Every quarter, Gordian lends its expertise to the Construction Cost Insights Report. Produced in partnership with Building Design+Construction, the report features market analysis from industry leaders based on their experiences, observations and Gordian’s RSMeans™ Data construction cost database. The industry standard for cost accuracy, RSMeans Data contains over 92,000 unit line items comprised of material, labor and equipment prices localized to 970+ locations. Available digitally and in print, this data is backed by more than 30,000 hours of research every year.
We recently published the latest Construction Cost Insights Report, covering Q2 of 2025. Based on the report’s observations and data analysis, it is clear that there are three questions looming over the construction industry as we head into the second half of the year.
Is This the Calm Before the Storm?
Gordian’s analysis of Q2 2025 construction costs shows little movement across core categories, a signal of stability at the national level. However, contractors, executives and other industry stakeholders are bracing for a tumultuous second half of the year.Â
As Andrew Ahrendt, PCL Construction’s director of national manufacturing, explains, “Some clients are locking in pricing early, anticipating tariff-driven increases later in the year.”Â
The full impact of potential tariffs on imported construction materials won’t be visible until Q3, maybe later. While no one knows how the global market will shift, some firms are already incorporating tariff modeling into the early phases of their plans, particularly when it comes to large-scale and complex projects. For deeper expert advice on navigating construction market shifts, watch this recording of our recent webinar, now available on demand.
While the national outlook for construction costs appears stable, there are pockets of pricing pressure. Costs are already surging upward in the South and Mountain regions, where infrastructure projects are active and manufacturing is in a boom period. This upward trend may soon be the norm across North America.
How Will the Supply Chain React to Market Volatility?
The desire to maintain some semblance of certainty and meet construction schedules amid fluid market conditions is inspiring some firms to adopt more sophisticated sourcing strategies and seek alternative suppliers. Â
Contractors are rethinking just-in-time delivery models, according to Gordian’s principal product manager, Sam Giffin. Delays in the delivery of electrical components, HVAC systems and specialty finishes are prompting earlier orders. Â
The good news is that construction firms aren’t panic-hoarding materials, which would only exacerbate supply chain constraints. Further, some contractors are leaning on digital procurement tools to help them forecast product lead times and identify alternative vendors more efficiently. Others are developing new and stronger relationships with domestic suppliers to ensure they have viable alternatives.
Want to know about solutions to an evolving supply chain? Read the full Q2 2025 Construction Cost Insights Report.
How Will the Labor Market Respond to Changing Economic Conditions?
The construction industry has long endured a labor shortage, especially concerning skilled labor. Expected market volatility is unlikely to change the situation for the better. It is recommended that contractors closely coordinate labor and material delivery to keep project schedules on track. Finally, should the cost of living increase, labor wages will, too, stretching project budgets to the extreme.
Moving Forward With Agility and Caution
The uncertainty pervading the construction industry at the beginning of the year has not gone away. In fact, all indications are that it will be here for a while. Now is the time for construction firms to embrace technology, adopt more nimble approaches to sourcing and scheduling, and find new suppliers. No one can be certain what is to come. We all must be ready to pivot at the drop of a hat.
