Addressing Workforce Shortages, Rising Costs and Industry Shifts with a Collaborative Approach
Even in an uncertain economy, design-build is helping drive construction growth, as the industry added 19,000 new jobs in February — its strongest month in five months. While this signals resilience in the AEC industry, challenges like workforce shortages, rising material costs and rapid technology developments remain. As Owners navigate these conditions, many are increasingly turning to design-build for its ability to streamline projects, improve efficiency and mitigate risk in an evolving market.
The Big Picture
February’s construction job gains were driven by hiring in nonresidential construction and heavy and civil engineering, which played key roles in the industry’s overall growth.
Overall, the Bureau of Labor Statistics (BLS) reported the overall U.S. economy added 151,000 jobs in February, indicating a slowdown from recent months. Eleven of the top 14 industry sectors saw growth, with education and health services, financial activities and construction leading the way. Only professional and business services, retail trade and leisure and hospitality saw declines.
The unemployment rate rose slightly to 4.1%, reflecting a slightly looser labor market and coming in fractionally higher than economists’ prediction that it would remain at 4%.
Despite uncertainty, design-build continues to play a critical role in helping the construction industry mitigate labor shortages, manage rising costs and improve project efficiency.
The construction industry’s job growth was largely driven by:
- Specialty trade contractors, who added 14,600 workers (though most were in residential construction).
- Nonresidential building contractors, who contributed 1,700 jobs.
- Heavy and civil engineering construction, which added 2,500 jobs, supported by federal infrastructure investments.
While these gains signal steady hiring in key areas, long-term industry concerns persist. Ongoing labor shortages, rising material costs due to tariffs and federal budget uncertainty could impact hiring in the coming months.
How Design-Build Helps Offset Workforce Shortages
One of the biggest obstacles facing the construction industry is a shrinking labor force. The average age of construction workers has risen to 42.1, and the number of workers aged 55 and older continues to increase. At the same time, only 26.4% of construction workers have retirement benefits, making workforce retention even more difficult.
With fewer skilled workers available, projects that are delivered using design-build can better navigate delays, avoid miscommunication and minimize cost overruns. Design-build helps fill these workforce gaps by:
- Reducing inefficiencies through early collaboration, ensuring projects stay on schedule even with fewer personnel.
- Streamlining processes, allowing projects to move forward with less administrative burden, which is crucial when fewer workers are available.
- Leveraging innovation, such as modular construction and prefabrication, reducing reliance on high-demand labor categories.
Owners are increasingly turning to design-build to deliver complex projects more efficiently with fewer resources as the industry continues to struggle with workforce shortages.
Design-Build Provides Cost Control Amid Uncertainty
With new U.S. tariffs on imports from Mexico, Canada and China, contractors are rethinking procurement strategies and stockpiling materials to offset rising costs. Steel, lumber and windows are among the most affected materials, leading some firms to dip into cash reserves or rent storage space to hold extra inventory. Higher material prices are putting pressure on project budgets, forcing contractors to redesign, seek alternative materials or explore modular construction.
Owners can address fluctuating material prices by embracing the flexibility design-build is uniquely positioned to provide, including:
- Faster decision-making allows for real-time adjustments to material selection without disrupting the overall project timeline.
- Early collaboration means design and construction teams can work together to lock in pricing earlier, reducing risk from tariff-induced price spikes.
- Integrated teams help identify cost-effective alternatives without the need for time-consuming change orders.
For Owners looking to manage financial risk in an unpredictable market, design-build offers a strategic advantage.
Design-Build Supports Innovation, Technology
With the construction industry rapidly adopting AI, BIM, modular construction and data analytics, design-build provides the ideal framework for integrating these innovations. The rapid evolution of technology is transforming the industry, and design-build is playing an increasing role in this shift by providing a framework for seamless coordination and improved efficiency. Virtual Design and Construction (VDC) is a prime example of how technology enhances design-build projects, integrating people, process and technology to drive better outcomes. By leveraging VDC, design-build teams can optimize workflows, minimize costly rework and support seamless teamwork, ultimately delivering higher-quality projects more efficiently.
The benefits of VDC make design-build a highly effective framework for integrating emerging technologies into projects. Some of the ways this can work include:
- AI tools enhance data gathering and decision-making capacity, helping design-build teams streamline workflows and improve project outcomes.
- BIM coordination works best in integrated teams, where contractors, designers and Owners collaborate from day one to drive efficiency and reduce costly errors.
- Prefabrication and modular construction benefit from design-build’s integrated approach, ensuring all key stakeholders contribute early to optimize design, materials and delivery.
- Sustainability initiatives — including carbon reduction, energy efficiency, and waste minimization — are easier to implement when all project stakeholders work together under a unified contract.
Design-build remains the best-suited delivery method for quickly and effectively implementing advancements in technology and embracing innovation.
Design-Build’s Role in an Uncertain Market
February’s job gains in construction are a positive sign, but the industry still faces significant headwinds, including labor shortages, tariff impacts and federal spending cuts.
Amid these uncertainties, design-build remains a proven strategy for keeping projects on track, managing costs and ensuring efficient infrastructure delivery. Thus, Owners seeking stability in an unpredictable economy are increasingly turning to design-build, reinforcing its role in the industry’s resilience and growth.
