Global Construction Cost Report

Executive Summary

The USA and Iran signed a 60-day memorandum of understanding (MOU) on 5/17/2026 ending their 3+ month conflict and reopened the Strait of Hormuz to marine traffic. However, there have been a number of disruptions to this agreement in the past 4 weeks, however it is still in place as of July. West Texas Crude Oil (WTC) prices have fallen to $68 a barrel, down by more than $58 from a high of $126 a barrel at the height of the conflict, this price decline (if sustained) will substantially improve worldwide inflation rates. Is this conflict over, or will it lead to more conflicts in the coming months?

The Iran conflict is causing serious problems to its neighbors (UAE, Qatar, Bahrain, Saudi Arabia, Jordan, Oman, Iraq, Kuwait, Lebanon and Israel). All of these countries have been targeted by drones and missile attacks, from Iran, some refineries, petro-chemical and gas facilities and supporting infrastructure have experienced serious damage over the last 3 months.

Currently there are between 600 to 650 ships, including LNG vessels, VLCC oil tankers, bulk carriers & cargo ships - stuck or delayed in the Straits of Hormuz waterway as of the end of June. At this time 12 to 40 ships a day are exiting this waterway; before the conflict between 100 and 150 made this journey each day. It could take 3 to 6 months to return to normal, assuming both parties live up to the MOU agreement regarding the Strait of Hormuz.

US gasoline & diesel prices are down by 12% from mid-May, which is better news for construction companies & consumers. The US is an exporter of energy products and is in better shape than many other countries.

We are seeing & experiencing a noteworthy worldwide construction expansion as we move into the 2nd half of 2026. Literally 100’s of AI Data Centers, dozens of LNG facilities, new major overland pipelines and major O/H high voltage electric power transmission lines in the US are being built or are in the planning pipeline.

Unfortunately, more than 30 AI data center construction projects in the USA worth as much as $20 billion have been effectively disputed or put on hold in the 1st half of 2026. Concerns from local communities regarding water usage & increased household electric bills are the issues that are behind these cancellations / delays.

Insurance rates & Ocean freight costs continue to increase by as much as 15% (year over year), there are lots of risks around the world, these increases are a measure of those risks.

Tariffs on timber, steel & aluminum remain in place & impacts construction costs as we transition into the 2nd half of 2026.

Projected Construction Material Increases in Q3 2026

Projected construction material increases in the 3rd Q of 2026 from 28th February (start of the conflict).

Venezuela: A New Dawn

In Venezuela, a new dawn has broken since the capture of President Maduro in January 2026 by US military forces. Look for Venezuela to reemerge as a major global supplier of oil and gas in the next 6 to 12 months, with the potential of producing 2.5 or more million barrels of oil per day. Numerous EPC mid-sized projects will commence ASAP in Cardon, Amuay and the Orinoco belt locations. These projects will primarily be Upgrade / Modernization / Revamp EPC type projects. Many CAPEX refinery projects are set to commence in the 2nd half of 2026; these initial projects will be concentrated on Revamp / Rehab / Modernization / De-Bottlenecking projects in the neglected domestic refining sector. These production and infrastructure facilities are basically worn out and not capable of producing Venezuela production potential of 3.5 million barrels a day. Several US & International Oil companies are committed to working on future projects.

The outlook in Venezuela in the next 1 to 5 years is to upgrade / revamp / modernize / upgrade existing underutilized refinery & gas assets. There will be many EPC opportunities related to the Oil / Gas sector in the coming years.

The 7 Risks / Challenges the Global Construction Industry Will Face in the 2nd Half of 2026 & Beyond

The 7 main risks / challenges the Global Construction industry will face in 2nd half of 2026 & beyond, include:

1. The Iran vs. Israel - USA conflict could drag on for months or years, that could cause a major global recession.
2. The continuation of the Russia vs. Ukraine war.
3. China’s future trade and territorial aspiration and a possible attack on Taiwan.
4. High construction material costs and US tariffs. Construction material costs have increased by close to 30% in the last 3 years, are more increases on the way.
5. Acute shortages of skilled labor in North America, Europe, Australia / New Zealand continues to be a problem.
6. Persistent inflation and high interest rates continue to be a problem in some countries, particularly related to commercial / residential-type construction work.
7. The future of tariffs on imported equipment and materials.

Key Global Construction Growth Sectors in the 2nd Half of 2026

• AI Data centers located in USA, Europe & Asia - spending on these facilities is forecast to double last year’s spend.
• Semiconductor / microchip facilities - look for expenditures to increase by 5% to 10% from 2025.
• Pharma & Hi Tech & Manufacturing CAPEX forecast to climb by 4% to 6% from 2025 levels.
• Infrastructure work funded by Governments such as highways, bridges, heavy marine / tunnel civil type work and rail is set to increase by 5% to 9% from 2025 levels.
• Power / Pipeline projects (with nuclear power now back in the mix) - CAPEX forecast to climb by 4% to 7% from 2025 levels.

Artificial Intelligence (AI) will continue to advance across all areas of the construction industry. The jury is still out on which “people” related jobs will be lost to computer generated (AI) activities. Prominent software development industry leaders predict that (AI) will replace millions of “white collar” workers in the next 5 to 10 years. However, blue-collar workers like Carpenters, Electricians, Plumbers & others may not be immediately impacted by (AI).

If and when a settlement is reached with Iran, the repairs to oil and gas and other infrastructure facilities could be significant and keep many EPC companies busy for many years.

Q3 2026 Economic — Construction Cost Metrics & Inflation Outlook for 12 Major Countries

Rank	Country	2026 GDP ($T) Forecast	Latest 2026 GDP Growth Forecast %	Construction Unemployment Forecast %	Construction Inflation Forecast %	Construction Forecast
1	USA	31.3	2.7%	4.1%	4.3% - 6.8%	Doing reasonably well, lots of AI, LNG projects, skilled labor shortage continues. See USA’s page for possible problems ahead. Is this Iran vs. USA conflict over?… or will it drag on for months. Oil prices have declined by 15% in last 2 weeks.
2	China	19.9	4.8%	5.2%	1.4% - 4.6%	Construction activity is slowing down. Over supply of housing units is a major problem. China gets more than 60% of its oil from Iran - this will be a big problem with the current Iran conflict.
3	India	5.9	7.7%	5.1%	3.9% - 5.6%	Going gangbusters, lots of infrastructure projects in the pipeline. Oil prices increasing will impact future construction growth.
4	Germany	4.8	0.3%	3.8%	2.9% - 4.4%	Limited construction growth, nothing much to get excited about. Higher oil prices due to the current Iran conflict will stymie future growth. Oil prices have declined by 15% in last 2 weeks.
5	Japan	4.3	1.6%	2.6%	1.4% - 2.8%	Very slow, nothing to get excited about. New Prime Minister might stir things up. Increased oil prices will not be helpful to the construction sector.
6	UK	3.8	1.1%	5.1%	2.9% - 3.7%	Construction in the doldrums. Nothing much to get excited about, SRU’s is positive, special relationship with USA is getting old. Higher oil prices will impact future growth outlook in 2nd Q. Prime Minister just resigned.
7	France	3.4	0.8%	6.2%	2.8% - 4.2%	Same as last year, nothing much to write home about. Increased oil prices will impact construction prices. Oil prices have declined by 15% in last 2 weeks.
8	Italy	2.5	0.7%	6.1%	1.7% - 3.7%	Very slow, major bridge connecting Sicily to mainland is the big news. Increased oil / energy prices will be a problem. Oil prices have declined by 15% in last 2 weeks.
9	Brazil	2.5	3.3%	6.1%	5.2% - 7.8%	Like last year, there is nothing to write home about. A global slowdown could be a serious issue.
10	Canada	2.3	1.8%	7.1%	2.9% - 3.9%	A global slowdown will slow construction activity. Political issues with its big southern neighbor are not good at this time. Oil prices have declined by 15% in last 2 weeks.
11	Russia	2.3	1.3%	3.8%	7.5% - 8.9%	Struggling as we move further into 2026, inflation up, ruble down. Higher oil prices going forward will be very helpful to the Russian construction sector.
12	Mexico	2.3	0.6%	2.8%	3.9% - 4.4%	Performing reasonably well. Will the war in Iran and a global economic slowdown impact the Mexican construction sector. Recent cartel / drug-related violence will put a damper on the tourist sector.

Q3 2026 Prices at a Glance

• Forecast Cost of a barrel of Crude Oil: $70 - $90
• Forecast of Euro / US $ Exchange Rate: 0.84 - 0.88
• Forecast of UK Pound / US $ Exchange Rate: $1.30 - $1.33
• Forecast of Structural Steel per pound: $1.30 to $1.60
• Forecast of Copper per pound: $6.20 - $6.50
• Forecast of Gold per Ounce: $4,100 - $4,250
• Forecast of Aluminum: $1.20 to $1.50 / pound
• Forecast of 3/4” 4’ x 8’ CDX PT sheet of plywood: $51.25 to $55.00
• US Construction Material Inflation (Basket of 10 construction materials): +4.3% - +6.9% - Average +5.6%