Key takeaways
- With $2.2 trillion in anticipated construction activity scheduled for 2027, the construction industry is poised to ride a wave of demand — if businesses have the capacity to keep up.
- To succeed, construction firms will need to get smarter about technology and AI, overcome workforce shortages and embrace differentiating organic and inorganic growth strategies.
- CEOs should also examine their current growth trajectories, assess whether they have the capital, tools and talent to maintain that growth and adjust their strategic planning if needed.
2027 is poised to be a strong year for the construction industry, with an estimated $2.2 trillion of construction activity on deck. But does your business have the capacity to handle that level of demand?
In this 2027 construction industry trends outlook, you’ll learn how to prepare your business to succeed over the next 12 months, as well as the top industry challenges and opportunities you’ll encounter along the way.
Keep reading for more.
What are the top challenges for the construction industry in 2027?
In 2027, the construction industry will need to build out capacity to service a wave of demand for new data centers. Leaders will also tackle familiar problems like labor shortages and cash flow issues, while navigating tariffs and soaring fuel prices.
Key details on top industry challenges include:
- Strained capacity: Demand for construction services is up, largely driven by mission-critical (data center and infrastructure) work. But as a result, businesses are straining their capacity to meet this demand, straining capacity to capture available market share and stretching their workforce and operational abilities beyond normal parameters.
- Cash flow problems: Smaller companies, especially, face delays in getting paid. This is made worse if a company is also growing or pushing its capacity, as investable cash flow limitations make that momentum harder to sustain.
- Labor shortages: This perennial problem for the construction industry is getting worse, with one estimate suggesting construction needs 456,000 net new workers in 2027 to maintain business as usual. Not only will many companies struggle to find those workers — due to factors like retirements, immigration policy, limited vocational education and skills gaps — but they’ll face intense competition on wages as well.
- Fuel prices and tariffs: Diesel prices, in particular, are roughly two-thirds higher than they were a year ago, with gas prices also up and tariffs continuing to raise raw materials costs. None of these issues will likely be resolved soon and each cuts into profitability.
- Concentration risk: Companies that are too concentrated in any one sector face real concentration risk. For example, if your whole business is building data centers, a pullback in that area would be dangerous — especially if you’ve increased your capacity to serve those jobs.
- Technology hesitation: Construction leaders want to do more with technology, especially AI, but often don’t know where to place their bets to best deploy their limited capital resources.
However, none of these challenges are insurmountable if you’re willing to adapt your business to meet the moment. That starts with embracing 2027’s opportunities.
What are the big opportunities for the construction industry in 2027?
Opportunities abound for construction in 2027. Leaders who make smarter use of technology, pursue strategic partnerships and diversify revenue streams will be poised to not only ride the $2.2 trillion wave of demand but also position their businesses to be more resilient in the event of a pullback.
Explore construction industry trends and opportunities like:
AI and technology
AI and better technology can help you run both your job sites and your business more effectively. Increasingly, this is a necessity to remain competitive, as the companies that find tech-driven efficiencies will have stronger margins and more pricing flexibility than those that don’t.
On job sites, look to AI to improve safety by monitoring site activity. AI can also increase precision on highly technical jobs and watch for construction errors in real-time (more advanced capabilities like robotics mostly remain a few years out but keep an eye on developments in this space).
Inside your business, AI can rapidly analyze data from your core systems, including accounting, procurement, construction management, sales and billing, to feed live dashboards that track your financial and operational performance. AI agents can speed up routine activities like expense management, proposals and project documentation, freeing team members up to focus on more valuable work.
M&A and private equity investments
To build out capacity and invest in better technology, more construction firms are exploring partnerships, M&A and private equity investments. This type of inorganic growth can be essential in helping deliver the level of business infrastructure you need to meet your current or projected customer demands.
The right deal is probably one that doesn’t just deliver additional liquidity or open up new markets but enhances your strategic capabilities as well. In other words, look for partners who understand where you want your business to go and have the insights and experience to help you get there.
Diversifying revenue
Successful construction businesses are diversifying beyond only building new structures. Adding capabilities that allow you to service existing buildings by providing maintenance, upgrades or renovations creates a new recurring and reoccurring revenue stream that significantly boosts the value of your business in the marketplace (especially if you make reoccurring services 15-25% of your income).
Doing this is also a hedge against risk. If new construction demand unexpectedly drops due to a macroeconomic event like a recession or a data center backlash, your business will be better insulated from the fallout if new construction is not your only service line.
Healthcare facilities
As the baby boomer generation continues to retire, the demand for healthcare services is only going up. Those services need additional facilities to support them, making the healthcare space a growth opportunity for the construction industry.
Look for new projects involving hospitals, senior living facilities and outpatient centers, especially in areas of the country that have larger senior populations.
Data center support structures
2027’s estimated $1.6 trillion in data center capex will need significant support infrastructure as well. Think water and sewer, power plants, transmission lines, support facilities for workers and ongoing data center maintenance.
For smaller companies — which often lack the high-precision technical capabilities needed to build data centers — expanding capabilities into support infrastructure is a way to still claim a piece of the AI boom.
Action steps: Here’s how construction CEOs can help their businesses win in 2027
How should construction CEOs take action to guide their companies to success over the next 12 months? Here’s how to get started:
1. Ask the big questions
Take a look at your business from a strategic, big-picture perspective. Ask broad questions like:
- Where do you need to go as a business to stay relevant?
- What’s it going to take to get there?
- What are your capital needs?
- Do you want to go it alone or should you find a partner to help you get there?
Answering these questions can give you practical insights into what you need to accomplish in 2027. Use your answers to guide your strategic planning moving forward.
2. Do an operational and team capabilities assessment
If your firm has grown recently, the scale of your business may have outstripped your current capabilities. If so, that could create financial and operational hurdles within the next year.
Do an operational and team self-assessment to evaluate whether your business needs new skills or systems in place. You need to know if you’ve got holes within your organization (you’ll almost certainly want to look at bringing in a strategic technology and AI leader, for example, as few construction companies have this critical role filled).
3. Understand your capacity
Assess your current capacity levels. Are you able to handle the demand you’re seeing today? And do you have the operational structure and infrastructure in place to support sustainable growth?
Equally important, though, is to find your sweet spot: the level of capacity that makes long- term sense for your business. The AI investment boom may not last forever — how are you preparing for a scenario where the music stops?
Ideally, you want enough capacity to handle healthy growth, but not so much that you’ve stretched yourself too far if and when conditions change.
4. Know your margins and profitability
Get as clear on your costs and margins as you can. Diesel prices, tariffs, wages and interest rates are all cutting into profitability, and while you can’t control any of these factors, you can better adapt if you know exactly how they affect you.
Having the right tech is really helpful here, as a financial system that’s tied into a data foundation will allow you to track your costs and cash flow much more clearly.
5. Think more about your capital needs
Dig deeper into your capital needs. Based on your current growth trajectory, do you have the resources to keep going? Are you able to make the technology and workforce investments you’ll need to stay competitive?
If the answer is no, then evaluate options like traditional financing, an M&A or a private equity investment as options to boost your liquidity.
6. Get AI-ready
Spending money on AI is mostly a waste if you don’t have a data and tech foundation already in place. AI needs data to function — the more, the better — so connect all of your core systems and feed their data into a data lakehouse that can fuel dashboards that deliver organizational and financial insights.
Establishing AI governance is also essential. Without governance, your business will be exposed to potent AI-related risks like data privacy, shadow AI and poor AI outcomes.
When choosing specific AI tools, think about your investments like a venture capitalist. Identify which AI tools could best support your core business objectives and then place your bets on those.
7. Develop technology champions
As technology fundamentally transforms how construction companies build and operate, you need people inside your business who are excited to help lead that change.
Find technology champions inside your organization. These are the individuals on your team who see technological change as an opportunity, not as a threat, and want to share their enthusiasm with the rest of the team.
Many will be younger, so mentor them and create a path for their development that allows them to ride their passion for technology into a more senior role that uses technology to drive business results.
8. Make culture a strategic priority
Construction’s workforce challenges make retaining talent in crucial roles more important than ever. A strong culture is no longer a nice-to-have (if it ever was), but an essential tool to maintaining the workforce you need to meet your strategic goals.
Make culture a strategic priority and a C-suite KPI. Assess your culture, compensation, benefits (including nontraditional options like tax-beneficial deferred compensation plans) and workplace environment to find out how you can encourage your best people to stick around.
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We advise construction businesses on performance, technology, risk, growth and more. Let’s talk about the challenges you face and how we can help your business thrive in 2027. Start a conversation.