The construction industry currently faces several challenges, particularly some that are critical for construction contractors in 2025. The following details a closer look at some key pressing concerns for contractors, as well as strategies to address the challenges therein.
Skilled Labor Shortage
An ongoing shortage of skilled labor continues to be a significant obstacle for construction contractors as experienced workers retire, and fewer young professionals enter the trade. The impact to contractors includes project delays, rising labor costs and increased competition for qualified talent. Delayed project timelines also put significant pressure on profit margins and overall productivity. Contractors should consider investment into robust training and apprenticeship programs, partnership with local trade schools and implementation of upskilling initiatives for existing staff. To attract and retain talent and a skilled workforce, contractors should focus on fostering a reputation as an employer that values workforce development and investment in the individual employee.
Economic and Interest Rate Uncertainty
Economic volatility and elevated interest rates make project financing more expensive and planning more complex. As a result, contractors and their clients now face tighter lending conditions, increased borrowing costs and a greater risk of project cancellations or delayed starts as clients reconsider investments, which can lead to reduced project pipelines and increased financial strain. To mitigate these risks, contractors should strengthen their financial planning and maintain strong relationships with lenders, as well as consider ways to diversify project portfolios to include both public and private sector work. Working with a trusted advisor can help contractors remain informed about economic trends and develop agile strategies to remain resilient in an uncertain or volatile market.
Keeping Pace with Technology Adoption
The rapid adoption of new technologies such as artificial intelligence, robotics and cloud-based project management tools has transformed how many industries, including construction, conduct business. Contractors who embrace these advancements can streamline operations, improve project accuracy, reduce project risk and offset some of the impacts of the labor shortage. Hesitancy or failure to embrace technological change means contractors could risk losing their competitive edge and miss out on efficiency gains. Contractors should actively evaluate and invest in technologies that align with their business needs and foster a culture of innovation within their organizations.
Sustainability and Regulatory Pressures
The recently enacted One Big Beautiful Bill Act (OBBB), which was signed into law on July 4, 2025, brought many changes to clean energy tax credits, specifically an accelerated phase-out for solar and wind projects plus new restrictions on sourcing materials. Contractors should consult with their trusted advisor to determine how these shifts in tax law now impact any client demand for eco-conscious building practices.
Cybersecurity Risks
As construction firms undergo digital transformation with the adaptation of digital tools, cloud-based project management and interconnected systems, they face a rapidly growing threat from cyberattacks. This risk is increased when most billing, payments and communication occur electronically among vendors, subcontractors and clients. Ransomware, phishing scams, redirected payments and data breaches are now common, meaning the question is less about if such incidents will happen, but when, which can halt projects and expose sensitive data. Smaller firms are especially vulnerable to such attacks, which can result in significant financial losses, legal liabilities and reputational damage. Contractors should consult with a trusted advisor on implementing a robust cybersecurity infrastructure and contingency plan to continue operations and maintain financial resources in the event of a cyberattack.
Windham Brannon as Your Trusted Advisor
Managing change with agility in the construction industry is neither easy nor simple, but it can be successfully achieved with the right advisor at your side. Windham Brannon’s Construction Practice professionals are well-versed in their industry expertise, helping contractors with every facet of their business. For more information, contact your Windham Brannon advisor today, or reach out to Kerry Buchan.
