From more AI evolution to shoring up your talent shortage, here are Deloitte’s top engineering and construction trends to follow in 2026.

The engineering and construction industry is facing both significant opportunities and challenges, but firms have good reason to tackle 2026 with optimism. While it’s likely shaping up to be another boom year for data centers and energy infrastructure, material costs are rising, making it critical to adjust for shifting international trade policy.

Positive industry signals in 2025 included a modest increase in real value added in the second quarter of $890 billion, a 1% increase year over year, according to Deloitte’s analysis of data from the U.S. Bureau of Economic Analysis. But by July, construction spending was down 3% year over year, due to downturns in the commercial and manufacturing segments, down 8.2% and 7%, respectively, based on Deloitte’s analysis of data from the U.S. Census Bureau. Margins also tightened and schedules stretched due to persistent inflation, elevated interest rates, tariff uncertainty, acute labor shortages and supply-chain disruptions.

The brightest spot on the engineering and construction landscape by far is the surge of AI-driven data center construction and the requisite energy infrastructure. AI-related data center investment will help investment in structures rise by a projected 1.8% in 2026. Advanced manufacturing, healthcare and defense activities also hint at selective growth opportunities.

Building on Growth Opportunities

Deloitte’s new 2026 Engineering and Construction Industry Outlook considers this complex landscape and identifies four trends that can inform growth strategies for 2026 and beyond:

1. Evolving tariffs may increase material cost pressures. In particular, 50% steel and aluminum tariffs are impacting construction material costs. The tariffs have intensified margin pressure and delayed procurement, contributing to an 88.2% year-over-year increase in project abandonment for August 2025.

To maintain project stability as trade policies continue to evolve, many leading contractors are pursuing various strategies like substituting alternative materials for heavily taxed materials, increasing domestic sourcing and diversifying supplier networks. They are also adopting digital platforms that integrate tariff data, freight information and material forecasts for predictive purchasing. The goal is to transform macroeconomic uncertainty into competitive advantage.

2. The AI explosion is fueling demand for data centers and the energy infrastructure to support them, even as traditional commercial and manufacturing construction slows. By 2035, Deloitte estimates that power demand from data centers in the United States could grow more than fivefold, to 176 gigawatts from 33 gigawatts in 2024. This buildout draws on economic, geopolitical, legislative and technological developments.

Many large engineering and construction companies are pivoting to win these mega projects, seeking partnerships to fill their skills gaps. Midmarket companies are looking to find efficiencies and develop their workforce to compete.

3. Digital transformation is one way for firms to increase efficiency from business processes in 2026, helping to offset labor shortages and rising costs. Leading organizations are deploying technologies such as AI-driven analytics, real-time project management platforms and connected jobsite solutions to streamline operations, enhance decision-making and stand out in a competitive landscape.

Leaders are also beginning to harness agentic AI, technologies that work, learn and decide autonomously, to manage complex scheduling and coordinate workflows. Building information modeling software, 3D printing and digital twins are expected to shorten design timelines. In addition, look for more computer vision and analytics to help improve site safety.

To capitalize on the digital dividend, firms can institutionalize data governance frameworks, invest in continuous workforce development and embed digital performance metrics throughout project delivery.

4. Talent shortages continue to impact the industry, a challenge expected to intensify in 2026 with a projected need for nearly 500,000 new workers, up from 439,000 in 2025. If trends persist, there could be a shortage of more than 2 million skilled craft professionals by 2028. By one account, the industry could lose nearly $124 billion in construction output due to unfilled positions next year.

Some firms are filling gaps by using digital tools such as autonomous equipment, robotics, AI-powered scheduling and prefabrication technologies to assist in the work of design, engineering and even construction.

Since the demand for talent is expected to remain for the foreseeable future, companies are expected to invest more in training. Moreover, as the engineering and construction workforce needs shift from traditional craft roles toward factory-based technicians and digitally skilled operators, firms may need to develop fresh human resources strategies in recruiting, onboarding, retention and career pathways to remain competitive.

Opportunity Through Agility

Although next year is expected to be a challenging one, there is potential for abundant opportunity for those who can read the signals, make the right strategic moves and leverage technologies.

It will be another year of significant growth in data center construction which may continue through the next decade. Either way, the industry likely needs half a million more talented workers and more predictable material costs to help maximize their opportunity.

Although it likely won’t be easy, 2026 can be a very good year.     

SEE ALSO: ‘STRONG FUNDAMENTALS’: REVIEWING DELOITTE’S 2025 ENGINEERING AND CONSTRUCTION OUTLOOK

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