How 2024 Trends Shape 2025 Construction Costs

Re-Published With Permission From Construction News and Review

By John Manning

The 2024 trends reveal critical insights into what the construction industry can expect in 2025, influencing planning, budgeting and decision-making.

Elevated Costs as the New Normal
With material costs stabilizing but remaining above pre-2020 levels, 2025 budgets need to reflect a “new normal” in construction economics. Materials like asphalt and concrete are unlikely to see significant price drops, meaning contractors should plan for consistent costs rather than relief from prior inflationary spikes.

Regional Disparities Drive Strategic Planning
Significant regional differences in material and labor costs, seen in 2024, continue to influence 2025. High-cost cities like San Francisco and Boston may require creative project planning, including alternative material sourcing and scheduling flexibility to mitigate peak costs. Meanwhile, cities like Charlotte, with lower increases, could become more attractive for large-scale projects.

Rising Labor Pressures Demand Long-Term Solutions
Persistent labor shortages and wage growth remain a challenge in 2025. The industry must continue investing in automation and workforce development to offset escalating payroll expenses. Companies prepared with labor-saving technologies and efficient workflows will gain a competitive advantage.

Sustainability Becomes More Accessible
2024’s focus on green materials and substitutions highlights a growing trend toward sustainability. In 2025, advances in sustainable material technologies – such as geopolymer concrete – could lower costs and drive broader adoption. Clients prioritizing environmental impact will increasingly see these solutions as viable, particularly for infrastructure projects.

Predictability Through Data Integration
KMI’s cost forecasting tools, alongside RSMeans and regional cost indexes, have proven invaluable for navigating 2024. This trend is deepening in 2025, with companies relying more heavily on real-time data to adjust to market changes. Access to accurate, localized cost data will be critical for bidding success and maintaining profitability.

Looking Forward
2025 is challenging firms to remain agile and proactive. By leveraging lessons from 2024 – such as addressing labor shortages, adapting to material volatility and embracing sustainability – the construction industry can mitigate risks and seize opportunities. KMI International will continue providing the data and insights needed to navigate these dynamics, ensuring your projects succeed in this evolving landscape.

John Manning is the founder, CEO and board chairman of KMI International.