The construction industry is like a mirror of the broader economy.
Advancements in technology, particularly artificial intelligence (AI), are reshaping and driving opportunities in construction. The physical manifestation of AI’s promise in the construction industry appears in the billions of dollars worth of data center construction projects underway, planned, and envisioned well into the future.
Behind data centers are energy and power infrastructure projects to support AI’s growth, including potentially nuclear power.
But like many industries, construction faces a mixed economic picture. While data center spending is fulsome, many other segments within non-residential construction project starts remain stable or are expected to decrease.
Contractors have to compete aggressively for scarce skilled labor, which is driving up labor costs. Inflation and the ever-growing cost of materials also complicate the financial math behind certain construction projects. And elevated interest rates ripple through the rest of the construction industry in the form of higher costs of capital.
Contractors who embrace risk management as a strategic advantage and foster transparency among themselves, their brokers, and their carriers can differentiate themselves in a competitive industry navigating a delicate economic environment.
Data centers dominate the construction scene
Data centers represent both opportunities and challenges for the construction industry.
The opportunity is obvious: Through June, more than $81 billion has been spent on data center construction in 2026. And given the advancement of AI, data center construction will likely persist well into the future.
The challenges are more intricate.
The ravenous demand for data centers has owners pushing to complete projects on ever-tightening construction timelines, some as short as 24 months.
The availability of skilled tradespeople, particularly electricians, is limited, allowing them to command a premium for their services.
Data center general contractors have to assemble quality teams early and pin down their procurement quickly.
The competition for quality teams is particularly critical, as insurance carriers carefully evaluate construction teams. Underwriters want to see contractor teams with strong track records and comprehensive quality controls. While data centers are not new, insurance carriers are concerned about potential defects in the construction of today’s large-scale data center projects.
Another risk in data center construction is the project’s power supply. Many data centers cannot connect to local electric utilities for several years, given data centers' energy needs and utility allocation constraints. So, data centers provide their own energy until they can use the utility grid.
For many data centers, that means bringing natural gas turbines onto the campus, which presents its own risks, ranging from property damage to downtime and service interruptions. Data center owners are increasingly supplementing their policies with parametric products to mitigate downtime risk.
The pace and scale of today's data center projects require more than technical construction expertise. Organizations that align project planning, risk management, insurance strategy, and operational resilience from the outset will be better positioned to secure capacity, control costs, and deliver projects with greater certainty.
Nuclear renaissance 2.0
Data centers, along with the electrification trend for cars and a vast array of other products, are driving significant new electricity demand. The International Energy Agency forecasts electricity demand will triple between 2010 and 2050.
The tremendous need for electricity and the constraints of fossil fuels and renewable energy sources have policymakers giving nuclear energy a renewed look.
A group of 38 countries has pledged to triple their nuclear energy capacity by 2050.
The nuclear renaissance presents another opportunity for the construction industry.
In Wyoming, work is underway on a 345-megawatt nuclear reactor, which will require 1,600 construction jobs by the time work is complete in 2030.
The operation of large nuclear plants is being supplemented by the development of smaller and more nimble reactors. Small modular reactors capable of producing up to 300 megawatts of power are built in factories and can be transported to remote locations or sites where electricity demand exceeds available capacity.
Microreactors are under development with the Department of Energy. These reactors, which can generate from 1 to 20 megawatts of power, may be an important component in powering data centers and other energy-intensive projects.
Nuclear energy presents intricate insurance issues during both construction and operations. Global nuclear liability regimes protect the public against nuclear incidents, but the frameworks are still developing for advanced reactors.
The use of AI in construction and insurance
Like other industries, construction and insurance companies that cover construction use AI to become more efficient.
AI helps insurance companies accept and process submissions in seconds or minutes, a task that can take a human nearly an hour. AI also helps collate, streamline, and access the vast amount of data that insurance companies, brokers, and others have collected over decades.
Despite these efficiencies, construction, design, and insurance experts have expressed concerns about governance over the use of AI, as well as its potential to eliminate lower-level functions within the industry. If the industry relies too much on AI or it replaces jobs, industry leaders have concerns about the fundamental knowledge that future generations of employees bring to their jobs.
Industry leaders caution that they should still emphasize critical thinking skills and industry fundamentals in their search for new, younger employees, rather than relying on what AI generates.
A complicated economy
Major stock indexes have reached record highs in 2026. Corporate earnings remain strong. The labor market is sturdy, and unemployment is low.
Hyperscalers — companies like Alphabet, Amazon, Meta, and Microsoft — are spending tens of billions of dollars on capital expenditures each in the quest for AI supremacy.
These signs seem to indicate a strong economy.
But consumer sentiment, as measured by the University of Michigan Survey of Consumers, is lower than during the Great Financial Crisis.
Consumers must contend with inflation, higher prices for seemingly everything, and a labor market that shows signs of weakening.
Broader economic headwinds extend to the construction industry.
Interest rates, already elevated, may continue to rise as inflation persists, in large part due to soaring energy prices. If interest rates climb, so too does the cost of capital for construction companies, businesses that might want to build, and consumers who might want to buy a new house with a mortgage.
And while energy prices are higher, so too are other inputs critical to the construction industry.
Steel mill product prices have nearly doubled since 2020. Wire and cable are also up significantly over the same time period.
These factors complicate the financial math for some construction projects, as evidenced by the AIA/Deltek Architecture Billings Index remaining below 50 for three years in a row, indicating an industry in prolonged retreat.
That doesn’t spell doom for the construction industry, but industry professionals should be on the lookout for the possibility of rapidly changing conditions, as the foundation of the U.S. economy has narrowed.
Thinking ahead
Construction will play a crucial role in the build-out of emerging technologies like AI and nuclear power. Construction companies that want to capture that opportunity should lean toward disciplined project selection, robust quality controls, and effective resource planning, on top of their technical expertise and access to capital. Nuclear deserves particular attention because most of the capacity the work is counting on by 2050 has not yet entered construction.
In a market that can shift rapidly, companies that treat risk management as a core strategy can better withstand uncertainty and potential phases of growth.
