§ 01 · The Headline
The construction sector is bullish on demand and bearish on risk, simultaneously.
KPMG has just published the 15th edition of its Global Construction Survey, and the headline finding is the kind of paradox that defines difficult markets. Optimism about the construction sector is up — 71 percent of executives now express confidence in the industry’s direction, up from 66 percent in 2023. At the same time, three in four executives report that they are equally or significantly more risk averse than they were twelve months ago. The two numbers should not coexist comfortably, and yet they do, and the gap between them is what KPMG’s authors call the risk delta: the widening divergence between the risks the sector now carries and the appetite of its leaders to absorb any of them.
The 2025/2026 edition draws on responses from 375 industry leaders across construction contractors, engineering firms, project owners, manufacturers, real estate developers, and the wider supply chain, spanning North America, EMEA, APAC, and South America. Read closely, the report is less a snapshot of where the sector is and more a diagnosis of how it is responding to a structural shift it cannot avoid. Demand is rising, but the conditions under which that demand has to be served — constrained labour, fragile supply chains, sharper regulation, and the unmistakable arrival of meaningful AI in delivery workflows — have changed the risk profile of every project at the same moment they have raised the prize.
For self-builders, custom build clients, modular manufacturers, construction technology firms, and the broader ecosystem of professionals who depend on what gets built, the report offers an unusually clear read on what the next two to five years will look like. This article works through the most consequential findings, places them in the context of the UK self-build and construction technology market, and closes with a 20-question FAQ for readers who want to use the survey as a planning input rather than a piece of macro-analysis.
— The Survey, in Five Numbers —
375
Industry leaders surveyed
71%
Optimistic about the sector
75%
More risk averse than 12 months ago
82%
Increasing training spend
21%
Of transformation spend on people
§ 02 · Where Growth Is Actually Coming From
Utilities, green power, and infrastructure top the demand pyramid.
The growth narrative is not uniform across the sector, and the variation matters more than the headline number. KPMG’s data shows a clear hierarchy of demand drivers, with three subsectors decisively ahead of the rest. Water and utilities top the list at 91 percent of respondents anticipating growth, followed by green power generation and infrastructure projects, both at 89 percent. These are the categories absorbing the bulk of new public and private capital, driven by a combination of climate adaptation, energy transition, and the explosion of data centre demand — which itself drives parallel growth in the digital, energy, and water infrastructure required to support it.
Below the top tier sits a substantial second band: transport at 88 percent, warehousing and logistics at 84 percent, residential at 84 percent, and leisure and hospitality at 80 percent. The trailing categories — offices at 73 percent, fossil fuel power generation at 75 percent, retail at 73 percent — tell their own story about where the sector is no longer betting. Office construction in particular has been structurally repriced by post-pandemic remote-working patterns, and the survey confirms it has moved from a growth category to a maintenance category in most developed markets.
For UK self-builders and custom build clients, the residential figure of 84 percent is particularly relevant. Housing remains a structural growth category, but it is doing so against a backdrop where the macro contractors and developers are increasingly selective. The result is a sector that is growing in aggregate while becoming harder to access for medium-complexity bespoke work — precisely the territory most self-builds occupy.
| Subsector | Anticipating Growth | Headline Driver |
|---|---|---|
| Water / Utilities | 91% | Climate adaptation, ageing networks |
| Green Power Generation | 89% | Energy transition, net-zero targets |
| Infrastructure Projects | 89% | Government stimulus, modernisation |
| Transport | 88% | Decarbonisation, urban densification |
| Warehousing & Logistics | 84% | E-commerce, supply chain reshoring |
| Residential | 84% | Housing shortages, demographic demand |
| Leisure & Hospitality | 80% | Travel recovery, experiential demand |
| Social Housing | 79% | Public funding, affordability crisis |
| Life Sciences | 78% | R&D investment, regulatory tailwinds |
| Fossil Fuel Power | 75% | Maintenance & transition projects |
| Retail | 73% | Format conversion, refurb-led |
| Offices | 73% | Retrofit-led; new-build subdued |
Source: KPMG Global Construction Survey 2025/2026 (n=375).
§ 03 · Regional Variation
North America leads optimism; South America trails — narrowly.
North America leads the global outlook with 77 percent of executives optimistic about sector direction, narrowly ahead of EMEA at 76 percent, APAC at 74 percent, and South America at 71 percent. The geographic distribution is more interesting than the headline numbers suggest. North American optimism is concentrated in infrastructure modernisation and utility upgrades funded by the US infrastructure bill and parallel programmes. EMEA leads on green power and water utilities, reflecting the region’s tighter sustainability regulations. APAC shows balanced expectations across categories, signalling the continued urbanisation push and government-backed development programmes that have characterised the region for two decades.
South America’s 71 percent optimism rating is, in some ways, the most striking number in the regional breakdown. The region has the highest confidence in infrastructure projects and water utilities, alongside strong demand for transport and residential development. The pattern suggests that regional construction sentiment is increasingly decoupled from broader economic indicators, driven instead by the visible pipeline of public-sector infrastructure commitments rather than the wider business cycle.
Chart I — Optimism Index by Region (% of executives positive on sector direction)
77%
76%
74%
71%
North America
EMEA
APAC
South America
Source: KPMG Global Construction Survey 2025/2026. The narrow regional spread (just 6 percentage points) suggests that the optimism story is genuinely global, not driven by any one geography.
§ 04 · The Strategic Priorities
Four priorities, three levers, and a forced integration.
KPMG’s analysis identifies four strategic priorities that construction executives are actively pursuing: operational efficiency and profitability (75 percent rating it strategically important), market expansion and client focus (72 percent), technology and innovation (61 percent), and risk and resilience management (53 percent). What is notable is the consistency of this hierarchy across regions and firm sizes — with one important exception. Mid-sized firms in the US$500M to US$5B revenue band rate operational efficiency at 87 percent, substantially above smaller firms (71 percent) and the very largest (80 percent). The mid-market is where margin pressure is most acute and where the next wave of consolidation is most likely.
The strategic priorities map onto three operational levers that executives describe as critical for the next 12 months: workforce (76 percent rating it critical), digital systems and processes (68 percent), and innovative delivery methods (61 percent). KPMG’s framing is that these three levers must be pulled together for transformation to deliver compounding value — treating them as isolated initiatives produces only incremental gains. The companies that will dominate the next decade of construction, the report argues, are the ones that align talent strategies with digital adoption and modern delivery models simultaneously, rather than sequentially.
Sustainability sits underneath all three. 90 percent of executives report that their clients are now demanding more sustainable options, and 71 percent anticipate stricter sustainability regulation within the next 12 to 24 months. Yet only 42 percent of projects currently embed sustainable practices, and only 36 percent conduct sustainability assessments. The gap between expectation and execution is one of the largest in the survey — and it is closing primarily through regulatory pressure rather than voluntary adoption.
| Priority | N. America | S. America | EMEA | APAC |
|---|---|---|---|---|
| Operational efficiency & profitability | 70% | 87% | 70% | 87% |
| Market expansion & client focus | 65% | 76% | 71% | 64% |
| Technology & innovation | 63% | 61% | 59% | 49% |
| Risk & resilience management | 62% | 26% | 47% | 69% |
Source: KPMG Global Construction Survey 2025/2026. The standout figure is South America’s 26% on risk & resilience — markedly below all other regions, suggesting either a different risk culture or differently calibrated expectations.
Companies are operating in a paradox of rising optimism and falling risk appetite. This protects margins in the near term and weakens long-term competitiveness in the same motion.
KPMG Global Construction Survey 2025/2026, paraphrased
§ 05 · Workforce
The skills crisis is now the number one constraint on output.
76 percent of construction executives describe workforce as critical to their strategic priorities — the single highest score across any operational lever in the survey. The data behind this is stark: 55 percent identify skilled labour shortages and managerial or technical capability gaps among their biggest challenges. The construction labour pipeline is constrained by three converging forces: an ageing workforce moving rapidly toward retirement, outdated skills among existing workers struggling to keep pace with digital and modular methods, and chronic difficulty retaining younger talent in an industry that competes poorly with software, finance, and other knowledge-economy sectors for digitally fluent workers.
The financial response is equally clear. 21 percent of total transformation investment is being allocated to people-related initiatives — the largest single category, marginally ahead of technology and data solutions at 18 percent, process improvements at 17 percent, and innovative construction methods at 16 percent. 82 percent of respondents plan to increase investment in employee training and development. This is a notable shift in capital allocation patterns; ten years ago, the equivalent surveys placed equipment and physical capacity well ahead of workforce as the primary investment priority. The transition to industrialised construction methods has reframed the bottleneck: the constraint is no longer the machinery, it is the people who can operate, maintain, and integrate the increasingly digital construction stack.
For UK self-builders, the labour constraint translates directly into procurement difficulty. Securing a competent main contractor for medium-complexity bespoke work is harder than it was three years ago. Lead times have stretched. The economic logic of off-site manufactured systems — closed-panel timber frame, SIPs, ICF, volumetric modules — is now consistently competitive with traditional masonry construction on cost, and decisively superior on programme and energy performance. The labour constraint is, in practice, accelerating the shift to factory-finished construction at the same time it is pricing some self-builders out of the traditional contractor market.
Chart II — Allocation of Transformation Spend (% of total investment)
People & Workforce21%
Technology & Data Solutions18%
Process Improvement17%
Innovative Construction Methods16%
Supply Chain & Partnerships15%
Sustainability Initiatives13%
Source: KPMG Global Construction Survey 2025/2026. People-related investment is now the largest single category of transformation spend — a notable shift from the equipment-led capital allocation patterns of the previous decade.
§ 06 · Technology Adoption
Strong on vision, weak on execution.
68 percent of executives consider technology and data solutions critical to their organisations — but the actual deployment numbers reveal how far behind execution remains. Less than 50 percent of respondents rate themselves as tech-mature leaders, and only 10 percent claim cutting-edge status. AI adoption is particularly uneven: 47 percent use AI for report generation, 39 percent for contract administration, but only 24 percent have deployed AI on more than 50 percent of their projects. The category sits firmly in the early-adopter phase, with most firms running pilots rather than enterprise-wide deployments.
When asked which technologies will be most transformative, executives gave a clear ranking. Data analytics and generative AI top the list at 44 percent and 43 percent respectively, followed by Building Information Modelling (BIM) at 32 percent, Integrated Project Management Information Systems at 27 percent, and prefabrication solutions at 24 percent. Robotics, drones, IoT sensors, and digital twins all feature in the conversation but trail meaningfully behind the top five. The pattern is consistent: firms have a clear view of where technology investment should go, but the gap between intention and operational reality remains wide.
The barriers are operational rather than technical. Many companies still depend on spreadsheets and disconnected scheduling or procurement tools, making data integration slow and costly. Advanced solutions like predictive analytics and AI for cost forecasting demand significant capital with ROI realised only after multiple project cycles. Site teams and project managers struggle with BIM platforms and IoT dashboards. Smaller firms, especially regional contractors and specialty trades, prioritise cash flow and immediate delivery over technology investment. The bottleneck, in other words, is not capability availability — it is operational readiness.
| Technology | Rating | Maturity |
|---|---|---|
| Data Analytics | 44% | Mature; widely deployed |
| Generative AI | 43% | Production in narrow use cases |
| BIM (Building Information Modelling) | 32% | Mainstream on larger projects |
| Integrated PMIS | 27% | Growing rapidly |
| Prefabrication Solutions | 24% | Maturing; supply-side constrained |
| Machine Engineering & Design | 23% | Specialist deployment |
| Mobile Platforms | 22% | Mature; ubiquitous |
| Smart Sensors / IoT | 21% | Selective adoption |
| Equipment Tracking & Fleet Mgmt | 19% | Mature in fleet-heavy firms |
| Cognitive Machine Learning | 18% | Early adopter phase |
Source: KPMG Global Construction Survey 2025/2026. The top two — data analytics and generative AI — together capture roughly 87% of the headline attention, but the long tail is where most of the operational productivity actually sits.
§ 07 · Delivery Models
Collaborative, digital, off-site — standard within five years.
61 percent of executives say adopting new delivery models is a high priority over the next 12 months. The future direction is unambiguous in the data: 56 percent of respondents expect collaborative contracting and integrated delivery models to become standard within five years, 54 percent expect complete supply chain digitisation in the same window, 50 percent expect dominance of off-site manufacturing, 48 percent expect carbon-neutral construction methods, and 47 percent expect automated construction processes. These are not distant predictions — they describe the operational baseline of construction in roughly 2030, less than five years from now.
For self-builders and custom build clients, this matters in immediate practical terms. The construction industry is shifting toward delivery models that demand more upfront design rigour, more collaborative early-stage planning, and more reliance on factory-manufactured components rather than site-assembled ones. The implications for procurement timing, financing structures, and warranty arrangements are substantial. The Nordic and central European markets — particularly Sweden, Norway, Finland, and Austria — have been ahead of this curve for over a decade, and an increasing share of the volumetric and panelised housing arriving on UK sites is fabricated in those countries. Stockholm-based accounting practices like Sveago report a noticeable uptick in cross-border invoicing work supporting Nordic modular suppliers shipping into the UK and Irish markets — a small but telling indicator of how the supply geography is shifting.
The financing landscape is also shifting. Lenders are becoming more comfortable with off-site manufactured construction because the build programme is more predictable and the warranties from established modular suppliers are increasingly mature. Self-build mortgages for MMC projects are now widely available where five years ago they were a niche product. The implication for custom build clients is that the system is gradually becoming friendlier to industrialised construction methods — but the firms delivering them remain in short supply, and the lead times for the best modular suppliers are stretching, in some cases to over a year.
| Delivery Practice | Standard Today | Standard within 5 Years |
|---|---|---|
| Collaborative contracting models | 20% | 56% |
| Complete supply chain digitisation | 20% | 54% |
| Off-site manufacturing dominance | 18% | 50% |
| Carbon-neutral construction methods | 16% | 48% |
| Automated construction processes | 15% | 47% |
| Automated construction equipment | 14% | 46% |
Source: KPMG Global Construction Survey 2025/2026. The trajectory is consistent across categories: roughly 1-in-5 firms operate this way today; roughly 1-in-2 firms expect to operate this way within five years.
§ 08 · What It Means
Three things that will define the winners.
KPMG’s authors close their report with three interrelated conclusions. The first is that transformation is no longer optional. The combination of complexity, regulatory tightening, and the workforce constraint means that firms which treat technology adoption and delivery model evolution as future projects will be acquired or shrunk by firms that have done the work already. The second is that workforce and technology are inseparable enablers. Investment in either alone produces incremental returns; integrated investment produces compound returns. The third is that adaptive delivery models are the new licence to operate. The contractors and developers that can flex between traditional, modular, hybrid, and digitally-enabled methods are positioning themselves to absorb growth in any subsector that pulls ahead.
For the construction technology ecosystem, the implications are largely positive. The data suggests that vendor categories which solve real bottlenecks — design integration, supply chain visibility, AI-assisted site management, sustainability reporting, off-site manufacturing optimisation — will see compounding demand over the next 24 to 36 months. The categories that will struggle are those selling incremental productivity gains in workflows where the underlying processes are themselves being replaced. There is also a quieter implication for the AI infrastructure layer underneath the construction tech stack: as more firms move generative AI deployments from pilot to production, the cloud and inference costs of running these models at scale become a real operational line. Construction tech startups burning through Azure or GCP allocations have begun routing surplus AI compute through brokers like AI Credit Mart, illustrating how plumbing-level infrastructure questions are now part of the construction-technology economics.
For self-builders, custom build clients, and custom build developers, the most actionable takeaway is straightforward. The market is moving toward off-site manufactured construction faster than the popular discussion suggests, the labour constraint is real and getting worse, and the firms that are good at delivering modern methods are increasingly the firms worth waiting for. The full KPMG Global Construction Survey 2025/2026 is available on the KPMG website, and is essential reading for anyone making capital allocation decisions in the construction sector over the next 12 months.
— Reader Questions —
Twenty questions, answered plainly.
What is the KPMG Global Construction Survey 2025/2026?
It is the 15th edition of KPMG’s annual study of the global construction industry, drawing on responses from 375 senior leaders across engineering firms, contractors, project owners, real estate developers, and supply chain providers. The survey covers North America, EMEA, APAC, and South America, and provides one of the most comprehensive snapshots available of where the construction sector is investing, struggling, and heading.
What is the “risk delta” the report describes?
The risk delta is the widening gap between rising risks in the construction industry and a shrinking willingness among executives to take them on. Optimism has risen from 66 percent in 2023 to 71 percent in 2025, but 75 percent of executives describe themselves as more risk averse than a year ago. The result is companies that are bullish on the sector but bearish on their own appetite to expose themselves to it — a paradox shaping strategy across the industry.
Which construction subsectors are growing fastest globally?
Water and utilities top the growth outlook at 91 percent of respondents anticipating expansion, followed by green power generation at 89 percent, infrastructure projects at 89 percent, transport at 88 percent, warehousing and logistics at 84 percent, and residential at 84 percent. Office construction has visibly fallen behind, reflecting the structural impact of remote working on commercial real estate demand.
Why is workforce the number one priority for construction firms?
76 percent of executives describe workforce as critical to their strategic priorities — the highest of any operational lever. The construction labour pipeline is constrained by an ageing workforce, outdated skills, and chronic difficulty retaining digitally fluent younger talent. 21 percent of all transformation investment is being allocated to people-related initiatives, the largest single category of spend in the survey.
How fast is construction adopting AI?
Slower than the headlines suggest. Only 24 percent of firms have deployed AI on more than 50 percent of their projects. Adoption is highest for narrow use cases — report generation (47 percent) and contract administration (39 percent) — and lower for site-based applications. Generative AI tops the list of “transformative” technologies at 43 percent, but most deployments remain in pilot or limited-rollout phases rather than enterprise-wide production.
Which technologies do construction executives consider most transformative?
Data analytics (44 percent), generative AI (43 percent), Building Information Modelling (32 percent), Integrated Project Management Information Systems (27 percent), and prefabrication solutions (24 percent) form the top five. Robotics, drones, IoT sensors, and digital twins all feature but trail behind these categories, indicating that information-handling and design integration are seen as higher leverage than physical automation in the near term.
What does “off-site manufacturing dominance” mean for construction?
It refers to the trajectory in which factory-manufactured components — closed-panel timber frame, structural insulated panels, volumetric modules, prefab bathroom pods — replace traditional in-situ construction as the default delivery method. 50 percent of executives expect off-site manufacturing to be standard within five years, up from 18 percent who consider it standard today. The shift compresses on-site programme times dramatically and changes the labour profile of housebuilding.
Are sustainability requirements driving real change in construction?
Increasingly, but unevenly. 90 percent of executives report client demand for more sustainable options, and 71 percent anticipate stricter regulation within 12 to 24 months. However, only 42 percent of projects currently embed sustainable practices, and only 36 percent conduct sustainability assessments. The gap between expectation and execution is closing, but primarily through regulatory pressure rather than voluntary adoption.
Which region is most optimistic about construction in 2026?
North America leads at 77 percent, narrowly ahead of EMEA at 76 percent, APAC at 74 percent, and South America at 71 percent. North American optimism is driven by infrastructure stimulus and utility upgrades; EMEA by sustainability-linked investment; APAC by urbanisation programmes; and South America by visible public-sector pipelines despite broader macroeconomic volatility.
Why is collaborative contracting becoming more popular?
Because traditional fixed-price contracting transfers risk to a single party in ways that no longer match the complexity of modern projects. 56 percent of executives expect collaborative contracting models — alliance contracting, integrated project delivery, partnering arrangements — to become standard within five years. These models share risk between client, designer, and contractor, align incentives more cleanly, and tend to produce better outcomes on complex projects.
How does the workforce shortage affect self-build clients specifically?
Self-builders and custom build clients are competing for the same scarce skilled labour as commercial developers. The practical effects include longer waits to secure competent main contractors, higher labour rates passed through to programme costs, and stronger economic logic for off-site manufactured systems where the factory-finished proportion of the build is high. Sites that previously relied on traditional trades for sequential construction are increasingly turning to closed-panel or volumetric solutions to reduce on-site labour exposure.
Is construction technology investment actually paying off?
In specific categories, yes. Firms that have integrated BIM, integrated project management systems, and AI-assisted scheduling report measurable productivity gains. The ROI is harder to quantify in less mature categories like robotics and digital twins, where pilots remain common but full deployments are rare. The rule of thumb in the data is that information-handling investment is paying off faster than physical automation investment in the current adoption cycle.
What does this mean for construction firm M&A activity?
The combination of margin pressure, workforce constraints, and technology investment requirements is concentrating value in firms with scale and digital maturity. Mid-sized contractors that defer technology adoption are likely to be acquired by firms that have invested ahead of the curve. The cost of not modernising is now a meaningful factor in acquisition discussions, with technology and workforce capability featuring prominently in due diligence on construction targets.
How is construction tech investment distributed across regions?
North America and EMEA lead on absolute spending, but APAC — particularly Hong Kong, Mainland China, and Singapore — is ahead on adoption of high-productivity technologies like Modular Integrated Construction (MiC). The Nordic markets have been ahead of the curve on digital construction methods for over a decade, partly because their tax authorities pushed early for digital filing and real-time reporting, giving construction firms in those markets cleaner data foundations than peers elsewhere.
What are the biggest barriers to construction technology adoption?
Fragmented data foundations (most firms still rely on spreadsheets and disconnected scheduling tools), capital constraints (advanced solutions require significant up-front investment with multi-cycle ROI), workforce skill gaps (site teams struggle with BIM platforms and IoT dashboards), and small-firm cash flow priorities (regional contractors prioritise immediate delivery over technology investment). Less than 50 percent of respondents rate themselves as tech-mature; only 10 percent claim cutting-edge status.
Is the report optimistic or pessimistic about construction’s future?
Cautiously optimistic. KPMG’s authors describe the moment as a “paradox of progress” — significant headwinds (supply chain fragility, regulatory pressure, workforce shortages) running alongside genuinely transformative tailwinds (government stimulus, sustainability mandates, AI capability, modular methods). The leaders who will dominate the next decade, the report argues, are the ones treating these conditions as a forcing function for transformation rather than a reason to retrench.
What is “Modern Methods of Construction” (MMC)?
MMC is the umbrella term for industrialised construction approaches that move value-add work from the building site to the factory. It includes seven categories defined by UK government policy, ranging from 3D volumetric modular (whole rooms or houses pre-assembled) to panelised systems, prefab sub-assemblies, and even site-based productivity improvements. KPMG’s data suggests MMC will be the dominant construction approach in most developed markets within five years.
Are construction firms increasing or decreasing their training spend?
Increasing decisively. 82 percent of respondents plan to increase investment in employee training and development. 87 percent of leaders are committed to the workforce investment agenda. The constraint is no longer capital availability but the capacity of training programmes themselves to scale, and the supply of qualified trainers in emerging skill areas like BIM, robotics, automation, and AI-driven project management.
What should construction firm leaders do in 2026?
KPMG’s recommendations distil to three actions: integrate the workforce, technology, and delivery model levers rather than treating them in isolation; embed sustainability into procurement, design, and operations rather than treating it as a compliance overlay; and adopt collaborative contracting models that share risk and incentivise mutual performance. The firms that move on all three simultaneously are positioned to absorb the structural growth coming through the next decade; those that move on none are positioned to be acquired.
Where can I read the full KPMG Global Construction Survey?
The complete report, including the full survey methodology, regional breakdowns, sector-specific deep dives, and interviews with industry leaders, is published on the KPMG website as “The Paradox of Progress: Global Construction Survey 2025/2026” and is freely available to download from kpmg.com.
— Editor’s Note —
On methodology and editorial independence.
The KPMG Global Construction Survey 2025/2026, titled “The Paradox of Progress,” draws on responses from 375 engineering, construction, and real estate leaders collected through online surveys conducted between January and March 2025, supplemented by more than a dozen one-on-one interviews with KPMG subject matter experts and corporate leaders. The full report is published by KPMG International and available on the KPMG website.
Right to Build Portal is editorially independent of KPMG and of all other firms or platforms referenced in this analysis. We have no commercial relationship with KPMG, the consulting firms cited, or any of the construction technology companies or self-build suppliers mentioned. The interpretations, framings, and self-build market commentary are our own, and any errors in the reading of KPMG’s data should be attributed to us rather than to the original report.