The construction industry has a productivity problem: How Gen AI can help fix it
Construction productivity is stagnant, but AI promises to help change that by streamlining processes and boosting efficiency.
The construction industry is a major contributor to the global economy, accounting for an estimated 14% of gross domestic product and employing millions. But despite its powerhouse economic role, the industry lags behind in productivity growth and innovation. The top construction trends 2025 highlight changes the industry needs to make in order to reach its potential.
And the potential is huge. McKinsey estimates that the industry could grow nearly 70% by 2040, a massive increase from the $13 trillion gross annual output from global construction projects as of 2023.
To increase the growth rate from the current 1.3% to the necessary 2.7% CAGR to reach those 2040 projections, construction companies will need to update their tech stacks in order to maintain the best workforce and improve sustainability.
There are a lot of positive signs for the construction industry, according to Deloitte. Better economic conditions with lower interest rates could generate demand and government initiatives such as the Infrastructure Investment and Jobs Act could spur growth, the firm said in its industry outlook for 2025.
Construction firms that want a piece of this growth will need to update their IT infrastructure and take advantage of new technologies. Here are the trends to watch this year:
Construction productivity is stagnant, but AI promises to help change that by streamlining processes and boosting efficiency.
This makes catching up on digital transformation a top trend for 2025. Shifting away from manual processes boosts efficiency, productivity, and collaboration across the industry—making it possible to achieve ambitious growth goals.
Gartner estimates that 45% of construction organizations use manual methods. The firm cites many software tools that help the industry with estimation, budget allocation, proactive adjustments, and more to improve communication, keep projects within budget, and free up time for strategic decision-making.
Construction leaders are implementing software to get them into the digital age. This helps them streamline data into a single source of truth so that employees can access timely information on finances, process adherence, project management, operational accuracy, and progress toward goals.
For example, Square Engineering, an Egyptian architectural and construction firm, reduced operating costs by 10% in one year with the help of cloud-based enterprise resource planning software. The company also cut down on the time and effort involved in managing construction projects. With their new single source of truth, they’re seeing better workflows and an increase in profit as well.
By unifying disparate data and giving leaders an overarching view of active projects, they’re able to better manage their finances, materials, operations, and collaboration.
Technology can help construction firms bridge the gap between finance teams and field operations, making sure field activity data is accessible alongside site management and back-office information. When all teams are aligned, companies will see better efficiency and accuracy across the full construction lifecycle—from initial bid to project handover.
With this huge spike in AI, use cases are exploding across engineering, design, operations, asset management, and more. In the construction industry, the AI trend promises to minimize risk, increase safety, reduce repetitive tasks like invoice processing and matching, and keep operations on schedule.
Most immediately, AI can save time and money by breaking down RFPs and prioritizing claims to avoid delayed payments.
Putting this technology layer on top of data makes it possible to augment institutional knowledge and old systems of record. AI can help with the RFP process, serving as a flawless repository of all past projects so that it can generate new bids faster. It can also improve the quality of project plans that come next, accurately estimating required materials and timelines to keep projects on track.
The next step is communicating these benefits to relevant teams and putting all of this information at their fingertips. When teams have a single source of truth, everyone can stay on track with changing project plans on the fly such as a switch to new building materials, staffing changes, and updates to initial designs. They also gain insight to drive innovation.
Finally, AI-driven tech can reduce worksite injuries and more tightly control access to construction sites with facial recognition integrated into cameras, drones, wearables, and smart sensors.
The construction industry needs a consistent workforce with the skills and technical know-how needed to deliver projects efficiently. But this has proven difficult industry wide: between 2017 and 2023, average US construction vacancies increased from 200,000 to 380,000, according to Bureau of Labor Statistics.
These statistics highlight a top construction trend in 2025: addressing the labor shortage in construction. Hiring and retaining new talent is the only way to complete existing contracts on time and create a pipeline of new talent to meet growth targets.
Companies that don’t make a plan to overcome the labor shortage now are already experiencing the pain. A $40 billion Taiwan Semiconductor Manufacturing Company chip factory in Arizona was expected to open in 2024, but had to postpone opening to 2025 due to worker shortages.
Many forward-looking companies are starting to look into Gen Z hiring to make up for the outgoing retirees and build an incoming workforce with the tech skills to get things done faster. Attracting young talent will help companies avoid the estimated $40 trillion the industry is set to lose out on by 2040 if productivity and workforce growth don’t pick up.
To prep a construction workforce for the future, companies should consider training programs that put AI skills first for new and existing hires alike. After recruiting and onboarding employees with the right work history and certifications, these programs can also help with ongoing education and mentorship to keep younger workers engaged.
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The UN Environment Programme considers the construction and building industry to be the worst greenhouse gas emitter, making up 37% of global emissions.
To lower this astounding number, construction companies must focus on reducing their environmental footprint. Digital technologies can be especially helpful with this by spotting areas to reduce waste or use alternative green materials.
With the UN’s goal of getting to net zero emissions in the sector by 2050, there needs to be rapid changes and innovations to make the built environment more eco-friendly. The UN suggests three ways to do this: avoid unnecessary extraction and production, shift to regenerative materials, and improve decarbonization of conventional materials.
As customers start to request more green buildings and projects, construction companies that have the right capabilities can start off the RFP process with this in mind and help their customers plan for the cost and material differences.
With the help of technology, the construction industry is driving efficiency with a number of positive downstream impacts, such as building modular homes faster and for less. Having a strong staff onboard with the know-how and skills to leverage these tech tools to their maximum potential makes a resilient and profitable future possible.
As construction companies stretch to meet goals and adjust their practices to complete more green projects, having the technology backbone to track sustainability metrics and progress will be essential to getting it all done at scale.