The construction industry is facing interconnected pressures from shifting data center demand, changing financial markets, persistent labor constraints, and the growing influence of large projects on smaller contractors. These conditions make disciplined project selection and execution more important. Contractors must align market opportunities with their workforce, financial position, and organizational capability, not just their available capacity.

Responding to these pressures requires contractors to understand where their operations are most vulnerable and which conditions they can influence. When project information is organized consistently through standard cost and labor codes, contractors can compare job data across projects, crews, and markets while maintaining a clearer view of backlog, workforce capability and financial exposure. Those comparisons provide the basis to act before market pressures become project-level problems.

Contractors can improve labor capability by:

Using labor code and productivity data to identify the type of work with the greatest losses
Targeting training and crew assignments to the skills the type of work requires
Improving planning, material readiness, and workflow so crews can stay focused on installation
Reviewing results on short, repeating cycles and adjusting field support before losses compound

Across each of these pressures, the contractor's advantage comes from recognizing change early and responding with discipline rather than reacting after performance declines.

Life after Data Centers

Data center construction is creating exceptional demand for skilled labor, specialized expertise, and supporting resources. As demand from large data center projects eventually normalizes, contractors will need to decide how their labor, expertise, and supporting resources can be redeployed across commercial, industrial, utility, and infrastructure markets.

This transition will not affect every market at the same time or in the same way. Some regions and contractors may continue to benefit from sustained digital infrastructure investment. Others may see changes in backlog, workforce utilization, and pricing as large projects wind down.

Contractors should prepare for:

Labor moving back into commercial, industrial, utility, and infrastructure markets
Increased competition as contractors pursue replacement backlog and enter adjacent markets
Changes in labor rates, equipment availability, and supplier lead times as demand is redistributed
Greater emphasis on workforce capability, not just headcount, with the type and timing of future work

The shift beyond current data center demand will require contractors to decide where their labor and expertise can stay competitive. Crews that perform well on repetitive data center scopes may not bring the same capability to other markets. Project data gives contractors a stronger basis for strategic decisions about where to deploy labor and expertise, which markets to pursue, and where prior experience is most likely to translate successfully. Testing future opportunities against that data, regional demand, and the company’s ability to execute helps contractors pursue replacement backlog without overcommitting resources.

Financial Market impact on the construction industry

Financial market conditions affect whether projects move forward, how they are funded, and how much risk contractors must absorb during execution. Changes in financing costs, customer investment, material pricing, and payment timing can alter project feasibility even after work enters the pipeline.

These conditions make it increasingly important to distinguish between backlog volume and backlog quality. Contractors should regularly reassess whether changes in financing, project timing, material costs, and payment terms have altered the expected value or risk of the work in their pipeline.

Contractors should continue to expect:

Greater scrutiny of project funding and financial readiness
Increased pressure on cash flow and working capital
Changes to project timing, scope, or purchasing decisions
Greater exposure to escalation and extended schedules
Increased emphasis on backlog quality over volume

Contractors cannot control financial markets, but they can reduce their exposure by recognizing changes in cost, cash flow, margin, and schedule early. Codified cost and labor data reviewed on shorter cycles lets companies test whether backlog remains financially viable as conditions change, rather than relying on contract value alone.

Improving Labor Capability is the way out of the labor shortage

The labor shortage has evolved beyond workforce availability. Contractors may be able to add people, but a higher headcount does not guarantee more work will be completed. Labor performance also depends on skills, supervision, material readiness, information flow, access, scheduling and the way work is broken down and assigned. Capacity and capability must be evaluated separately. Capacity measures how much labor is available. Capability measures whether that labor has the skills, experience, support, and direction to execute work effectively.

Improving capability requires contractors to:

Utilize Work Breakdown Structure (WBS) to break the work into more manageable tasks
Match crew assignments to the skills each activity requires
Track productivity to measure performance against the plan
Identify productivity losses and their underlying causes
Adjust training, planning, material support and supervision based on the results

Adding workers to undefined or poorly coordinated work can increase congestion, trade stacking, and supervision demands without improving quality, predictability, or effectiveness. Addressing the labor shortage therefore means strengthening the conditions that let available workers succeed, rather than treating headcount as the only measure of workforce readiness.

The Impact of large jobs on small contractors

Large projects can give smaller contractors opportunities to increase revenue, gain experience, and enter new markets. However, a project that is large relative to the company can also put significant pressure on labor, supervision, cash flow, procurement, and administrative support.

The risk is not limited to one project. When a large job consumes a disproportionate share of the company's resources, problems with productivity, billing, procurement, or schedule can spread to the remaining projects and threaten overall financial stability. Without consistent productivity tracking, those problems often surface only after they have already spread.

Before taking on large work, smaller contractors should evaluate:

Whether available labor has the capability, not just the capacity, the project requires
Whether supervision and project management can support the job
The effect on existing customers and committed backlog
Cash flow requirements created by mobilization and material purchases
Payment timing, retainage, escalation, and schedule exposure
Whether the expected return is proportionate to the organizational risk

For a smaller contractor, a large project is a sound opportunity only when the company can absorb its demands without compromising existing work or financial stability. Sustainable growth comes from selecting projects that fit the contractor's ability to manage risk, keep commitments, and support the business as a whole.

Turning Industry Pressure Into Action

Changing market conditions require contractors to be more deliberate about the work they pursue and how they prepare to execute it. Growth must be supported by clear processes, reliable information, and an understanding of the company's ability to perform the work.

Each of these pressures comes back to the same question: does the company know what its work requires and how well it is performing? Many contractors look to software for that answer, but software can only report on the information it receives. The process has to come first, starting with codifying the work. Cost and labor codes should be defined and applied to every project, and scope should be broken into manageable, measurable tasks. With that structure in place, software supports the process instead of standing in for it. Once consistent data is collected, results can be compared across jobs, crews and markets to identify where recurring issues exist and which opportunities align with its demonstrated strengths.

Consistent labor data, performance tracking and a clear view of capacity versus capability gives contractors the information needed to make timely decisions. Teams shouldn’t wait until a project is complete to learn how it performed. Instead, they plan, measure, and adjust on short, repeating cycles, which keeps productivity, procurement, cash flow, and project risk visible while the work is still underway. Issues come up early enough to adjust field and management support before they affect the outcome. Over time, those results give contractors a better basis for backlog decisions. They can weigh work against what their crews have shown they can execute, not just the number of workers available, and direct training, crew assignments, and supervision where they are needed most. The same discipline applies whether a company is pursuing new markets as data center demand shifts or evaluating a project that is large relative to its size.

More work, more people, and more software will not resolve these pressures on their own. Sustainable performance depends on codifying the work, developing capability, maintaining process discipline, and using reliable productivity information to guide project and organizational decisions.

Publications

Transforming a Company: Spheres of Influence

Sustainable growth depends on more than market opportunities; it requires systems that preserve knowledge, align strategy, and support consistent execution. A framework built around organizational learning, corporate memory, and repeatable processes can help companies reduce reliance on individual expertise while improving resilience through leadership transitions and long-term growth. Read more: Transforming a Company: Spheres of Influence

Using Software to Enable Your Processes — Not Control Them

Creating sustainable improvement requires more than new tools; it requires processes that connect strategy, planning, execution, and measurement. When technology is designed to support those processes, organizations gain better visibility, stronger coordination, and greater ability to continuously improve operational performance. Read more: Using Software to Enable Your Processes — Not Control Them

The Continuum: Keeping Project Information Connected

As organizations grow, information often becomes fragmented across people, departments, and systems. Establishing a connected flow of project data from estimating through closeout improves visibility, supports better forecasting, and creates the organizational memory needed to continuously improve performance and future project outcomes. Read more: The Continuum: Keeping Project Information Connected

Additional Articles – Want to Learn More?

Research

Workforce Planning, Increasing Labor Demand, & Productivity

As demand continues to grow from data centers, AI infrastructure, and related construction activity, workforce capacity and capability are increasingly becoming constraints on what projects can be built, where they can be built, and when they can be delivered. The industry's challenge, however, has evolved beyond simply finding more people to put on jobsites. MCA, Inc. recently completed a workforce and market analysis examining the impact of this unprecedented growth on labor capacity and project execution.

The study found that while demand for electrical construction continues to accelerate, workforce constraints will increasingly limit the industry's ability to deliver projects on schedule and within budget using traditional staffing models. Long-term success will depend not only on recruiting additional workers, but also on increasing workforce capability through improved training, prefabrication and offsite construction, industrialized work processes, and more effective deployment of skilled labor. In an environment where labor remains the primary constraint, productivity, workforce planning, and execution strategy are becoming critical competitive advantages.

Evaluating Market Shares and Pipeline & Backlog Using Existing Data

The labor shortage has elevated workforce planning from an operational concern to a strategic necessity. To support more timely market intelligence (knowing how big the market is, how much specific organizations control, and how that market share changes over time) and workforce forecasting (how many people were used previously and will be expected in the future), MCA, Inc. has implemented the first phase of a new API (Application Programming Interface) designed to automate the flow of project and labor information into the Pipeline & Backlog module within DCI Construction^®. This development reduces the time, cost, and effort required to maintain current market and project visibility while improving the frequency and accuracy of analysis.

The value of this effort extends beyond just data collection. Pipeline & Backlog provides visibility into upcoming work, market opportunities, and expected manpower requirements, allowing organizations to proactively address workforce needs before they become execution constraints. In a market where labor availability continues to influence project success, having earlier insight into future demand can improve planning, resource allocation, workforce development, and strategic decision-making.

A Local, Data-Driven Response to the Labor Shortage

Building on this workforce and market analysis, the Sacramento and Los Angeles-area NECA chapters and their IBEW Locals are moving from market insight to action. Through ongoing market share measurement, each Local can identify the work categories it needs to retain, the markets it wants to penetrate, and the areas where its contractors face the greatest competitive challenges. With data center development increasing demand for skilled labor, Locals must maintain their position in established markets without allowing major projects to draw too much labor away from other important work.

Using Pipeline & Backlog, local leaders can categorize upcoming work and forecast where and when labor will be needed. Labor code data can then reveal where productivity is weakest within targeted markets, allowing Locals and contractors to develop focused training and adjust policies, processes, crew assignments, and field support to increase productivity and reduce costs.

MCA, Inc. has completed similar analyses and improvement efforts with other contractors. In one example, JPAC^® data identified branch rough-in as a labor code representing a significant share of project hours but experiencing poor productivity. Contributing issues included assigning less-experienced workers to the activity, insufficient layout and planning, and excessive onsite material handling. The contractor used these findings to improve crew mix, layout, material preparation, training, and execution. Subsequent analysis documented measurable improvement in branch rough-in productivity.

Making this cycle routine, from market analysis and labor forecasting through targeted training and productivity measurement, will help each Local use available labor more effectively and continuously strengthen its ability to retain and grow market share.

Software Development

API Integration Efforts

We are expanding DCI Construction^® integrations by building on our existing APIs and evaluating connections with additional ERP, estimating, and construction platforms. These integrations are intended to reduce duplicate entry and keep project information current as data changes in connected systems. This will improve data quality and provide better visibility from estimating through project execution. With less manual data entry between systems, teams can focus on using the information to plan labor, monitor performance, and respond to changing project conditions.

Labor Needed Report

Our latest DCI Construction^® update adds a new output to the Pipeline & Backlog Time Report that converts projected labor hours into the estimated number of workers needed for each reporting period. The calculation uses an eight-hour workday, project-specific working days, and labor hours from backlog, pipeline, approved change orders, and pending change orders. Results can be viewed by month, quarter, or year in both the chart and table. This gives users an earlier view of upcoming labor needs so they can make more informed hiring, scheduling, resource allocation, and project selection decisions.

Historical TPAC^® SPR^® Creation

The TPAC^® module now allows users to create a historical Single Point of Review (SPR^®) report based on a selected report date. The report uses the TPAC^®, JPAC^®, and project data available at that point in time rather than only current values. This capability helps teams recreate prior reporting periods, evaluate changes in projected cost and productivity, and maintain a clearer record of project performance over time.

Upcoming Events

Agile User Group Symposium: October 14^th

Re-electrification and rapid data center growth are creating unprecedented demand for skilled electrical labor—and challenging contractors to deliver more with the workforce they have.

The Agile User Group Symposium will bring together leading contractors and practitioners to discuss gaining organizational support for Agile Construction^®, improving capacity and productivity without simply adding headcount, and responding to the labor and market trends reshaping the industry. Attendees will leave with practical strategies they can bring back to their organizations, making this a valuable opportunity for leaders and the teams responsible for planning and delivering work.

Click here to register.

IEC Spark: October 21^st – 24^th

Which approach is better suited to today’s construction environment: Lean Construction or Agile Construction^®?

This IEC Spark session will examine how the two approaches differ and show how Agile principles help teams respond to changing jobsite conditions, use labor more effectively and make faster, data-driven decisions. Practitioner insights and real-world applications will help leaders and their teams assess current practices, determine where greater flexibility is needed and identify opportunities to improve productivity and project outcomes.

Agile User Group: December 4^th

The December Agile User Group will show how Agile Construction^® can translate into measurable improvements in the field. Through real-world examples and lessons learned, the session will explore applications that improve labor efficiency, strengthen scheduling and make project delivery more predictable. Participants will also have the opportunity to exchange experiences with fellow practitioners, giving individuals and teams ideas for advancing implementation within their own organizations.

Click here to register.

Wednesday, May 13, 2026

May 2026 State of the Industry Report Vol XI Issue 1

Table of Contents

Industry Update

Data Center Demand Driving Labor Shortage

More Workers Means More Risk on the Jobsite

Energy Demand is Becoming a Limiting Factor

The Middle East Conflict is Disrupting Material Flow and Pricing

Supply Chains are no Longer Independent Systems

Data Centers are Reshaping Local and Global Industries

Publications

Re-electrification of the U.S.: Why Data Centers Are Driving the Surge

The Data to Build Data Centers: Why Better Information Wins Projects

Additional Articles – Want to Learn More?

Research

Work Breakdown Structure Research: What Makes a Good Plan?

Job Porosity Research: Identifying the Risk Factors for Project Financial Outcomes

Development

Integration of AI Models in DCI Construction®

Proof of Concept AI Development in JPAC®

Project Likelihood of Total Profit Gain with AI Powered Bid Filtering

Industry Update

The construction industry is facing a moment where opportunity and constraints are colliding.

The surge in data center development is accelerating demand across labor, energy, and materials. Meanwhile, global instability is disrupting how those resources are supplied. What once felt like separate challenges are now compounding into a single, interconnected pressure on project delivery.

Here’s how it’s showing up:

Data Center Demand Driving Labor Shortage

The rapid expansion of data center projects is reshaping labor demand across the construction industry. What was once a localized staffing challenge is now a structural shortage in key skilled trades.

The surge in data center construction is placing sustained pressure on the skilled labor pool
Competition for electricians, mechanical trades and commissioning talent is intensifying across markets

This is turning labor into a defining constraint on project delivery timelines and execution. As a result, it is increasingly influencing timelines, cost certainty, and how work is sequenced across portfolios. In a market defined by sustained demand and limited capacity, labor availability is becoming a primary factor in determining what can realistically be built and when.

Several response strategies may be explored:

Bringing labor from outside regions or international markets to fill critical gaps
Slowing or sequencing projects to better align with the available workforce capacity
Increasing prefabrication to reduce on-site labor demand
Investing in automation and productivity enhancing construction methods, such as Agile Construction^®

More Workers Means More Risk on the Jobsite

As workforce demand increases, many projects are responding by adding more crews to maintain schedules. However, higher jobsite density introduces new layers of operational and safety complexity.

Meeting aggressive schedules often requires increasing workforce density on already complex jobsites
Adding more workers in tight spaces creates greater coordination challenges and elevates safety risk

Trade stacking becomes harder to manage as jobsite density increases. This adds strain on supervision, communication, and site logistics across the entire site. As a result, strong safety programs and oversight become progressively more important to maintain performance and reduce risk.

Energy Demand is Becoming a Limiting Factor

Data centers are now one of the largest drivers of new electricity demand in the construction pipeline. As a result, energy availability is increasingly shaping when and where projects can move forward.

Data centers are driving a sharp increase in electricity demand across regions
Power availability is becoming a key constraint in project planning in delivery

What’s changing?

The industry is being pushed towards re-electrification and shifting infrastructure priorities
Utilities are playing a larger role in determining project feasibility and timelines
Energy access is becoming a gating factor for development, not just a consideration

The Middle East Conflict is disrupting Material Flow and Pricing

Currently, the instability tied to the conflict in the Middle East is putting pressure on one of the world’s most critical shipping corridors: the Strait of Hormuz.

Disruptions to key shipping routes are impacting the movement of energy and raw materials
Fuel and transportation costs are becoming more volatile and difficult to predict

What does this mean for the construction industry?

Material pricing is harder to lock in and more apt to sudden shifts
Procurement planning must happen earlier, with added contingencies
Sourcing strategies need to diversify to reduce exposure to global disruptions

Supply Chains are no Longer Independent Systems

Labor availability, energy capacity and material access are now tightly interconnected. A disruption to one area can quickly cascade across multiple phases of a project.

As a result:

Project timelines are increasingly exposed to external shocks outside direct control
Planning must account for compounding risk, rather than isolated disruptions
Agility in execution is becoming a core advantage in delivery performance

Data Centers are Reshaping Local and Global Industries

The rise of data centers is not just a construction trend, but a structural shift in how economies and industries are organized. Their influence extends far beyond the jobsite, both locally and globally.

Local Influence:

Driving, infrastructure investment, and increased demand for utilities
Placing new pressure on power grids, land use and overall reginal planning

Global Influence:

Increasing demand across energy and construction related industries
Intensifying competition for labor and materials
Reinforcing the interconnected nature of the industrial digital economy

What is unfolding is a structural shift in how construction projects are delivered. Labor availability, energy capacity, material flows, and global instability are the constraints shaping every major project. Success will increasingly depend on how effectively these pressures are anticipated and managed in real time.

Publications

Re-electrification of the U.S.: Why Data Centers Are Driving the Surge

Data center expansion is accelerating electricity demand, turning power access into a key constraint while amplifying labor and supply chain pressures. These forces are no longer separate—they’re converging into a single challenge shaping project timelines and feasibility. Read more: Re-Electrification of the U.S.: Why Data Centers are Driving the Surge

The Data to Build Data Centers: Why Better Information Wins Projects

When labor shortages, energy limits, and supply chain volatility converge, project outcomes depend less on conditions and more on the quality of information driving decisions. Higher-fidelity connected data enables earlier risk detection and more reliable execution in complex environments. Read more: The Data that Builds Datacenters

Additional Articles – Want to Learn More?

Research

Work Breakdown Structure Research: What Makes a Good Plan? Using AI to Predict Project Outcomes Before They Start.

In construction, success is usually measured after a project is complete. But what if you could predict outcomes before work even begins? The takeaway from MCA’s research is simple: better planning = better outcomes. High-performing projects start with plans that are:

Clearly defined
Structured around the work (not just hours)
Measurable and actively managed

Tools like a Work Breakdown Structure (WBS) help define scope, align teams, and create a reliable roadmap for execution. AI can also help improve project performance when used in the right circumstances. MCA, Inc.’s research shows that applying AI to project data allows teams to:

· Predict outcomes early in the project

· Identify risks before they escalate

· Make more informed, proactive decisions.

The bottom line is: contractors who adopt structured planning and data-driven tools will be better positioned to improve performance, reduce risk, and stay competitive.

Job Porosity Research: Identifying the Risk Factors for Project Financial Outcomes

Most construction projects start with a solid plan and a healthy margin, but many still end up underperforming financially. MCA, Inc.’s research points to a key concept: job porosity, or the hidden (and common) risk factors that allow profit to slowly slip out of a project.

The more “porous” a project is, the more likely it is to experience profit fade. Common causes of project fade include:

Gaps between estimate and reality – assumptions don’t match field conditions
Lack of alignment – estimating, operations, and accounting aren’t working from the same plan
Poor data quality – inconsistent or unreliable reporting
Unrecognized variability – treating every project as “unique” instead of understanding patterns

Project outcomes aren’t random; they’re driven by identifiable factors. Job porosity gives contractors a way to spot risks earlier and respond with better decisions and risk prevention, whether that’s adjusting a bid or managing a project more proactively.

Development

Integration of AI Models in DCI Construction®

DCI Construction^®, (Digitalization Commonization Interconnection^®) the flagship construction ERP developed in house by MCA, Inc. is making strides towards the integration of Artificial Intelligence to improve reliability and efficiency for the project manager and field. The power of DCI Construction^® in interconnecting data across all areas of the project, combined with AI models built from 30 years of research, will provide one of the most powerful all-in-one enterprise level management software’s available.

Proof of Concept AI Development in JPAC®

By leveraging post-2021 project data in JPAC^® (Job Productivity Assurance and Control), MCA, Inc. developed a machine learning proof of concept to predict end-of-job productivity earlier and with greater accuracy while maintaining JPAC^®’s current reliability. Using over 11,000 data points across 470 projects, the AI model improved productivity modeling accuracy by more than 68%, demonstrating that data-backed AI can move beyond educated guesswork and expand its use in Agile Construction®, enabling teams to:

Recognize and predict patterns based on labor code performance
Predict financial and productivity performance outcomes early
Provide actionable insights for project teams based on the statistical patterns

Project Likelihood of Total Profit Gain with AI Powered Bid Filtering

Built upon the research conducted by MCA, Inc., DCI Construction^® will house an AI driven bid filter aiming to help project managers predict performance and help decide if they should bid a job. By utilizing historical data and inputs, DCI Construction^® will be able to predict the likelihood of winning the bid.

There are twelve sources that the AI model will use to make a bid prediction. Some of these include:

Project manager average months – Assessment of experience
Project location – Based on state
Overhead ratio – Burden & other cost divided by total cost
Profit – Estimated at time of bid and as a percentage of the contract
Timeframe – Estimated time of the project

Saturday, October 3, 2026

Table of Contents

Industry Update

Life after Data Centers

Financial Market impact on the construction industry

Improving Labor Capability is the way out of the labor shortage

The Impact of large jobs on small contractors

Turning Industry Pressure Into Action

Publications

Transforming a Company: Spheres of Influence

Using Software to Enable Your Processes — Not Control Them

The Continuum: Keeping Project Information Connected

Additional Articles – Want to Learn More?

Research

Workforce Planning, Increasing Labor Demand, & Productivity

Evaluating Market Shares and Pipeline & Backlog Using Existing Data

A Local, Data-Driven Response to the Labor Shortage

Software Development

API Integration Efforts

Labor Needed Report

Historical TPAC® SPR® Creation

Upcoming Events

Agile User Group Symposium: October 14th

IEC Spark: October 21st – 24th

Agile User Group: December 4th

Wednesday, May 13, 2026

More Workers Means More Risk on the Jobsite

Re-electrification of the U.S.: Why Data Centers Are Driving the Surge

Additional Articles – Want to Learn More?

Work Breakdown Structure Research: What Makes a Good Plan? Using AI to Predict Project Outcomes Before They Start.

Job Porosity Research: Identifying the Risk Factors for Project Financial Outcomes

Historical TPAC^® SPR^® Creation

Agile User Group Symposium: October 14^th

IEC Spark: October 21^st – 24^th

Agile User Group: December 4^th