Skip to main content


Six trends shaping the future of the global construction industry

The industry is undergoing a profound transformation, propelled by technological advancements, changing demographics, and a growing emphasis on sustainability.
reflection in a glass panel of a skyscraper facade

The global construction industry is currently confronting several headwinds that are shaping its trajectory. These challenges stem from a complex interplay of economic uncertainties, geopolitical tensions, labour shortages, regulatory complexities, and environmental issues.

The industry is undergoing a profound transformation, propelled by technological advancements, changing demographics, and a growing emphasis on sustainability. As we look ahead, it is evident that construction is about to undergo a remarkable evolution, revolutionising how we design and build for the future, and interact with our environment.

Here are the six key trends that we see shaping the future of the global construction industry.

1. Macroeconomic dynamics

Global economic growth has slowed in the past 12 months amid high inflation and tightening financial conditions, which are also constraining investment. Challenges to the global construction industry include the high costs of construction materials and labour shortages. Given these factors, analysts at GlobalData forecast global construction output growth of 1.8% in 2023, up only slightly from 1.7% in 2022.

On the upside, the industry expects to regain some growth momentum in 2024. Assuming there is an improvement in global economic stability, forecasts suggest output growth will expand by 3% and reach an annual average of 4.2% between 2025 and 2027.

Investment in the infrastructure and the energy and utilities sectors is a major driver of overall construction output growth. McKinsey predicts global expenditure in energy transition could amount to US$275 trillion between 2021 and 2050, with spending frontloaded.

2. Technological advancements

The construction industry has often taken a cautious approach to technology adoption. However, companies are increasingly changing their mindset regarding the adoption of new technologies.

A GlobalData technology in construction survey showed there were a number of drivers behind this shift. 

Improving productivity (61%) was the most commonly cited reason behind investment in technology, followed by achieving greater competitiveness and reducing costs (both 37%) and enabling faster construction times (35%).

More than a quarter of respondents gave the ability to win contracts as an investment driver. This is most notable with regards to being building information modeling (BIM) compliant in numerous countries in order to secure contracts on public projects. For example, in the UK, since 2016, all centrally-procured construction projects are required to be BIM Level 2 compliant, and there are similar standards in place in many other markets in Europe. There is also an increasing share of private projects that have project owners expecting BIM compliance.

3. Modern methods of construction

Prefabrication and modular construction techniques are expected to gain widespread adoption in the coming years. The global prefabricated construction market is projected by Grand View Research to reach US$162.4 billion by 2030, growing by 7.5% per year. 

The advantages of prefabrication — reducing construction time, improving quality control, and increasing cost-efficiency – are driving its increased implementation across various construction sectors.

This is not a solution for all of the challenges facing the industry. Prefabrication and modular construction often require standardised designs and module sizes. This can be limiting when dealing with complex architectural or structural designs that may not easily align with modular dimensions.

Also, transporting large modular components from the factory to the construction site can be logistically challenging. Oversized modules may require special permits, route planning, and coordination with local authorities. Transport-related risks, such as damage to modules during transit, delays, and increased costs, can arise if not managed properly.

However, prefabrication and modular construction can effectively address space constraints in urban areas and enhance worker safety. For instance, manufacturing modules in a controlled environment minimises exposure to on-site hazards, promoting a safer construction environment for workers.

4. Sustainable construction

In an era of increasing environmental consciousness, sustainability will be at the forefront of the construction industry’s future. The green building market is projected by Mordor Intelligence to reach US$394.4 billion by 2028, growing by 9.73% annually.

The adoption of sustainable practices, such as energy-efficient materials and renewable energy systems, can lead to significant cost savings for the construction industry.

However, the transition to a more sustainable future will not be straightforward.

A Forbes survey found that while 59% of construction industry respondents regarded a sustainable supply chain as a competitive differentiator, 47% said increased process complexity was an obstacle to achieving their sustainability targets.

To help overcome this challenge, construction companies are increasingly improving their data monitoring, collation and assessment efforts, through which they can gain greater visibility of their own processes as well as those of their subcontractors and supply chains.

This insight can enable businesses to take steps to lower costs and minimise emissions.

5. Smart and connected infrastructure

The concept of smart cities will drive the development of intelligent and connected infrastructure. Fortune Business Insights predicts the global smart building market will reach US$328.62 billion by 2029, growing at a rate of 22.2% per year.

Integrating Internet of Things (IoT) technology, data analytics, and artificial intelligence (AI) is expected to enable efficient resource management, predictive maintenance, and enhanced occupant experience, improving sustainability and operational efficiency.

Embedded sensors in infrastructure components can collect real-time data on parameters such as temperature, humidity, stress, and structural integrity. This information facilitates continuous monitoring, early detection of potential issues, and proactive maintenance, helping to ensure safer and more reliable structures.

By analyzing historical and real-time construction data, AI algorithms forecast project performance, identify potential risks, and can optimise scheduling and resource allocation. This may lead to improved project management, cost control, and timely decision-making.

AI-powered algorithms can also analyze construction data to optimise energy usage, resource allocation, and logistics planning. These intelligent systems can help to reduce environmental impacts, enhance sustainability, and promote efficient construction practices.

6. Skilled workforce and digital transformation

In today’s hypercompetitive business landscape, attracting and retaining top talent has become a challenge across various industries. The construction sector continues to find itself in a fierce battle for talent.

As projects multiply and demands surge, industry players are grappling with the urgent need to secure skilled professionals who possess the expertise to shape skylines and build sustainable infrastructure.

Fostering a culture of continuous learning is paramount. Virtual reality (VR) and augmented reality (AR) are projected to grow in use, revolutionising training, simulation, and on-site safety, enabling workers to acquire new skills in a safe and immersive environment.

In the Marsh McLennan 2022 Global Talent Trends Report, 71% of C-suite executives plan to spend on AI-based productivity tools, significantly higher than the 50% all-industry average. Establishing robust training programs, mentorship initiatives, and partnerships with educational institutions can help nurture a skilled and future-ready workforce.

The future construction industry also requires a flexible and adaptable workforce. Recognising the evolving preferences of the modern workforce, construction companies can tap into the benefits of flexible work arrangements.

By offering opportunities for freelance or contract work, organisations can attract skilled professionals who value autonomy and diverse experiences. Additionally, promoting diversity and inclusion initiatives within the construction industry can attract a broader pool of talent and foster innovation and collaboration.

The way forward

The global construction industry is on the cusp of revolutionary transformations as the world’s population continues to grow and societal demand shifts to smarter and sustainable infrastructure and buildings. 

By embracing digital technologies, modern methods of construction and sustainability measures, the industry is poised to become more efficient, eco-friendly, and adaptable this changing demand.  

Leveraging data and technological innovations is expected to allow construction professionals, policymakers, and stakeholders help shape a future where construction is a catalyst for development and economic growth on a global scale.

Our people

Placeholder Image

Maarten van Haaps

Head of Construction, Marsh Specialty

Placeholder Image

Brad  Day

National BDM – Corporate Construction, Marsh Specialty

This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modelling, analytics, or projections are subject to inherent uncertainty, and any analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. LCPA 23/486

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”