransomware attacks, data breaches, and other cyber incidents. 

The World Economic Forum’s Global Cybersecurity Outlook 2025 emphasizes the growing complexity of cyber threats, with ransomware and AI-powered cybercrime being top concerns. 

Solutions: How Firms Are Strengthening Cybersecurity 

• Implementing robust cybersecurity protocols and regular system audits 
• Providing employee training on cyber hygiene and threat awareness 
• Utilizing secure cloud-based platforms for data storage and sharing 
• Collaborating with cybersecurity experts to stay ahead of emerging threats

15. Issues With Being Organized in Construction 

Efficient organization is crucial for the timely and successful completion of construction projects. Disorganized workflows can lead to resource misallocation, missed deadlines, and increased costs. 

Fortunately, the adoption of Building Information Modeling (BIM) and Integrated Project Delivery (IPD) methods has shown promise in improving organizational efficiency by enhancing collaboration and information sharing among stakeholders. 

Solutions: How Firms Are Improving Their Organization 

• Adopting BIM and IPD methodologies to enhance collaboration 
• Standardizing processes and documentation across projects 
• Implementing project management software for real-time tracking 
• Conducting regular reviews to identify and address organizational bottlenecks

Turning Challenges Into Opportunities With OpenAsset

The construction industry is no stranger to pressure, but 2025 is making firms rethink their operations. Whether dealing with disorganized documents, rising costs, or a scattered team, the path forward starts with clarity and control. 

That’s where OpenAsset comes in. As the go-to DAM platform for AEC firms, OpenAsset helps you move faster, stay organized, and build winning proposals without wasting time. From managing visuals and resumes to streamlining your workflows across teams, we help AEC firms work smarter.

Want to stay competitive in 2025?