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REDWOOD CITY, Calif., March 4, 2025 — As the construction market experiences growth, project owners are confronted with mounting challenges stemming from factors such as labor shortages, supply chain disruptions, and volatile global policies, according to DPR Construction’s latest Market Conditions Report.
"Markets don’t like uncertainty and, right now, we have a lot of it," said Tim Jed, DPR Construction’s supply chain leader. "In addition to ‘normal’ disruptions like natural disasters, labor shortages, and high demand for materials, the industry is grappling with uncertainties related to both domestic and foreign policies, global instability, and cost unknowns. This is not the time for business as usual when it comes to construction project planning."
The 2025 construction market looks promising, but it is also fraught with complexities that could impact project timelines, budgets, and resource allocation. DPR Construction is urging project owners to work closely with project partners to address the emerging challenges early on in their planning processes. Specifically, project owners must focus on three key areas to prepare for:
1. New Executive Orders: A Double-Edged Sword
Recent executive orders may offer both opportunities and challenges. On one hand, efforts to streamline the permitting process could provide a boost for customers looking to speed up their time-to-market. However, as DPR points out, it’s uncertain whether the supply chain, which heavily relies on imports, will be able to keep pace with these accelerated timelines. This uncertainty places additional pressure on owners to lock in material prices early to hedge against price volatility.
“The availability of the skilled labor workforce is a similar challenge. It's crucial for project owners to engage with partners early to plan for these potential impacts,” said Jed.
2. Tariff Implications: Potential Price Hikes
Another concern for project owners is the potential for new tariffs on construction materials such as steel, aluminum, and gypsum. While tariffs have historically led to higher consumer prices and slower employment growth in manufacturing, the impact on material prices is often not as straightforward. For example, a 25% tariff on Mexican gypsum could lead to only a 5% increase in drywall prices. However, even modest price hikes can have significant effects when scaled across large construction projects.
“It’s essential to understand that the tariff percentage doesn’t directly correlate with material price increases. Even a small price hike can add up quickly across a project’s full scope,” Jed explained.
3. Supply Chain Volatility: A Global Concern
Global instability, including ongoing geopolitical tensions such as the Ukraine war and issues surrounding Taiwan, continues to strain the supply chain. These disruptions have led to material shortages and rising costs for essential building supplies. As DPR highlights, industries dependent on raw materials will face ongoing challenges in maintaining supply chains and controlling costs in 2025.
“This is a critical issue for owners in sectors reliant on raw materials. The instability is expected to persist, making it essential for project owners to stay proactive and adjust their supply chain strategies to remain agile,” said Jed.
Recommendations for Project Owners
In response to these growing uncertainties, DPR Construction recommends that project owners take immediate action to secure resources and pricing. By collaborating closely with partners, owners can navigate the complexities of material sourcing, labor availability, and cost fluctuations. Early and transparent communication with suppliers and contractors is also crucial for minimizing delays and mitigating financial risks.
Market Outlook for 2025
Despite these challenges, the construction market is still poised for significant growth. As the industry adapts to these new pressures, DPR Construction’s Market Conditions Report notes that there are still opportunities for innovation and efficiency, especially for those who are prepared.
“We’re at a crossroads in the construction industry, where anticipating these disruptions can mean the difference between project success and failure. Planning with a long-term view will be essential to keep projects on track despite the uncertainties,” concluded Jed.
To explore more insights on construction market trends, visit DPR’s interactive market conditions dashboard for real-time data on key indices and industry forecasts.
Originally reported by DPR Construction.