This April, the BCIS reported good news for the UK construction industry: despite the 1.6% decline in the sector reported in 2024, modest growth can be expected by the end of 2025. But what’s the catch?

To make this recovery happen, and overcome the string of challenges still holding back progress, leaders must proactively adopt smarter strategies, seizing opportunities to build a better future.

Challenge 1: A shrinking talent pool

The Construction Industry Training Board estimates the sector needs 250,000+ new workers by 2028 to meet demand, with the UK Trade Skills Index 2023 putting this figure at 937,000 over the next decade. Yet, we continue to face the worst skills shortage we’ve seen in years. Apprenticeships are doing little to pick up the shortfall, with dropout rates currently at 47%, according to the British Association of Construction Heads.

The solution: Invest in people, pipelines and perception

Sustained, structured investment in upskilling and training across the entire industry is needed to attract, retain and grow the talent we desperately need.

Not only will this help to top up the skills of those already in the industry, but will challenge the negative misconceptions many have about careers in the sector. Construction is a truly rewarding career path, but many view the industry as offering limited opportunities and scope for progression.

The sector needs to showcase the benefits of a career in construction more clearly to attract the young workers we need. Promoting the range of roles on offer will help to challenge outdated stereotypes that construction solely involves potentially dangerous manual labour. Further to this, investment in training, pay and additional benefits will help to attract talented people from adjacent disciplines like geography, engineering and design.

Challenge 2: A still volatile economy

Recent rises in employer NI are problematic in the context of continued economic volatility, particularly with the BCIS predicting a further 18% rise in labour costs by 2030.

This is in addition to a forecasted 15% jump in tender prices: a sharp blow for a sector marred by closures, with construction firms accounting for 17.2% of all insolvencies in England and Wales in May 2025, according to the Insolvency Service.

The solution: Engage early on to improve cost control

Whilst the onus is on the government to step up and be proactive in supporting firms across the built environment, there are still several steps companies can take to protect themselves.

Engaging contractors early on can help to make costs more predictable, particularly when inflation-linked contracts and pre-construction service agreements (PCSAs), which are becoming more popular, are signed.

Tools like Building Information Modelling (BIM) and digital twins add further advance cost control by helping leaders to anticipate challenges and ensure designs fit requirements before moving forward, cutting unnecessary time and monetary costs. Ultimately, the more visibility gained, the lower the chances of financial problems.

Challenge 3: Shaky supply chains

The same visibility and control are required across materials. Geopolitical instability has destabilised industry supply, with material costs projected to rise by 15% over the next five years as a result, according to BCIS research.

The solution: Source locally – thinking outside the box

Local sourcing can help firms to regain some control, and there is a growing number of home manufacturing facilities across the UK, such as the new Etex plasterboard facility near Bristol.

Whilst certain materials like bricks remain in relatively short supply, with little having changed since the 2004 Barker Review reporting domestic shortfall, there are plenty of alternative viable materials available for those willing to take a different approach.

Take timber frames, for example. A sustainable material with a low carbon footprint, 80% of houses in Scotland now boast timber structures, but they are used in just 8% of new builds in England. The rest of the UK should follow suit and make use of this material.

Embracing Design for Manufacture and Assembly (DfMA) can likewise help by reducing reliance on traditional, potentially less available materials, whilst also keeping costs down, accelerating delivery, and reducing on-site labour, and carbon-intensive processes on site.

Challenge 4: Delays threatening resilience

Any relief in project timelines becomes a competitive advantage when considering the growing number of projects that have stalled or stopped completely due to lead contractor collapse.

When ISG went into administration in 2024, it left £2.5 billion worth of live projects and £1.7 billion worth of awarded contracts abandoned, as reported in New Civil Engineer.

Such instances can leave sub-contractors teetering on bankruptcy, meaning companies must prove they are able to deliver on their promises before new tenders are signed.

Said Business School reports that just 27% of global infrastructure projects finish on or under budget, and only 0.2% are delivered with all the promised benefits, within budget, and on time. It’s clear that it can be difficult to prove or guarantee stability, but this needs to change.

The solution: Plan for risk in advance  

Changes to UK planning processes would help to cut delays and boost reliable project delivery.

At present, the new Building Safety Regulator processes add six to nine months to high-rise approvals. Streamlining these processes while broadening the range of permitted developments would make a significant difference in cutting delays.

With little change on the horizon, however, companies must once again advocate for their own interests as much as possible. The responsibility shouldn’t fall solely on the sector’s shoulders alongside other industry stakeholders, but initiatives including robust risk assessments, early-stage temporary works design, and resilience planning certainly help. Likewise, contingency plans for potential contractor insolvency, combined with clear structural sequencing planning, offer vital peace of mind to clients.

Challenge 5: Rising regulatory pressures

If anything, 2025 has brought greater regulatory scrutiny on the built environment. From the Future Homes Standard for energy efficiency and ever-nearing net-zero targets, to post-Grenfell fire-safety regulations, it all demands more thorough lifecycle thinking. This unfortunately comes at additional monetary and design cost

Strict Gateway requirements under new legislation such as BSR mean months of additional planning and construction demands, further risking delays.

The solution: Prioritise compliance using tech

Day-one compliance becomes a critical ally in this landscape. The more prepared teams are for potential challenges, the less likely they are to be confronted by unanticipated expenditure or bureaucratic slowdowns.

Tech tools like BIM, digital twins and parametric modelling add an additional layer of safety by simulating safety performance and allowing leaders to resolve any design conflicts early on. Experienced structural engineering teams who are well versed in regulation can likewise help to maintain compliance without hurdles, by bringing smarter, data-backed solutions to the table.

This input can turn any challenge into a competitive advantage by supporting faster action and approvals across the ever-changing UK built environment.

A future without pressure

Ultimately, while pressures exist alongside an urgent need for greater government action, better days lie ahead for construction firms who adopt a forward-thinking approach, invest in the skills, technologies, and the external support needed to fully embrace emerging opportunities across the sector.