According to data published in the Beck Group’s latest construction cost report, nonresidential construction costs increased about 5% last year, which falls within the range of normal cost escalation. In 2026, construction cost inputs are expected to trend close to last year’s level, pending no major hiccups, such as a prolonged Middle East conflict.

Expectations of another year of stable construction costs, along with potentially lower interest rates and reduced inflationary pressures, helped buoy AEC firms’ hopes of improved business conditions later this year.   

The report lists input costs for markets in Atlanta, Austin, Dallas/Fort Worth, Denver, South and West Florida, and Raleigh. It presents construction costs for healthcare, higher education, hospitality, office, multifamily, faith-based, parking and site work.    

Tariff Impacts Overblown

Many AEC firms feared significantly higher prices for imported construction materials when the Trump administration unleashed an unprecedented flurry of global tariffs under the International Emergency Economic Powers Act and other statutes in the first quarter of 2025. The IEEPA tariffs had their greatest impact on metal products, such as aluminum, steel and copper.

But a Supreme Court decision in February ruled that the tariffs were deemed illegal. That led the administration to impose a 15% tariff increase under a different statute to replace the invalidated tariffs.   

Surging demand for data centers and mission-critical infrastructure projects contributed to higher prices for metal products. But prices for other construction materials were largely capped by slower activity in nonresidential projects.

Significant construction cost escalation failed to materialize for various reasons. That included the administration successfully negotiating lower tariffs with some countries and no new 2025 tariffs following the initial round that year.

Other contributing factors included AEC firms implementing cost-containment strategies, such as negotiating supplier deals or purchasing materials from countries with lower tariffs. Some AEC firms’ workflow models, such as Beck’s highly collaborative design-build model, also proved valuable in stabilizing project costs.

Demand for Skilled Trades Heats Up in Cooling Labor Market  

Additionally, input costs remained affected by the ongoing shortage of construction workers. That trend is exacerbated by a proliferation of data center and other large-scale construction projects, which are siphoning skilled workers from other projects by offering higher pay and other attractive incentives.  

However, overall demand for construction labor has cooled amid fewer commercial projects, particularly in the office and multifamily segments. Higher borrowing costs have made it difficult for owners and developers to pencil in these projects profitably. But steady demand exists for healthcare and educational projects, which are typically funded with public investments.      

Costs are also impacted by building codes and regulations, building designs and other factors. Those costs generally gradually rise over time and are in addition to material and labor costs.

Firms still face headwinds that could push construction costs above anticipated levels this year. More costly tariffs and other event risks could potentially lead to supply disruptions, material scarcity and higher energy costs.

Regional Cost Disparities

In the breakdown of building costs in Beck’s markets, there are significant differences across regions and industry sectors. Size, location, project type and complexity, labor wages and material prices are among the mix of factors influencing construction costs.

South Florida had the highest input costs in Beck’s operating regions. West Florida, Denver and Atlanta were also at the high end of costs, while Raleigh, Austin and Dallas/Forth Worth were on the lower end.  

The report shows significant cost differences across several building categories in Beck’s markets.

Below are examples of building costs in Beck’s markets. The building sectors listed below reflect the lowest (generally Dallas/Foth Worth) and highest (generally South Florida) construction costs in the firm’s markets. 

• Healthcare–In Beck’s seven markets, the cost of building an acute care hospital ranges from a low of between $705 to $832 per square foot to a high between $795 and $938 per square foot. Costs for a core-and-shell medical office building (without tenant improvements) range from $225 to $265 per square foot to $292 to $345 per square foot. Many industry veterans may recall that the cost to build complex healthcare facilities, such as hospitals, ranged from $500 to $600 per square foot. Those costs are now approaching $1,000 per square foot, reflecting technical requirements and long-term escalation.

• Hospitality–Construction costs for a five-star hotel range from a low of $594,392 to $701,338 per key to a high of $990,654 to $1.168 million per key. The cost of a four-star hotel ranges from $235,945 to $278,397 per key to $499,093 to $588,892 per key.
• Higher Education–Building costs for general classroom and office buildings range from a low of $403 to $476 per square foot to a high of $621 to $733 per square foot. The projects’ renovation costs range from $355 to $418 per square foot to $433 to $511 per square foot.
• Multifamily–Input costs for a rental high-rise project range from a low of $330,956 to $390,503 per square foot to a high of $623,130 to $735,246 per square foot.
• Office–Input costs for a seven-plus-story, core-and-shell office building (without interior finishes and parking facilities) range from a low of $237 to $279 per square foot to a high of between $326 and $385 per square foot. The cost of constructing office buildings is approaching $300 per square foot nationwide, up from the historically lower end of $200 per square foot. The office market has undergone structural changes since the pandemic, with many older or underutilized buildings being used or planned for residential or mixed-use projects. There is a general lack of interest in speculative, ground-up office buildings due to higher borrowing costs and concerns over their profitability in the current environment.
• Faith-Based–Worship space construction costs range from a low of $424 to $500 per square foot to a high of $659 to $778 per square foot. Renovation costs for this building type range from $189 to $223 per square foot to $231 to $272 per square foot.
• Parking–Construction costs for a precast parking structure range from $18,672 to $41,420. For an above-grade podium parking structure, the cost to build this facility ranges from $43,179 to $84,824.
• Sitework–For work on urban sites less than five acres, costs range from $1.45 million to $2.32 million. For non-urban sites between 5-15 acres, the cost ranges from $911,808 to $1.45 million; for non-urban sites larger than 15 acres, the cost ranges from $561,674 to $896,639.

Barring any unforeseen bearish events in 2026, construction cost inputs are expected to mirror cost escalation in 2025. This year also marks a period of guarded optimism among AEC firms, following a turbulent year. Beck will publish an update on nonresidential construction costs in the markets listed above later this year, providing a snapshot of how building costs are transforming a dynamic built environment.    

SEE ALSO:

The post Construction Costs Should Stabilize for 2026 Despite Persistent Global Pressures first appeared on Construction Executive.

Construction spending continues to contract, and momentum is particularly scarce outside of the data center segment. Headwinds like materials price escalation and high borrowing costs remain stiff, yet backlog and consumer confidence are both healthy heading into the second half of 2026. 

Private Nonresidential Construction Spending Continues to Slide

Construction spending in the private nonresidential segment shrank for the seventh straight month in May and is down nearly 7% over the past year. Much of that weakness is due to waning CHIPS Act incentivized megaprojects, yet there is an utter lack of momentum outside of the surging data center segment. Public nonresidential activity has held up better and rose at a healthy pace in May.

Construction Employment Grew in June

Construction industry employment added 11,000 jobs in June, all of which were in the nonresidential segment. Employment in the residential segment contracted. This growth, fueled by data centers and public construction, will likely persist over the coming months as activity in those segments continues to expand.

The industry’s unemployment rate is up 1.3 percentage points over the last year, indicating that worker availability has improved across certain occupations.

Contractor Backlog and Confidence Stable

ABC’s Construction Backlog Indicator fell to 8.8 months in June but is still above year-ago levels. That annual growth has been fueled entirely by the Middle States and South regions; backlog is down over the past 12 months in the Northeast and West. Contractor confidence, meanwhile, remains elevated, with contractors on net expecting greater sales, hiring and profit margins over the next six months.

Materials Prices Fall With Oil Prices

Construction input prices fell in June, largely due to the decline in oil prices, but remain nearly 8% higher than during the same month last year. Despite the decline, input price escalation will likely resume in the coming months due to renewed oil price pressures and ongoing increases in the price of tariff-affected inputs like iron, steel and copper.  

Looking Ahead

Surging data center activity is crowding out other forms of commercial investment. That, along with elevated materials and borrowing costs, has led to a dearth of momentum across most private nonresidential construction segments. That dynamic will remain firmly in place over the coming months, especially with oil prices once again rising and borrowing costs unlikely to decline in the near future.

Sources: U.S. Bureau of Economic Analysis; U.S. Census Bureau; U.S. Bureau of Labor Statistics, Associated Builders and Contractors.

*The Construction Backlog Indicator measures the average months of work under contract for ABC members.

**The Construction Confidence Index is a diffusion index where values above 50 indicate expectations of expansion over the next six months, while values under 50 indicate expectations of contraction.

SEE ALSO: CONSTRUCTION BACKLOG INDICATOR SLIPS, CONTRACTORS REMAIN CONFIDENT IN JUNE

The post Construction Futures: July 2026 Economic Roundup first appeared on Construction Executive.

The post Financial Planning Frameworks for Construction Companies first appeared on Construction Executive.

These scenarios play out in commercial buildings across the country every day. And in most cases, they can be avoided entirely with proactive capital planning.

An Elevator Works Harder Than Most People Realize

The average commercial elevator makes up to 500 trips per day, equivalent to traveling more than 1,000 miles per year. Over the operational life of a building, that is an enormous cumulative load on mechanical and electronic components that were engineered for a specific service life. The cab and its components such as control systems, drive technology and door operators are relics of the era in which they were installed, likely operating well past their optimal performance window.

Regular maintenance can keep aging systems running smoothly for decades, but even the best maintenance plans have their limits. At some point, repairs can only do so much, and the cost of keeping an outdated system operational begins to outpace the cost of replacing it with something built for the next 20 to 30 years. 

The Three Costs Building Owners Aren’t Accounting For

When a building owner defers an elevator modernization, the calculus often looks straightforward: The repair bill today is smaller than the proposed modernization project. What that calculation misses are the three categories of cost that accumulate as your elevator equipment ages.

The first is operational. Aging components fail more frequently and less predictably. Emergency service calls can carry premium pricing, and replacement parts for obsolete systems can be difficult to source, which adds extended downtime on top of cost. What begins as a manageable maintenance budget and downtime can quickly double over a three-to-five-year window as a system continues to age.

The second is liability. Aging elevator equipment interacting with the public every day creates real exposure for building owners, operators and managers alike. ADA compliance, fire safety codes and local inspection requirements are not static, and systems that were fully compliant at installation may no longer meet current standards. Owners who get ahead of modernization are protecting their tenants, their visitors and themselves.

The third is asset value. In a competitive leasing market, vertical transportation is not a background amenity, it’s a daily touchpoint for every tenant in the building. Slow wait times, frequent service interruptions and outdated cab aesthetics are documented factors in tenant retention decisions. For building owners preparing for a refinance, a sale or a major lease renewal cycle, an aging elevator system is a liability that sophisticated buyers and tenants will price in.

Modernization Is a Roadmap

One of the most persistent misconceptions about elevator modernization—one that often causes decision makers to delay—is that it requires a complete system replacement, a prolonged construction period and a major capital event. In practice, a well-structured modernization can be phased across budget cycles, prioritized by risk exposure and executed with minimal disruption to building operations.

Modern approaches allow individual cars to be taken offline for upgrades while the remaining units stay fully operational, a meaningful advantage in multi-cab modernizations where downtime is the primary operational concern. Building owners and their contractors can also take advantage of online planning tools that allow modernization scenarios to be modeled and costed before any contractor engagement begins, enabling more informed conversations with lenders, ownership groups and tenants.   

The conversation has also shifted around destination dispatch technology, which optimizes traffic flow across a bank of elevators by assigning passengers to specific cabs before they reach the lobby. Originally developed for new high-rise installations, this technology is now broadly applicable to modernization projects and can be added to many existing systems without a full cab or hoistway replacement. For building owners looking to meaningfully improve performance without a full overhaul, it represents one of the highest impact upgrades available for elevator systems.

The Efficiency Case Is Getting Harder to Ignore

For building owners navigating ESG reporting requirements or managing LEED-certified properties, an elevator modernization carries an energy efficiency dividend that is increasingly difficult to overlook. Modern drive systems, including regenerative drive technology that return energy to the building’s electrical system during descent, can reduce elevator energy consumption significantly compared to older motor-generator technology. In large, multi-cab installations, that reduction is a meaningful contribution to a building’s overall energy profile.

Modern systems also reduce the carbon footprint of ongoing maintenance, as intelligent diagnostics and remote monitoring allow service teams to address emerging issues before they become emergency calls. This predictive maintenance reduces unplanned service calls and tenant disruption.

Where to Start

For contractors advising building owner clients, the starting point is an honest assessment of the equipment. The right questions are simple: How old are the core control and drive components? What does the repair history look like and in what direction is it trending? Are there pending code reviews or renovation projects that could trigger compliance requirements? What does the leasing picture look like over the next three to five years?

Online planning tools now make it possible for building owners and their advisors to begin modeling modernization options, including phased timelines and associated costs, well before a formal contractor engagement. That early homework separates building owners who are in control of their modernization timeline from those who find themselves at the mercy of it.

The Cost of Waiting Is Already on the Ledger

For building owners and facility managers with aging elevator equipment, an elevator modernization is not just a future expense to be budgeted; it is an opportunity to plan your downtime and therefore provide a better customer experience. The cost of waiting to modernize your elevator is real, and those who work in the industry can confirm it almost always exceeds the cost of a proactive modernization.

Treating your vertical transportation systems as strategic assets rather than maintenance line items will put you in control, helping to avoid emergency calls, increase tenant satisfaction and retention, and ultimately protect the long-term value and reputation of the property. The cost of waiting to modernize is real, and in the experience of those who work with customers facing these decisions every day, it almost always exceeds the cost of proactive modernization. So rather than crossing your fingers that your equipment can survive another year, talk to your elevator service provider about how to get ahead of it on your schedule, on your terms, and on your budget.

SEE ALSO: RISING DEBATE: PROPRIETARY VS. NON-PROPRIETARY ELEVATOR EQUIPMENT

The post How Deferred Elevator Modernization Quietly Erodes Your Building’s Bottom Line first appeared on Construction Executive.

Overall construction input prices are 7.6% higher than one year ago, while nonresidential construction input prices are 7.4% higher. Prices decreased in 2 of the 3 energy subcategories last month. Crude petroleum prices declined 12.1%, and unprocessed energy materials fell 8.1%. Natural gas prices were up 16.6% in June.

“Aggregate construction input prices receded in June due to the steep decline in oil prices that occurred throughout the month,” said ABC Chief Economist Anirban Basu. “Despite that decline, however, ongoing materials price escalation is likely over the coming months. The conflict in Iran has resumed, triggering a roughly 15% rebound in oil prices, and tariff-affected commodities like iron, steel and copper continue to experience steep price increases.

“While contractors remain optimistic about their margins, according to ABC’s Construction Confidence Index, higher input costs will likely weigh on profitability during the second half of 2026,” said Basu.

SEE ALSO: UNDERSTANDING THE TOTAL COST OF OWNERSHIP IN CONSTRUCTION FLEETS

The post Construction Materials Costs Fall With Oil Prices in June first appeared on Construction Executive.

That’s where TCO—total cost of ownership—becomes critical. Understanding TCO gives construction fleets the clarity they need to make informed decisions about budgeting, replacement planning, maintenance strategy and job costing. Without it, fleets rely on assumptions and, in construction, assumptions are expensive.

What Total Cost of Ownership Really Means

TCO represents the full lifecycle cost of an asset from acquisition through disposal. While purchase price or lease cost is often the most visible expense, it is only one part of the equation. Financing, depreciation, preventive maintenance, unexpected repairs, parts and labor, fuel consumption, insurance, compliance requirements, downtime and eventual resale value all contribute to the true financial impact of assets.

In many cases, the majority of an asset’s cost accumulates after it enters service. An excavator that appears affordable upfront can quickly become one of the most expensive assets in the fleet if repair frequency rises or fuel efficiency declines. Without a comprehensive view of these costs over time, fleet leaders cannot accurately measure performance or profitability. Understanding TCO shifts the conversation from upfront pricing to long-term value.

Why TCO Is Essential for Construction Fleet Strategy

Construction fleets operate on tight margins and strict timelines, with equipment reliability and cost control directly influencing whether a project meets profitability targets. When fleet costs aren’t fully understood, even small inefficiencies across dozens or hundreds of assets can significantly erode margins.

One of the most immediate benefits of TCO visibility is improved budgeting and forecasting. When fleets can see how operating costs trend over time, they can anticipate major maintenance events and plan capital expenditures more accurately. Instead of reacting to surprise repair bills, leadership teams can prepare for predictable cost increases and make proactive investment decisions.

Replacement planning is another area where TCO insight is transformative. Many fleets still base replacement decisions primarily on age, OEM guidelines or intuition; however, two similar machines can have very different cost trajectories depending on jobsite conditions, utilization rates and service history. Tracking cost per hour or cost per mile over time reveals when operating expenses begin to accelerate, providing a clear financial signal that replacement may be the more cost-effective option.

Accurate TCO data also strengthens job costing. Construction companies rely on precise cost estimates when bidding projects. If vehicle and equipment expenses are underestimated, bids may appear competitive but ultimately reduce profitability. A detailed understanding of lifecycle costs allows fleets to assign realistic hourly equipment rates, allocate maintenance expenses accurately and improve the financial accuracy of future bids.

According to a 2026 fleet benchmark report, “most fleets accept high-mileage assets; when maintained properly, older assets can keep a TCO value comparable to that of a newer asset. When maintenance discipline fails, those same assets become expensive and disruptive, fast.”

TCO analysis supports smarter maintenance strategies to keep assets safely working longer. Construction environments are harsh, and equipment is constantly exposed to dirt, vibration, extreme weather and heavy loads. By analyzing maintenance history alongside overall asset costs, fleets can identify recurring failure patterns, compare preventive and reactive repair costs, and adjust service intervals based on actual performance data. This reduces downtime while controlling unnecessary maintenance spend.

Why Calculating TCO Is So Difficult

Despite its importance, calculating TCO remains challenging for many construction fleets. The issue is rarely a lack of awareness; rather, it’s a lack of consolidated data. In many organizations, cost information is scattered across spreadsheets, accounting systems, fuel card platforms, telematics providers, vendor invoices and paper work orders. “When data lives in disconnected systems, building a complete and accurate cost profile for each asset becomes time-consuming and prone to error,” explains John Byron, maintenance advisor at Fleetio. “Manual data entry introduces inconsistencies, asset naming conventions may not align across platforms, and maintenance documentation is often delayed or incomplete.”

As fleets grow in size and complexity, these inefficiencies multiply. The result is a fragmented view of asset performance that makes reliable TCO analysis nearly impossible. Without centralized visibility, leaders are forced to rely on partial information and educated guesses.

How Digital Fleet Solutions Simplify TCO Tracking

Digital fleet maintenance and management solutions address the aforementioned challenges by consolidating asset data into a single system of record. Instead of managing separate tools and spreadsheets, fleets can automatically associate maintenance expenses, parts and labor costs, fuel transactions, inspections and downtime with the correct asset in real time.

This automation creates a continuously updated financial profile for every vehicle and piece of equipment. Digital work orders capture labor hours, service history and parts usage without relying on paper documentation, building a reliable maintenance record over time. With this level of visibility, fleets can analyze trends such as rising repair frequency, increasing parts costs or declining fuel efficiency before they escalate into larger problems.

Consolidated reporting also enables objective replacement planning. Rather than relying on subjective judgment, fleets can establish measurable thresholds, such as cost per hour exceeding a defined benchmark or maintenance spend reaching a certain percentage of asset value. These data-driven criteria help optimize capital allocation and improve long-term fleet health.

Turning Insight Into Financial Performance

Understanding TCO empowers action. With accurate data, construction fleets can refine PM schedules, identify training opportunities that reduce operator-related wear, negotiate more effectively with vendors and prioritize investment in equipment models that consistently deliver strong performance. Over time, these improvements extend asset life, reduce downtime, strengthen project margins and improve forecasting accuracy. Most importantly, they replace uncertainty with clarity.

Construction fleets operate in an environment where equipment performance directly impacts productivity and profitability. Relying on purchase price alone is no longer sufficient, but by embracing digital fleet solutions with built-in automation, construction companies can consolidate data and track operating costs with precision to uncover the trends that reveal the true financial story behind their equipment. Understanding TCO allows construction fleets to move beyond guesswork and take strategic control of their assets, improving both operational performance and bottom-line results.

SEE ALSO: FLEET SAFETY AS A BUSINESS STRATEGY FOR CONSTRUCTION COMPANIES

The post Understanding Total Cost of Ownership in Construction Fleets first appeared on Construction Executive.

View ABC’s Construction Backlog Indicator and Construction Confidence Index for June. View the full Construction Backlog Indicator and Construction Confidence Index data series.

Only the Middle States region experienced backlog growth on a monthly basis in June. In the Northeast region, backlog contracted sharply in June and is down by over a month from a year ago. 

ABC’s Construction Confidence Index readings for sales and staffing levels increased in June, while the reading for profit margins inched lower. The readings for all three components remain above the threshold of 50, indicating expectations for growth over the next six months.

“While backlog declined in June, it’s still longer than any point from September 2023 to April 2026,” said ABC Chief Economist Anirban Basu. “This strength is the result of continued booming data center construction. The 13% of ABC members under contract to work on data centers have significantly higher backlog (11.0 months) than the 87% that are not (8.5 months). This trend is noticeable headwind for smaller contractors—just 8% of contractors with less than $100 million in annual revenues have data center work under contract, well below the 41% share of contractors with greater than $100 million in annual revenues.  

“The effect of rising input prices may be weighing on contractor profitability,” said Basu. “Contractor confidence regarding profit margins fell to a seven-month low in June, though expectations remain above the prevailing level from the second half of 2025.”

SEE ALSO: HOW CONTRACTORS ARE SHIFTING HEADCOUNT BUDGETS TO AGENT BUDGETS

The post ABC’s Construction Backlog Indicator Slips, Contractors Remain Confident in June first appeared on Construction Executive.

The distinction between scheduling and planning is subtle, but it may be one of the most important and misunderstood dynamics in modern construction. Companies believe they are planning because they are scheduling. In reality, they are often simply documenting work instead of directing it. Across the industry, schedules are frequently treated as proof of control. If a project has a detailed CPM schedule, the assumption is that it is well planned and under control. But that assumption rarely holds up in practice. Many construction organizations operate under a delivery model in which planning is treated as an administrative requirement rather than a management discipline. In fact, schedules are often created to satisfy three primary pressures:

• Contractual obligations
• Claims defensibility
• Executive reporting requirements

What they are not consistently used for is arguably more important: guiding decisions, aligning teams and anticipating risk in real time. This creates a dangerous illusion: Leadership believes it has visibility and control, while in reality, it is reacting to problems after they have already materialized.

A Backward-Looking Exercise

Scheduling, as commonly practiced, is largely a backward-looking exercise. Schedules are frequently built around contractual milestones, with logic designed to justify timelines rather than reflect how work will actually be executed. Updates tend to explain variance rather than prevent it. Over time, the schedule becomes less of a tool for managing work and more of a record of what has already gone wrong. The result is a static artifact, a document that describes the project but does not actively influence it. Field teams often recognize this disconnect immediately. Superintendents and project managers rely on informal, experience-based planning to actually run the job. The official schedule, meanwhile, exists in parallel, reviewed in meetings but rarely trusted as a real-time guide. At that point, the schedule becomes a reporting requirement rather than a source of truth.

Planning operates on an entirely different level. It is not about building a perfect schedule, nor is it confined to a single document or tool. Planning is an ongoing process of anticipating, adapting and aligning. It is how teams decide what to do next—and why. At its core, planning is about foresight. It doesn’t just ask where the project is today, but where it is heading and what, if anything, needs to change to stay on track. It connects field execution with leadership decision-making and ensures that adjustments happen early, not after problems are locked in. This is where the industry often falls short. It confuses the existence of a schedule with the presence of a plan.

One of the biggest drivers of this confusion is the industry’s reliance on tools as a proxy for capability. There is a persistent belief that if a project uses a sophisticated scheduling platform, it must also be well planned. But tools do not create planning maturity. This mindset has led to a fundamental misdiagnosis: Organizations equate tool compliance with operational control. In practice, this produces a familiar pattern. Plans look detailed but prove fragile. Planners spend more time maintaining data than influencing outcomes. And the gap between what the schedule says and what the project is really doing widens. Technology can support planning, but it cannot replace it. When organizations prioritize outputs over decision-making, they end up with highly detailed schedules that offer very little practical value.

Another key difference between scheduling and planning lies in ownership. In many organizations, the schedule is owned by the scheduler. Once it is created or updated, it is handed off to others or simply filed away until the next reporting cycle.

Shared Accountability Is Key

Planning requires something entirely different: shared accountability. It requires that operations teams take ownership of execution against the plan, that planners are empowered to challenge sequencing and assumptions, and that field teams are actively involved in shaping the plan from the beginning. Without this alignment, the plan becomes disconnected from reality. In lower-maturity environments, this disconnect shows up quickly. Planners are often overridden to maintain optics and field teams revert to their own methods. Trust erodes and the schedule becomes irrelevant to day-to-day operations. In higher-maturity environments, planning is collaborative. It is built with the field, not for it, and it becomes a common language across the entire project.

Even when schedules are technically sound, they are often underutilized. In many projects, the schedule is present in meetings but absent from decisions. Teams review it, but they don’t rely on it. Changes are analyzed after impacts occur, rather than modeled in advance. Forecasts are produced, but rarely challenged or improved. This reflects a deeper issue: The plan is not embedded in how the project is actually run.

True planning maturity requires that the plan becomes central to decision-making. It informs weekly coordination, guides resource allocation and provides a framework for evaluating trade-offs before they become problems. Without that integration, the schedule remains passive, something to report on rather than something to act on.

Technology, while essential, can sometimes reinforce the problem. Many scheduling systems are designed around compliance, structure and defensibility. These are necessary, but they can also introduce rigidity that conflicts with real-world execution. Teams often find themselves balancing two competing realities:

• Maintaining a clean, defensible CPM schedule
• Highlighting the messy, fast-changing conditions of the jobsite

When tools cannot accommodate both, workarounds emerge. Shadow systems develop. Teams duplicate effort just to keep the schedule aligned with reality. Instead of enabling planning, technology becomes something to manage around. The goal should not be to abandon these tools, but to ensure they support the way projects actually operate. When technology aligns with execution, it enhances planning. When it doesn’t, it widens the gap.

Why This Matters Now

The stakes are rising. Construction projects are becoming more complex, timelines are compressing and margins are tighter than ever. At the same time, experienced talent is leaving the industry, taking institutional knowledge with it. In this environment, the difference between scheduling and planning is no longer academic; it is operational.

Organizations that rely on schedules alone will continue to operate reactively, identifying risks only after they have already impacted the project. Those that embrace planning as a discipline will be better positioned to anticipate challenges, align teams and make informed decisions under pressure.

Closing the gap between scheduling and planning does not require new terminology or wholesale system changes; it requires a shift in mindset. Organizations need to move beyond asking whether they have a schedule and start asking whether that schedule is actually being used to run the job. That means elevating planning to a leadership function, integrating it into daily operations and measuring success not by the existence of a schedule but by the quality of decisions it enables.

Construction projects do not fail because they lack schedules. They fail because those schedules are mistaken for plans.

SEE ALSO: DISTRIBUTION CENTER, SERVED HOT: LE CREUSET’S NEW LOCATION

The post Construction Scheduling vs. Planning: The Industry’s Most Costly Confusion first appeared on Construction Executive.

That gap is the whole story. The capital that builds breakthroughs is going to one place and it isn’t the jobsite. It’s the office.

For an industry that has spent a decade waiting on autonomous bricklayers and exoskeletons, this should be clarifying. If great robots were ready, contractors would be deploying them. Hardware that has to operate safely in unstructured environments, around humans, in weather, on schedule, is genuinely hard. Capital markets know this and are voting accordingly.

Meanwhile, the systems behind the field-to-finance workflow like the expense report, the pay app, the change order and the submittal are being rebuilt right now with most of that $211 billion behind them. AI agents that read, route, approve and reconcile administrative tasks are in market, deployable this quarter. Leaders waiting for the robots to arrive are waiting in the wrong room.

The Hidden Constraint on Scale

Every construction firm carries administrative load. Time tracking, expense reports, pay apps, submittal logs and change-order approvals don’t disappear thanks to AI. But across many firms, back-office process flows still rely on spreadsheets, email and on-premise file servers. Even for firms using established project management systems, many handoffs remain manual and error-prone.

As firms grow, this is not an area where efficiencies are gained. A change order that took one review when the firm ran out of a single office takes five when a second branch opens. Data gets rekeyed across the project management system, the accounting system and the field reporting tool, now in two locations, with two AP teams reconciling against each other. Senior estimators and PMs end the week having spent ten hours on tasks no client paid them to do. The default response is to hire. Add an AP clerk, add a project coordinator, add another controller. It works in the short term. But every added admin head raises G&A permanently and adds another handoff where information can stall. Overhead starts compounding faster than backlog.

Why the Math Has Changed

The common objection from controllers and operations leaders is straightforward: Can an agent really do what a senior accountant, project coordinator or estimator does today? That is the wrong question.

The right question is whether an agent can create 45 hours of capacity across a five-person team: nine hours per person, per week. Framed this way, the answer changes quickly. Capacity compounds across workflows, not job titles.

On a fully burdened basis, an office hire is a six-figure annual commitment that improves incrementally with training and tenure. An AI agent, by contrast, holds a relatively stable cost profile and improves multiple times a year as underlying models are updated. Firms that deploy agents early inherit those gains automatically, without renegotiating compensation or restructuring teams.

That framing is supported by emerging labor-market data. In March 2026, research comparing what large language models could theoretically perform across occupations with what they are actually doing in live workflows today highlighted a significant gap. One chart from this report (a radar showing theoretical versus observed AI task coverage) captures the dynamic clearly.

Office, administrative, finance and professional roles show some of the largest gaps between capability and adoption. The ceiling is already visible. Most organizations are simply operating far below it. The binding constraint is not technology; it is deployment.

For construction firms, this matters. It explains why AI is not arriving as a single moment of labor replacement, but as incremental capacity gains embedded inside existing teams. The early wins are administrative: expense routing, time reconciliation, pay applications, submittals. Firms capturing that capacity now are not eliminating roles. They are changing how much work a fixed headcount can reliably support.

The Hiring Filter

Before any open requisition becomes a job posting, it should pass through a new gate: Can the work be handled by an agent? If the answer is yes for even half the role, the remaining work can be redistributed across the existing team and the role may not need to be posted.

If the answer is no—a body is genuinely needed—the requisition still has to clear a second test. Every new hire should be accretive, not dilutive, to the firm’s AI readiness.

That sounds abstract until you measure it. A simple internal benchmark works: What percentage of the team is AI-literate (can use the tools), data-literate (can structure information for them) and AI-curious (will reach for them unprompted)? In recent survey work with one client’s accounting department, those numbers came in at 55%, 85% and 70%. That’s the baseline. Every new hire either raises the average or drags it down.

This shows up in the job description before anyone is interviewed. Hiring a senior estimator? Add “fluent with AI-assisted takeoff tools” to the requirements, not the preferences. Hiring a project coordinator? “Comfortable building and refining agent prompts” belongs above “proficient in Excel.” The wrong hire isn’t the one who can’t do AI work today, it’s the one who has no interest in learning.

Burdened, an office hire is a six-figure annual decision. It’s worth the extra week to make sure that decision compounds in the right direction.

A Strategic Shift in How Firms Scale

Contractors that have moved furthest are no longer treating automation as a one‑time initiative, but as a permanent operational discipline shaping how they scale. Deploying agents aligned to real workflows lowers long‑term cost structures while improving execution and governance.

The capital markets have already made their bet. More than $200 billion is flowing into the systems that power paperwork and office workflows, not into autonomous jobsite labor. That investment is already at work in the back office, whether contractors deploy it intentionally or keep hiring around it.

SEE ALSO: THINKING OF AI AGENTS AS MEMBERS OF A CONSTRUCTION CREW

The post How Contractors Are Shifting Headcount Budgets to Agent Budgets first appeared on Construction Executive.

The true cost, however, is so much more than the hours spent on a losing proposal. Executives are pulled in and distracted, subject matter experts are taken away from high-impact, billable work, right-fit opportunities don’t get the time they deserve, employees get burned out with losing efforts and no data is captured systematically to improve future decision making.

The Costs Everyone Counts

The obvious cost—time spent responding—is conservatively between $3,000 to $5,000 per response for relatively straightforward proposals. With the average win rate hovering between 15%-20%, the spend per winning proposal is $33,000 at the upper end.

Many executives will see this as the cost of doing business. The hidden costs are much more impactful than purely hours spent.

Hidden Cost No. 1: Executive Distraction

An executive’s time is sparse and expensive. Every serious pursuit pulls senior leaders into pricing calls, strategy reviews, positioning decisions and final red-team sessions. When this time and attention is spent on a proposal that the company is not in a position to win, the senior leaders are kept from doing work that moves the business forward—winning right-fit proposals, nurturing client relationships and managing current projects.

A leadership team that is spending an afternoon on a long-shot bid is a leadership team that is not spending their time on the right work. Grandiose, long-shot bids may feel like ambition, yet they are often barriers to growth when pursued frequently.

Hidden Cost No. 2: Repeated Expert Work

Technical experts such as senior engineers and project managers are some of the most overcommitted and expensive people, after the executives. Most pursuits will have significant information overlap with approaches of similar, past projects.

RFPs will often ask them to answer the same questions from scratch each time. These subject matter experts are often the bottleneck. In fact, they historically and famously only respond to proposal input requests 30% of the time—leaving proposal managers and marketing directors to use boilerplate content, which directly impacts win rate.

So, the question is: Is their time best used responding to poor-fit pursuits? No, it is not. Pursuing the right work ensures less waste and perhaps better response rates.

Hidden Cost No. 3: Spreading Too Thin

Companies have a rather fixed amount of proposal response capacity. Operationally, that tends to mean that during high-volume times the quality of responses will suffer. The dependencies on executives and subject matter experts remain the same.

This is exactly the time when going after the right-fit work is absolutely imperative. Without a systematic approach to deciding which work is the right-fit work, the company will undoubtedly produce worse outputs and have worse win rates. This leads to the next issue.

Hidden Cost No. 4: Employee Burnout

Winning feels good. Losing feels bad. Losing feels even worse when there are unrealistic deadlines and expectations. Often, proposal managers and marketing directors are given an RFP and told to pursue the opportunity.

Nobody likes feeling like they are wasting their time. Most people do not appreciate working into the late hours of the night for what will undoubtedly be a wasted effort.

To protect employees’ mental health, going after work that makes sense, having realistic expectations and being consistent are all key. A recent survey showed that in construction +50% of marketing talent was considering quitting their current role. When they leave, the company loses significant institutional knowledge.

Hidden Cost No. 5: No Data Capture

How does a company know which opportunities to pursue if there is no systematic way to record the decision-making process and the results of that process? Not having a process to define which opportunities to pursue inherently means that there’s no data being captured on what worked and what did not.

Making decisions on gut feeling is not the way to promote growth of a company. It works sometimes, admittedly. However, gut feeling tends to go much further when there is data to back it up and a system that builds in consistency.

Hidden Cost No. 6: Financial Risk

Not all RFPs and opportunities were built equally. There may be significant contractual risks. There may be a single sentence that breaks your financial model. Without thoroughly reviewing a document with that particular lens, the company puts itself at risk of expending their time and people on an unprofitable project.

Having an appropriate process will help mitigate the financial risks that are otherwise often overlooked.

The Fix: A Real Go/No-Go System

A strong go/no-go process requires data, discipline and memory.

Data is crucial. Does the opportunity have significant risk? Does the RFP have clauses that are unfavorable? Is the company, at a minimum, compliant with the expectations? Are the requirements ones that the company can meet or exceed? Who is competing for this work? Can the company meaningfully differentiate itself from the competition? What is expected return on time spent responding? Is there an existing relationship with a decision maker? Without being able to answer these questions, pursuing an opportunity comes with financial risk.

Discipline is exactly as it sounds. The company needs the will to act on what the data says, even when there is open capacity and pressure to bid. A poor-fit opportunity is still a poor fit when the pipeline looks thin. Walking away is hardest when an executive is excited or a deadline is looming, yet that is exactly when discipline matters most. It also means applying the same standard to every opportunity, not just the ones nobody feels strongly about.

Memory is what makes the process compound. Every decision, the reasoning behind it and the result should be captured somewhere durable, not left in an inbox or a single person’s head. Over time, that record becomes the company’s own definition of a winnable pursuit. The next go/no-go decision starts from evidence instead of a blank page, and the knowledge stays with the company even when people leave.

None of this requires heavy bureaucracy. It requires a repeatable way to look at an opportunity honestly before committing the company’s most expensive resources to it.

The strongest firms decide well and remember what they decided. Chasing every RFP is a choice and it is rarely free.

SEE ALSO: CAN A PR AGENCY HELP CONTRACTORS WIN THE NEXT BIG RFP

The post Construction Companies Can’t Chase Every Proposal With a Weak RFP Approval Process first appeared on Construction Executive.