Productivity has never been more important as project viability remains challenging

By Paul Beeston Partner – Head of Industry and Service Insight, RLB in the UK

Across all regions, project delivery is being shaped by a more complex and interconnected mix of influences than ever before.

Even for project teams operating in a single market, global connectivity means that pricing, risk and procurement remain exposed to international forces.

A clear focus on regional markets while understanding and monitoring the overall global picture is required to deliver successful projects and best value in 2026.

The current global construction market is being impacted by these trends:

Sector divergence – Infrastructure and data centre development continue to have strongest performance globally, alongside energy transition projects and general public investment. Continuing affordability challenges, together with the high cost of borrowing, although appearing to ease into 2026, has meant residential construction in most markets is subdued, despite strong demand.
Labour shortages – Skills availability appears to be an issue in all markets and is expected to remain so into 2026. This has and will continue to add cost pressures to projects, which may need to increase the speed on MMC development to meet market demands.
Geopolitical pressures – Rapidly changing global events have the capacity to disrupt pricing of key materials (particularly concrete, steel and copper). Costs respond both directly through tariffs and indirectly through risk pricing.

Tender price inflation will grow steadily

Our overall analysis of tender prices suggests inflation in most markets is on a rising trajectory, albeit there are global regions where there is an expectation of deflation. However, the forecast rate of tender price inflation in 2026 has eased in 50% of global regions since our 2025 report.

Based on current global economic and construction market indicators, we anticipate the following for tender prices and procurement in 2026:

Volatility in pricing – driven by fluctuating energy costs, geopolitical uncertainty, and uneven sector demands.
Changing tender price forecasts – uncertainty is the new certainty, and we expect inflation to evolve throughout the year.
Drive towards value-based procurement – finding the right delivery partner for clients, where risk can be appropriately shared can provide greater certainty for all parties.

Higher productivity is key to unlocking viability

Although tender price inflation is moderating in many markets, the absolute cost base and challenges that many clients are facing on the value side of appraisals means that even softer tender price forecasts are not directly translating to an improved outlook for projects. Generally, project teams are working harder to get viability to stack up.

Against a backdrop of static and fragile economic growth, productivity becomes a pivotal lever for project viability.

Artificial intelligence (AI) will transform our industry, but it alone does not hold all the answers to productivity improvements – the right levers need to be pulled and that requires an approach informed by deep local market and sector knowledge.

Where activities can be replaced by technology and AI, the impact on optimising productivity should not be underestimated. But people and processes should not be ignored in the pursuit of greater productivity. AI is only part of the solution.