The global construction industry is teetering on the brink of ‘paralysis,’ grappling with profound economic uncertainty and geopolitical instability, according to a stark new report from research firm Pick Everard. The findings paint a concerning picture for a sector already under immense pressure.
Addressing the escalating impact of inflation and persistent supply chain disruptions demands immediate and proactive planning. Experts warn that without such measures, the industry faces critical risks, including stalled construction pipelines and a significant reduction in demand.
This urgent warning follows a recent survey by Pick Everard, which revealed that a staggering 70% of construction professionals anticipate severe impacts on prices and capacity within the next six months, primarily due to oil restrictions stemming from regional conflicts.
Middle East Conflict’s Direct Impact on Construction
The report highlights the direct and undeniable link between the Middle East conflict and the downturn in construction industry productivity. Inflation has now climbed to 3.3%, largely fueled by surging fuel prices directly attributable to the ongoing war in the region. This has intensified the strain on an industry already struggling with fragile confidence and a backlog of project delays.
Gavin Mason, Operations Director at Pick Everard, emphasized the critical need for action. “Sitting tight is not an option,” he stated, urging construction companies to swiftly adopt a proactive risk-management approach. Mason added, “It’s not a lack of intent that is the issue now, but a ‘watch and wait’ mentality that is threatening growth.”
He further cautioned, “The problem is that the shockwaves from the Iran war are likely to be felt by construction for some time – regardless of how peace talks play out. In these volatile times, we need to collaborate and foster agility through strategies like advanced procurement and data sharing.”
Mounting Concerns Over Costs and Project Viability
The latest market intelligence from Pick Everard underscores a deepening sense of unease within the sector. 45% of respondents described the mood of the construction industry as either concerned or very pessimistic.
Survey participants, a diverse group including clients, contractors, developers, and consultants, consistently cited costs and project viability as among their most formidable challenges. Nearly 70% expressed fears of an imminent further squeeze on prices and overall capacity.
The research, conducted last month, also revealed that more than half of those surveyed believe the war in the Middle East has already disrupted immediate delivery plans. Strikingly, only 17% thought inflation had a minor or negligible impact on their construction projects.
De-risking Construction Programmes for Enhanced Productivity
The report concludes with a call for strategic adaptation: “The past six years have seen three consecutive periods of major supply chain disruption – the triple shock of COVID, the conflict in Ukraine and now the Gulf. This is starting to feel like the new normal, and the effects are felt throughout the economy long after the events have stopped.”
Advisers are now tasked with helping clients de-risk construction programmes by prioritizing locally sourced materials and specifying less energy-intensive products. This approach, the report argues, is not merely about meeting sustainability targets but is fundamental to project viability in the current climate. Clients, already grappling with previous cost impacts from crises, planning hurdles, and statutory compliance, are continuously seeking ways to ensure their schemes remain solvent. The report stresses that tapping into strategic design and project advice will be more crucial than ever to ensure projects are deliverable.
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