Construction in Transformation: How the Sector is Demonstrating Resilience in Uncertain Times

We live in an era in which a lot is happening at regional, European and global level. How can the construction industry keep pace with these developments, both positive and negative? We asked Marjon Scholten, Director of Consulting at PwC, about five current trends in the construction sector. She specialises in performance management, project management and digital transformation within the construction sector. “Market conditions are looking good. I think the construction industry is going to do much better in the coming years.”

Construction trend 1. From AI buzz to proven value

“Let me start on a positive note: within Europe, the Netherlands is one of the leading countries when it comes to the adoption of technology in general. This also applies to AI,” says Marjon Scholten, kicking off this trend in construction. “On the other hand, construction as a sector is never at the forefront of innovation. The sector often still lacks the basics – good data and systems – to get started with AI. In addition, we see that companies do not yet have a solid top-down AI strategy that they are rolling out across the entire organisation. That’s a shame, because it means you’re not exploiting the full potential.”

Scholten believes it will ultimately be necessary for companies to implement AI. “The entire European construction sector is watching each other; there is no one builder that stands out significantly. When it comes to external market conditions, I think there is now a perfect storm for acceleration, an AI revolution in the sector.” Because if you look in from the outside, you can see that the construction challenge in several European countries will be enormous in the coming decades, she explains. “In fact, increasing labour productivity is the only way for builders to seize that opportunity in market demand. Because construction is traditionally very labour-intensive, the shortage of technical personnel is high and increasing. AI and industrial construction can make an important contribution to more efficient work and doing more with fewer people. That is desperately needed in the current market conditions. I expect AI to take off in the coming years, including in the construction sector.”

Construction trend 2. Prefabricated and industrialised construction

Scholten therefore believes that the sector can no longer avoid scaling up labour productivity as quickly as possible. But how? “The two most important keys to achieving this are technological innovations (including AI) and industrial or prefab construction.” She sees it as a transformation that an organisation must undergo, which also costs a lot of money. This investment must be recouped. “If, for example, you want to run a housing factory profitably, you need to have sufficient occupancy. That is very difficult because there is too little volume and flow in the market demand. For housing construction, infrastructure, and the energy transition, you really want clients to put large work packages out to tender. A kind of guaranteed sales for a longer period. If you can create that, builders are really willing to develop an industrial concept and, for example, produce in a factory setting.”

She believes that politics has a clear role to play in residential construction, both in the Netherlands and in neighbouring countries. There is a large underlying market demand that will continue in the coming years. “We all know that there is a housing shortage, but due to all kinds of external influences, it is not possible to meet the targets of 100,000 homes per year. But a builder is not going to set up a hugely expensive and advanced factory if he is not sure that there will be a market for it. Consistent and clear policy and adaptation of legislation and regulations are therefore very much needed for housing construction.”

Scholten also knows from experience that there is one factor within the construction industry. Namely, resistance. “Firstly, there is still quite a lot of resistance to prefab and industrial construction among builders themselves, but also among clients and architects. Many feel that craftsmanship and creativity are disappearing because everything is becoming process-oriented, conceptual and standardised.” She argues that this resistance is unnecessary because prefab construction has many advantages. Relatively fewer personnel are needed, and costs are reduced. “With prefab, you can build very cheaply and the quality is much higher, because the production process takes place in a controlled environment where all conditions are constant.” In addition, failure costs are reduced, and the production process is more sustainable, with, among other things, less waste. “So there are many advantages to industrialisation.”

Construction trend 3. The complexity of construction

Another development in construction is new technologies that are advancing how we build. However, this also means that well-trained personnel are needed to develop and implement new production methods supported by new technologies. Such personnel are scarce in the European construction industry, according to Scholten. But there is a way for employers in the construction industry to distinguish themselves in this regard. “Everyone is fishing in the same pool of technically skilled employees. There are smart builders who do everything they can to profile themselves as good, pleasant employers. This is a way to recruit and retain people and reduce absenteeism due to illness. Ensuring that you attract and retain the right, motivated people is something that you, as an employer, can do very well. Many companies are currently working proactively on this, and I would definitely recommend it.”

To do more with less, Scholten once again emphasises automation, including AI. “And I really believe in industrial construction. Take a housing factory where they make entire facade sections that are assembled on the construction site. A number of homes are produced there every day, but there are perhaps only five operators. That’s a big difference from a construction site. This shows that industrialisation really does lead to a structural decrease in the number of people needed. In my opinion, there is no other option.”

Construction trend 4. Housing construction and infrastructure under pressure

Within the construction sector, several reasons explain the slow progress in, for example, building more homes. These include sluggish politics, ineffective legislation and regulations, and a lack of development sites. According to Scholten, it is certainly not only the sector itself that is to blame for the slow pace of progress. “It’s not that builders can’t keep up with demand; it has more to do with external factors. There is a great deal of complex legislation and regulations, particularly surrounding housing construction, in the Netherlands and more broadly in Europe. As a result, housing development and the granting of permits are stagnating. That simply leads to problems.”

She continues: “Interest rates and inflation have a particularly significant impact on the housing market. For investors, if interest rates are high, they pull out because their financing costs are too high. In addition, inflation leads to higher construction costs. This has been a problem in recent years, but fortunately, interest rates are now lower in 2025 and inflation has stagnated. This is expected to stimulate growth in the housing market and demand again.”

Construction trend 5. Resilience in uncertain times

One trend in construction we cannot ignore is that there is currently a lot of activity on the world stage. The familiar ties with the United States are being shaken, and several wars are raging, one of which is within European borders. Will this also affect construction? Scholten believes that it will not be too bad. “The construction sector is not currently being affected that badly by geopolitics. The supply chains in construction are fairly local, or at least European. Take the tariff war that is currently raging, triggered by the US: because the supply chains and sales are fairly local, they are not really affected by it.”

Scholten refuses to believe that the construction sector will stagnate, regardless of global circumstances. “Construction is so important to society, to us as citizens, but also to the government. I just don’t believe that it will come to a standstill. Market conditions are looking really good. I think that construction will actually improve significantly in the coming years. Clients have now realised that they need to approach the market in a different way. They have to offer work on better terms with different contract forms, otherwise they simply won’t get the work done. You can see that it’s flipping from a client’s market to a contractor’s market, which is a good sign for construction.”