The Construction Dilemma
The construction industry is grappling with rising demand for infrastructure and housing alongside a shrinking labor force due to retirements and low youth entry (owing to safety, prospects, and physical intensity). Productivity growth in construction (0.4% CAGR from 2000 to 2022) has lagged significantly behind other sectors like manufacturing (3.0% CAGR). While purpose-built robots and off-site manufacturing offer some relief, on-site automation is difficult due to the unique, constantly evolving, and unstructured nature of construction environments.
The Humanoid Solution
General-purpose robots, particularly humanoids (robots that resemble humans in size and shape), represent a potentially transformative solution. Their power comes from embodied AI, which enables real-time decision-making and versatility—unlike specialized robots that perform a single task.
Key technological advances supporting their future deployment include:
- Sophisticated AI Foundation Models: Vision-language-action models allow humanoids to interpret visual cues and follow spoken instructions, enabling rapid skill mastery by analyzing vast amounts of construction data.
- Improved Mobility and Dexterity: While enhanced, further work is needed for robots to expertly navigate busy, unstructured worksites, climb ladders, and handle complex, delicate tasks with human-level dexterity.
- Focus on Safety and Collaboration: Developers are working on safety features for “fenceless” operations and improving AI models for seamless collaboration with human workers.
Applications and Timeline
While large-scale humanoid usage may be a decade away due to the complexity of construction sites, leaders should prepare for an accelerated timeline. The primary goal is for humanoids to support, not replace, human workers.
- Near-Term (Pilots): Focus on repetitive, moderately complex tasks in low-variability zones, such as preparing tools, cleaning sites, painting walls, or unloading trucks.
- Long-Term (10+ years): More versatile assistance in complex tasks, including on-site casting, installing pipes/sensors in tight spaces, collecting terrain data, and precision taping.
How Industry Leaders Can Prepare
Forward-looking construction leaders should begin preparing now to position their companies for success. Recommended actions include:
- Assess Value: Determine where humanoids can add the most value, such as closing productivity gaps, reducing risk in hazardous tasks, or supporting large-scale infrastructure projects.
- Invest in Infrastructure: Improve worksite sensors and connectivity.
- Build Robot Capabilities: Obtain robust, task-specific data (e.g., construction videos, teleoperation records) and use it to train models through virtual simulations and digital twins.
- Develop a Strategy: Decide on a deployment strategy (First Movers, Early Adopters, or Selective Deployers), each with trade-offs between speed-to-market/shaping standards and investment risk.
- Create New Playbooks: Develop guidelines for human–robot collaboration and upskill the workforce to operate alongside the machines.
ABC 2025 Field Tech Report Highlights Jobsite Innovation and Construction Technology Trends
The Associated Builders and Contractors (ABC) has published its fifth annual Field Tech Report for 2025, detailing how field technology is transforming construction jobsites and driving the industry’s next phase of innovation.
Key Takeaways
The report highlights various digital tools and solutions that are reshaping field operations, including:
- Drones
- Robotics
- Laser scanning
- Jobsite security systems
According to ABC, these technologies enable contractors to plan, monitor, and execute work more efficiently while also improving safety and productivity.
ABC officials emphasized that technology is central to overcoming industry challenges like workforce shortages and economic uncertainty, asserting that companies investing in connected systems will be better positioned to deliver safer projects and remain competitive.
The 2025 report includes insights from ABC’s Tech Alliance members and Dodge Construction Network, with an executive summary provided by Milwaukee Tool.
Data Centers: Construction’s Unsung Hero or Overhyped Savior?
Data centers have earned significant praise for stabilizing the U.S. construction industry and providing an anchor for the broader economy in 2025. In many ways, this hype is justified, as construction spending on these critical infrastructure hubs has skyrocketed from less than $10 billion in 2020 to more than $40 billion as of July 2025.
The Critical Boost
The timing of this surge has been pivotal. Since the start of 2024, data center spending has ballooned by $16 billion, offsetting a dramatic $55 billion decline across virtually every other private nonresidential segment. This growth is also benefiting a broad cross-section of the industry, with more than 20% of Association of Builders and Contractors (ABC) members currently contracted for data center work—a sharp contrast to the highly concentrated manufacturing construction boom of 2022-2024.
The Hype Check: A Look at the Total Picture
Despite the astronomical growth, the narrative around the data center construction boom is somewhat overblown. Even at its current peak, this segment accounts for just over 5% of private nonresidential construction spending (and less than 2% of total construction spending).
This share remains relatively minor compared to recent construction surges, such as the computer/electronic manufacturing boom, which peaked at nearly 17% of private nonresidential spending in 2024, or the warehouse construction frenzy, which reached about 11% in August 2023.
Why the Massive Capex Numbers Don’t Match Construction Spending
The modest market share often perplexes analysts who see headlines about “hyperscalers” investing staggering capital expenditure (capex) sums—estimated to be over $250 billion in 2024 and exceeding $300 billion in 2025.
The discrepancy lies in defining what those capex numbers actually cover:
- Core vs. Content: The construction of a data center’s powered core and shell (the physical building) accounts for only an estimated 25% to 30% of total data center development costs. The majority of the spending goes toward expensive equipment that fills the facility.
- Equipment Refreshes: The reported capex numbers also include the cost of updating equipment at existing data centers, such as servers that are typically refreshed every three to four years.
A Powerful Caveat: The Power Play
One crucial factor is often overlooked: The data center boom is undoubtedly fueling a related construction surge in power infrastructure. Data centers, while currently accounting for only about 3% of U.S. power consumption, are projected to drive anywhere from 20% to 60% of the nation’s load growth over the next five years. This enormous demand is generating significant, power-related construction activity outside the narrow data center subsegment.
The Upshot
Data centers are providing the construction industry with essential momentum during a challenging economic period. However, the scale of the boom—as it narrowly relates to construction—is often exaggerated due to the conflation with the massive overall capital expenditure figures. In terms of dollar volume and share of total construction, the current data center surge is, for now, smaller than the warehouse construction boom that occurred from 2020 to 2023.
Tax Changes for Construction Under the Big, Beautiful Bill
The “Big, Beautiful Bill” introduces several tax changes for the construction industry. Key provisions include:
- 100% Bonus Depreciation: This is now permanent, allowing full expensing of eligible equipment and property starting retroactively from January 19, 2025.
- Increased Section 179 Expensing: The deduction limit has been raised to $2.5 million, with a phase-out for purchases over $4 million.
- Immediate Expensing for U.S. Production Property: Nonresidential manufacturing property built between January 20, 2025, and the end of 2028 can qualify for full depreciation.
- R&D Expense Deduction Restoration: Domestic research expenses can be fully deducted in the year they are incurred.
- Permanent QBI Deduction: The 20% pass-through business deduction is now indefinite.
- More Interest Deductions: The interest expense limit now uses EBITDA, which is beneficial for capital-heavy companies.
- Temporary Higher SALT Cap: The SALT deduction increases to $40,000 (indexed) through 2029.
- Accelerated Cutoff for Green Energy Credits: Energy-efficient building deductions and home credits now expire after mid-2026.
- Expanded Revenue Deferral: Larger residential projects with more than four units can now defer income recognition until completion.
- Temporary Overtime Deduction: From 2025 to 2028, workers can deduct up to $12,500 ($25,000 for joint filers) for qualifying overtime pay.
Most of these benefits are “front-loaded” through 2028, businesses and individuals should consult with a tax professional to understand how these changes affect them.
