Construction Industry Challenges 2025

The construction industry enters the final stretch of 2025 with both promise and pressure. After years of slow growth and more complex projects, the industry faces unique challenges. These challenges need better execution, stronger workforce management strategies, and smarter use of technology.

For project managers, executives, and field leaders, the last four months of the year are important. They are not just about meeting deadlines. This time is a test for profitability, compliance, and competitiveness.

This article looks at the biggest challenges in the construction industry for 2025. It discusses their importance now and how contractors can tackle them before the end of the year.

1. Persistent Labor Shortages

Skilled labor remains the number one issue in construction. The Associated Builders and Contractors (ABC) says the industry will need more workers. Experts estimate that companies will require over 439,000 additional workers by 2025 to meet demand.

For contractors, the challenge is twofold:

• Recruitment and retention: Attracting new talent while retaining experienced workers.
• Onboarding speed: With projects running on tighter schedules, new hires must become productive faster.

Year-end priority: Standardize digital workflows to enable new employees to adapt to company systems and processes quickly. Configurable tools like mobile timekeeping and production tracking reduce the training curve while boosting accuracy.

2. Rising Material Costs and Supply Chain Risks

Although material prices stabilized in early 2025, inflation and global supply chain disruptions still ripple through the industry. Contractors report higher costs for steel, copper, and electrical components—materials central to MEP projects.

KPMG’s 2025 construction report has a warning. It says that changes in trade and immigration policies are affecting commodity prices. These changes are also impacting project timelines.(KPMG).

Year-end priority: Contractors should use real-time field data to monitor consumption and adjust procurement before shortages hit. Production tracking systems provide early warning signals when usage trends differ from estimates, helping managers prevent cost overruns.

3. Compliance and Regulatory Pressures

From OSHA safety rules to evolving state labor laws, compliance burdens continue to grow in 2025. For many contractors, manual documentation remains a weak point. Autodesk and FMI report that insufficient data causes 14% of all construction rework globally.

Non-compliance by your construction business carries steep penalties: lost bids, legal action, or damaged reputations.

Year-end priority: Automate compliance documentation. Digital forms for safety, health, and environmental reporting give real-time insights into risks. They help track labor accurately and protect contractors from fines.

4. The Push for Real-Time Project Insights

Owners and GCs now expect real-time visibility, not outdated monthly summaries. Contractors stuck on paper or spreadsheets can’t keep pace—leading to missed opportunities in cost forecasting and resource allocation.

Manganaro faced this challenge head-on. By standardizing workflows with Rhumbix, they unified timekeeping, production tracking, and T&M reporting in one platform. This gave leadership daily cost visibility and empowered field teams with accurate KPIs, reports, and dashboards. The shift from paper chaos to integrated clarity eliminated delays and set a new benchmark for responsiveness and control. Read the full case study here.

Year-end priority: Consolidate timekeeping, production tracking, and change order documentation into one system. A single source of truth aligns office and field teams, streamlining decision-making and enhancing profitability.

5. Labor Productivity and Rework

McKinsey’s research shows that labor productivity in construction has not improved from 2017 to 2024. Rework is hurting profit margins for everyone (McKinsey). As projects accelerate toward year-end, the risk of errors rises.

Rework often stems from inconsistent reporting, unclear change orders, or poor communication between the field and the office.

Year-end priority: Prioritize consistent, standardized workflows. Clear documentation of change orders and progress tracking ensures fewer disputes, faster approvals, and more predictable cash flow.

6. Construction Technology Fragmentation

Many contractors use a patchwork of tools—some for payroll, others for safety, others for scheduling. This creates data silos and an extra administrative burden.

Integration has become a competitive necessity. Field Tools with modern interfaces allow data to move seamlessly between ERPs, point solutions, project management tools, and compliance systems.

Year-end priority: Audit your tech stack and invest in integrations. The last four months of the year are important. We need to remove redundancies, combine platforms, and create workflows. This will help reduce back-office work in 2026.

7. Meeting End-of-Year Deadlines

The final quarter is often the busiest season for contractors. Owners want projects wrapped before the holidays, while accounting teams push to close the books. Missed deadlines carry financial penalties, strained client relationships, and future bidding disadvantages.

Year-end priority: Use digital dashboards to track progress with real-time field reporting. Real-time KPIs for labor, equipment, and materials help managers adjust crews and resources. This way, they can prevent deadlines from slipping.

8. Client Expectations for Transparency

Owners expect transparency into costs, labor hours, and production rates. Contractors who cannot provide this level of visibility risk losing bids to competitors who can.

Year-end priority: Share dashboards and standardized reports with clients. Demonstrating accurate, real-time data strengthens trust and positions contractors as partners capable of delivering accelerated schedules with certainty.

9. Preparing for 2026

Beyond immediate deadlines, the last four months of 2025 provide an opportunity to prepare for the year ahead. Contractors who excel will be in a better financial position in 2026. They need to finish on time, stay within budget, and follow the rules. This will help them be more competitive.

Key preparation steps include:

• Establishing KPIs for efficiency and cost savings.
• Reviewing and refining workflows based on field feedback.
• Training crews on digital tools to start 2026 with higher productivity.

Finish Strong, Start Stronger

Rising complexity, tighter deadlines, and greater expectations for accuracy define the construction industry in 2025. Labor shortages, compliance requirements, and cost pressures are not going away.

The last four months of the year offer a great opportunity to standardize workflows, digitize field reports, and align office and field teams. Contractors who act now will finish 2025 stronger. They will also prepare for a more profitable and competitive 2026.