- Published on:
- Last updated: October 29, 2026
- 12 min read
Table of Contents
Introduction
In our recent 2026 Commercial Construction Outlook webinar, PlanHub was fortunate to have Ken Simonson of the Association of General Contractors of America provide an update on the state of the construction industry and an outlook for what’s ahead. Simonson discusses key matters to consider, like an even tighter workforce, variable growth across sectors, and rising costs.
With his outlook on the industry and understanding of the current trends for 2026, construction professionals can begin planning the steps to take as we approach 2027. Construction firms start building their plans in Q4, so now is the time to begin planning.
Whether you are a general contractor, subcontractor, or a supplier, volatile pricing and variability in segment growth should be important considerations as you plan your strategy for the next year. As you consider how to plan your construction business for 2027, this guide provides key action steps and a roadmap to adapt to the industry’s most significant trends today.
Key Takeaways
- Focus your pipeline on the highest-growth segments right now — data centers, power, air transportation, and infrastructure are where the strongest project opportunities are heading into 2027.
- Build pricing transparency and short lead times into your value proposition so contractors see you as a reliable partner when material costs are volatile and unpredictable.
- Get in front of contractors and subcontractors working in growing segments before Q4, since that's when firms lock in their plans and the suppliers already in their network get the first call.
- Lead with labor-saving and prefabricated products when you're positioning yourself to contractors — the workforce shortage makes anything that reduces time and labor on the jobsite a genuine competitive advantage.
- Tighten your own financial safeguards now by monitoring tariff impacts on your materials, shortening payment terms where you can, and maintaining a credit cushion to stay resilient through a higher-rate, higher-cost environment.
Lever 1: Choose Your Sectors and Markets for 2027
The construction industry as a whole is not objectively growing or shrinking. Instead, the story lies in the sectors themselves, with some areas growing and others facing declines. In his webinar, Simonson provided a convenient breakdown of how various sectors are performing, specifying which are experiencing growth in spending and which have declined in the past year.
Spending in residential construction is down across the board, with a 7% decline in the past year. Meanwhile, nonresidential construction has stayed relatively stable, with variability across subsegments.
Nonresidential sectors like power and highway and street infrastructure have shown promising growth in the past year, with spending on power up 5%, led by electric power, and highway and street construction up 4%. Meanwhile, data center construction growth holds a considerable grip on the industry, up by a staggering 57%. However, private office construction, in the same segment, is down 11%.
On the other hand, manufacturing and healthcare are facing declines. Manufacturing has seen the steepest decline, with a 21% decrease in spending and a 47% decline in computer and electronics manufacturing, related to less time spent on semiconductor manufacturing plant construction. However, Simonson foresees a likely resurgence in this area, related to increases in pharmaceutical plants and natural gas liquefaction facilities.
An awareness of these trends is important for choosing work wisely. Consider the direction of the following sectors as you plan your construction business for 2027.
Notable Changes in Nonresidential Construction Segments July 2025-July 2026
Segments | Spending Trends |
Data centers | 17% |
Manufacturing | -21% |
Private Offices | -11% |
Highway and Street Infrastructure | 4% |
Commercial Construction | -5% |
Power | 5% |
Pre-primary, libraries, museums, and miscellaneous education | 4% |
Air transportation | 3% |
Medical building | -6% |
Special care | -10% |
Education | -0.6% |
Source: www.census.gov/constructionspending
Altogether, the most promising segments over the past year have proven to be data center construction, transportation equipment manufacturing, air transportation, and power construction, including wind, solar, and natural gas. Construction firms should prioritize looking toward these areas for opportunities as they move into 2027.
General contractors should:
- Carefully review which projects to take on and which to pass on
- Identify the key specialty trades that growth segments require
- Build a network of subcontractors experienced in the trades and regions that these segments often correlate to
Subcontractors should:
- Bid strategically, with close attention to the sectors that are highest performing and growing
- Lean further into nonresidential commercial and public sectors over the residential sector
Suppliers should:
- Identify and build a pipeline of supplies that are beneficial to trades in growing segments
- Build professional connections with general contractors and subcontractors in these fields
Lever 2: Protect Your Margin Against Rising Costs
Protecting margins is one of the most critical planning constraints for construction firms, as material costs continue to rise considerably heading into 2027. International conflicts that have raised diesel fuel prices to over $6 a gallon and tariffs on materials like steel, aluminum, copper, and lumber have put firms in a difficult position, forcing them to contend with unpredictable costs.
Firms should build safeguards into their bids and formal contracts to be proactive about planning for construction costs and tariffs, rather than having to disrupt projects already in progress. Thinking ahead, being transparent, and finding solutions with suppliers is key to adapting to this year’s challenges.
General contractors should take the following steps:
- Consider including contingency and escalation language in contracts so that material cost risk is shared with owners and not entirely on them
- Establish relationships with suppliers and lock in pricing where possible
Subcontractors should:
- Keep quotes short-dated
- Review pricing separately for every bid
- Build pricing volatility into contracts to avoid thin margins
Suppliers can stay competitive by:
- Providing value to contractors with short lead times
- Offering transparency in costs and being upfront about volatility
Takeoff & estimation tools that provide reference pricing are valuable resources for developing accurate bids that firms can trust, even in a volatile market. These tools feature an extensive item cost library, allowing teams to develop clear and accurate bids and estimates with less research.
Lever 3: Lock In Labor Before You Need It
A workforce shortage is nothing new in the construction industry, and it remains a concern for construction labor planning into 2027, so firms must be equipped to either prevent or fill in the gaps. In an industry where 35% of the tradespeople were born outside the US, policy changes may place even more strain on construction firms seeking to fill roles. The keys to success are to build a reliable professional network to lean on, invest considerable energy in retaining employees, and implement strategies to optimize output.
Construction wages are increasing by 5% year over year to keep roles enticing to skilled professionals, compared to a 3.3% increase in the economy at large. Meanwhile, both hiring and layoff numbers are low, as firms hold on to scarce workers in a tight labor market. These factors are likely to remain important for construction firms to maintain their reliable labor.
General contractors should:
- Adopt careful prefabrication strategies that can help you make the most of a tight workforce environment
- Maintain access to a reliable subcontractor network to remain flexible when the workforce is tight
- Develop a process for pre-qualifying subcontractors to build a strong team for projects
Subcontractors should be able to do the following:
- Protect your crew with a retention and hiring strategy centered around benefits and wages
- Utilize prefabrication strategies to help you make the most of a tight workforce environment
Suppliers can:
- Provide value to contractors by leading with labor-saving and prefabricated products
- Offer guidance to contractors on substitutions for products that can save time, effort, and labor
Build a Winning 2027 Game Plan with PlanHub
PlanHub provides you with access to a network of experienced construction professionals and actively bidding projects while empowering you with tools to be selective about which work opportunities make the most sense for your business.
Lever 4: Build a Disciplined Backlog and Bid Pipeline
In a challenging year when you have to be mindful of which segments are performing best and which jobs are most worth your time, backlog quality outweighs quantity. Businesses should be mindful of which jobs will yield the greatest margins and align their bidding processes with the most promising opportunities. Ultimately, businesses that are the most focused on bid quality are best equipped for success and can win more construction projects.
General contractors should take the following steps:
- Develop a strategy for which projects to target rather than taking any potential bid that crosses their desk
- Utilize a strategic bid management strategy to identify subcontractors that are the best fit for working with them on projects
Subcontractors should:
- Be selective about construction projects to bid on and the segments they exist within
- Find and bid on construction projects that align with what they can win and complete most profitably
- Use a bid board to prioritize the most fitting opportunities
- Review previous bids to track which bids are the most likely to win and offer the best returns
PlanHub can help you find and evaluate the right fit projects so that you can move forward with a clear strategy. Our bidding tools use automated matching features to help general contractors and subcontractors find the best fit projects.
Once you find projects worth bidding on, use our Ask AI feature to ask more targeted questions about the project, such as what will be required of you within the scope. The feature will provide you with an answer based on the project documents, with a reference to where it is found, making the evaluation phase quicker and simpler.
Lever 5: Plan Cash and Financing for a Higher-Rate Environment
Simonson anticipates that federal interest rates may continue to rise, which increases financial uncertainty. He predicts that rising interest rates may raise borrowing costs for owners, squeeze public bonds that fund public projects like schools or airports, increasing select project costs and potentially impacting project funding timelines.
The added uncertainty means that construction firms across business types should build in safeguards to be more disciplined in their cash management and more mindful of which projects to choose. Some tips for being more disciplined with your cash regardless of your specialty area include:
- Bid on opportunities with a consideration for increased costs or volatility
- Tighten payment terms to reduce uncertainty
- Invest careful attention into both employee and tradepartner retention to prevent added volatility
- Shop materials across suppliers to find the friendliest rates and delivery schedules
- Maintain a credit cushion to prepare for a slower-paying or higher-rate environment
Build Your 2027 Plan, a Step-by-Step Checklist
With a clear understanding of the current state of the construction industry is one thing, knowing what to do with the information is another. The following checklist can help construction professionals prepare themselves for the changing industry:
- Pick your target segments strategically
- Price your services for cost volatility
- Secure labor on your team or through relationships
- Continue to invest time and finances into both employee and client retention
- Set your pipeline and bid rules
- Refine your bidding processes to increase bid quality over quantity
- Pressure-test cash flow and forecast potential work and challenges
Your Watch List for the Rest of 2026
As we move into Q4 of 2026, construction firms will unfortunately have to grapple with considerable uncertainty. From international events to national policy, the construction industry is facing uncertainty from multiple sides, and firms must keep a close eye on impacts on their business.
Some considerations:
- International conflict and its impact on diesel and fuel prices in general
- Changes in tariffs and their impact on materials like steel, aluminum, lumber, and copper
- Whether the federal highway and transit spending authorization will continue
- Continued workforce uncertainty due to labor trends and migration policies
Beginning to build your network now and finding your specialty areas can help you weather the questions to come. Refining your bidding processes and being strategic about the work you prioritize into 2027 is key to success.
Plan Ahead for 2027 With PlanHub
As 2026 winds down, the 2027 roadmap requires careful planning to adapt to challenges like a tight job market, rising material costs, and inconsistent industry spending driving varied growth across segments. In response, construction businesses must be able to prepare themselves by building a network of reliable partnerships, optimizing their processes, and being selective about projects that are the best fit.
PlanHub is a helpful tool for planning ahead and preparing for the ups and downs of the construction industry where it stands today. In an industry where businesses have to adapt to constant change, PlanHub allows you to withstand the waves by surfacing active projects and connecting you with a network of potential partners who can help you advance your business.
Book a demo with PlanHub to experience how you can streamline your workflow and better prepare for the coming year.
FAQs
How should a general contractor plan for 2027?
A general contractor should plan for 2027 by building a strong network of subcontractors, preparing for cost volatility with transparency in contracts, finding a reliable pipeline of suppliers, and anticipating which construction segments are driving increased spending and which are shrinking.
What should subcontractors do to prepare for the 2027 construction market?
Subcontractors should differentiate themselves from competitors by bidding on projects in growing segments, remaining transparent about pricing volatility, developing accurate yet flexible bids, and protecting themselves against market uncertainty with careful forecasting and clear contracts.
How can suppliers plan for construction demand in 2027?
Suppliers can plan for demand in 2027 by being transparent about pricing volatility, developing consistent relationships with contractors, and providing value with reliable lead times and product recommendations. Suppliers should also continue to pay close attention to factors affecting material costs and stay mindful of cost-effective alternatives.
How do I protect my bids from rising material costs and tariffs?
Protect your bids from rising material costs and tariffs by building flexibility and transparency into the bid, avoiding guarantees on prices, and using takeoff and estimation tools to develop the most accurate bids possible.
How can contractors handle the construction labor shortage in 2027?
Contractors can handle the construction labor shortage by prioritizing retention strategies, keeping up with the industry’s trend of growing wages, and developing strong relationships with reliable subcontractors to fill in gaps where possible.
Which construction sectors are worth targeting in 2027?
The fastest-growing construction sectors heading into 2027 are data center construction, transportation equipment manufacturing, highway and street infrastructure, and energy infrastructure, such as solar and natural gas.
Is 2027 a good year to expand my construction business?
It’s difficult to predict whether businesses should expand given the uncertainty that many parts of the market are facing, from labor shortages to pricing volatility. However, cautious growth may be an effective strategy for businesses that target growing segments and focus on a strategic bidding process for protecting margins. Construction firms that have a specialty area and focus on developing high-quality bids in their target area are best equipped to expand in an uncertain market.
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