INDUSTRY REPORT
Global market challenges
Construction market challenges include labour / skills shortages, rising and fluctuating costs( materials, labour, interest rates) and global supplychain disruptions. Economic uncertainty and tight regulations also contribute to this mix. These challenges can lead to project delays, cashflow issues and pressure on profit margins, requiring firms to innovate and adapt with digital tools and new strategies.
Labour shortages and workforce pressures remain among the top HR challenges in the construction industry, influencing project delivery and costs across all sectors. To sustain growth and protect profit margins, companies must strengthen cost forecasting, improve project efficiency and manage risks across different market conditions.
Buildern pointed out that, while global construction output is expected to grow in 2025, three persistent challenges continue to weigh on project costs, schedules and overall feasibility.
“ Understanding the impact of inflation, supply chain risks and financing conditions is critical for construction budgeting and investments this year,” it said in its‘ 2025 Construction Industry Outlook’.“ While the pace of increases has slowed, costs are still sitting well above pre-2020 levels. Labour expenses add to the problem, with wages for skilled trades climbing 5-7 % annually in many markets as worker shortages persist.
“ Supply chain reliability has improved since the worst disruptions of the pandemic years, but vulnerabilities remain. Global shipping delays still affect delivery times, and energy price swings continue to push up transport costs. [ For ] large projects, even a two to threeweek delay on critical materials can trigger cascading schedule and budget impacts,” added Buildern.
Sustainability and skills
Affordable and sustainable housing emerged as a defining challenge at COP30, with many countries expressing their support. This support reiterates that these are global challenges and require a
Farnborough airport, UK.
Image: Shutterstock. com. unified response, with actors around the world benefitting from guidance and best practice on solving the challenge, according to RICS( the Royal Institute of Chartered Surveyors).
“ The concluding Belém Call for Action commits countries to integrate climate goals into housing policy by 2030. This aligns with our work on WLCA, which the UK Environmental Audit Committee recognised as a key industry standard for measuring and reducing embodied carbon alongside operational emissions. These frameworks help members to deliver housing that is low-carbon, resilient and socially valuable. Affordable housing is not just a social priority— it is a climate imperative,” RICS confirmed.
“ Governments will need professionals who
Major players in the construction can deliver low-carbon, resilient, affordable market are actively pursuing innovative housing at scale, and technologies, particularly automation, to WLCA is the tool that elevate project efficiency, curtail costs makes this measurable. and gain a competitive advantage
By applying whole life carbon assessment to housing projects, members can help clients and policymakers understand the true climate impact and identify the most cost-effective pathways to net zero. Whether you’ re a professional in building surveying, residential valuation, development consultancy or project management, your ability to integrate sustainability into housing delivery will be increasingly valued,” it added.
Looking ahead, RICS also sees skills as a critical enabler. Its recently launched Skills report identifies gaps in sustainability and digital capability. To address this, its Sustainability advisory MRICS Pilot Pathway offers members a route to lead on ESG and climate strategy at project, portfolio and policy levels. The pathway covers climate action, circularity and social value, with an emphasis on governance, risk and systems thinking, and a coordinated approach.
“ The way forward is to apply WLCA to every major project and integrate nature and resilience through our land standards, including the International Land Performance Framework. Like the unified response conveyed by Belém’ s location, using multiple frameworks to develop a holistic approach to the built environment will be key to achieving sustainability targets,” concluded RICS. n
Image: Shutterstock. com.
26 | ismr. net | ISMR December 2025 / January 2026