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Construction’s next shock could come from anywhere
Where is uncertainty coming from?
Uncertainty is coming from several directions at once, making it harder to plan with confidence.
Material cost inflation remains the leading global risk factor, with 70% of respondents saying it has had a high or very high impact on their certainty in achieving key project goals. Energy price volatility follows at 64%, with supply chain disruption at 59%, economic policy at 56%, and labour and skills shortages at 54%.
Top global risk factors impacting project delivery
% reporting high or very high impact
But this only tells part of the story. The next major disruption may not be visible in today’s data. Disruption from a geopolitical flashpoint, energy shock, or climate event can ripple quickly across markets, affecting oil prices, materials, insurance and procurement at the same time. For example, please see our recent analysis of the impact of oil price volatility on construction costs amid conflict in the Middle East.
And, unfortunately, construction leaders do not see relief on the horizon. Respondents expect risk factors to worsen over the next 12 to 24 months.
Top global risk factors expected to worsen (next 12-24 months)
% expecting situation to deteriorate
“A lot of general contractors are relying on the same domestic supply chains, so international supply can help, but it brings its own risks. Logistics lead times are longer and more uncertain, and tariffs seem to change month by month. Then the question becomes: who takes the financial risk?
If material costs rise significantly, does that become a change order for the end user, or does the contractor absorb it? That is why it comes back to planning early and having a clear conversation about where the project risk sits.”
— John Kutcher, Programme Manager, EPC - Data Centres, SLB
What does this means for the industry
The biggest challenge is how different risks interact, shift and appear without warning.
Material cost inflation weakens budgets. Energy volatility flows into materials, logistics and operating assumptions. Supply chain disruption can limit options when flexibility is needed most. Skills shortages can slow delivery and reduce the capacity of a project team to respond. Technology can improve resilience, but it also creates new investment decisions, capability gaps and delivery expectations.
No organisation can predict with confidence where the next major disruption will come from. The priority is to understand where exposure is greatest and where action will make the biggest difference.
That means investment needs to become more strategic.
Organisations can’t build resilience by trying to mitigate every possible risk at once. They need to focus on the capabilities that give them greater visibility, more flexibility and stronger control. That includes better cost and supply chain data, scenario modelling, clearer governance, stronger procurement insight and the skills to interpret risk in context.
The aim is to make smarter decisions about where to invest, when to adjust and how to keep projects on track as conditions change. Certainty comes from being ready to respond with discipline when disruption happens.
“Most project teams can model the risks they know. The challenge comes when inflation, geopolitical events and supply-chain capacity start moving together. A major piece of equipment planned around a 52-week lead time can quickly become 64 or 82 weeks. That changes the whole project plan.”
Peter Harrison
Head of Project Management Framework GSK
“Most project teams can model the risks they know. The challenge comes when inflation, geopolitical events and supply-chain capacity start moving together. A major piece of equipment planned around a 52-week lead time can quickly become 64 or 82 weeks. That changes the whole project plan.”
Peter Harrison
Head of Project Management Framework GSK
Case study
Building certainty into Ramhan Island from the start
Ramhan Island is a multi-billion-dollar waterfront development in Abu Dhabi. Limited site access, complex logistics and utilities, and rising costs in a busy regional market create uncertainty around delivery.
We’ve been involved from the start, helping the client, Eagle Hills, build cost and procurement certainty into the programme. Early cost planning, testing different approaches and local market insight help the team understand changing conditions, make informed decisions and respond before risks become problems.
That early investment is helping the project adapt as conditions change, with costs and procurement closely managed and potential issues addressed before they affect delivery.