At the 2025 Trimble Dimensions User Conference, construction finance and operations leaders gathered for a candid discussion on the current economic landscape. This session from Forvis Mazars during the conference, “Direction of the Economy: Impacts & Considerations for Contractors,” brought together contractors, lenders, and surety partners to share real-world perspectives and practical strategies for navigating uncertainty. This article highlights the main insights from the session.
“No one in the room said they had all the people they needed. Capacity is the constraint that touches every decision.”
Market Observations
As the construction industry continues to adapt to shifting conditions, several critical factors are influencing decision making and operational strategies.
Labor availability is tight. When asked during the session, none of the attendees reported being fully staffed. Immigration and artificial intelligence (AI) are helping in pockets, but they’re not fully offsetting the shortage of skilled craft and supervisory talent. Retirements are accelerating and training pipelines take time to produce job-ready professionals. These issues mean contractors need to be more careful about which projects they take on, how they plan them, and how they protect their profits.
Signals are mixed across regions and segments. Some geographies show softer travel and service activity, while non-residential construction spending remains relatively firm. Healthy backlogs are common, but the quality and visibility of those backlogs vary. Finance leaders should consider stress testing schedules and cash flow under several demand scenarios to understand liquidity needs before they become urgent.
Costs are putting more strain on margins. Overhead items such as rent, transportation, and medical benefits have all seen upward trends. When combined with labor constraints, these pressures can create a margin fade (a decrease in profit margins) unless teams regularly update job cost forecasts and review change orders and contract protections.
“Healthy backlogs are helpful. Healthy information is indispensable.”
Industry Indicators Worth Watching
Two industry gauges frequently surfaced during the dialogue:
- American Institute of Architects (AIA)/Deltek Architecture Billings Index: Movements below 50 in the index1 suggest contracting design activity. While construction lags design, finance leaders can use this as a directional signal for future demand and to inform cash and capital planning.
- Construction Financial Management Association (CFMA) CONFINDEX Survey: Softening confidence readings from quarter to quarter may point to tighter conditions in bidding, financing, or project starts. These changes can be a good opportunity to revisit risk appetite and working capital assumptions.
These indicators don’t predict outcomes on their own. They can be helpful when used with internal data on bid pipelines and production rates and worked into a liquidity plan.
Financial Discipline in a Cautious Banking Environment
Lenders and surety partners are supportive of strong operators but continue to demonstrate a careful posture and may ask more questions, require additional paperwork, and take longer to make decisions, especially in cases of higher leverage or recent losses. Clear communication in this setting can be a strong differentiator. A few steps you can take to help prepare include the following:
- Prepare a monthly financial report summary that incorporates trends, risks, and mitigation plans.
- Schedule regular calls with your lender(s) for anticipated larger needs (committee-driven approvals can take longer lead times and often require additional context).
- Coordinate your internal calendar so that job reviews and work-in-progress (WIP) updates happen prior to lender reporting dates to help keep numbers consistent and reduce follow-up inquiries.
“When capital is tight, your communication plan is part of your collateral.”
Operational Excellence & Technology That Move the Needle
Finance and operations leaders can help reduce risks by improving accuracy and timeliness of information by using the following methods:
- Standardized Data: Unify data definitions and reporting across accounting and project teams. Access controls are important for data integrity and confidentiality.
- Calendar-Driven Project Reviews: Capturing the conditions of construction sites, progress made, committed costs, and change order status can help identify margin fade early. The use of technology can provide additional insights not earlier obtainable. For example, construction firms can use drones or other digital methods to corroborate field progress and help improve forecasting.
- AI for Training & SOPs: Consider creating short, role-based training content and searchable standard operating procedures (SOPs) to shorten the ramp for new hires. For some employees, asking questions to an AI assistant is faster than hunting for documents or waiting on a colleague to respond.
Diversification & Governance
Diversifying works well when it is intentional. Smart decisions are based on segment profitability, available talent, and capital requirements. When thinking about your strategy, consider these three key questions:
- Where are we consistently making strong profits with manageable risk?
- Where are we struggling with capacity, pricing power, or predictability?
- What are the talent and capital needs for growing or exiting a segment?
Regarding governance, clearly defined roles and accountability are fundamental. Intercompany accounting and support processes need to keep pace when a company expands so leaders such as CFOs can rely on the data and move quickly.
Best Practices for Contractors to Consider
The following practices can help position contractors to remain resilient, agile, and competitive amid economic uncertainty.
- Make Liquidity a Priority
- Build a rolling 13-week cash forecast with multiple demand and collection scenarios.
- Identify flexibility in the timing of capital expenditures (CapEx), draw schedules, and covenant limits.
- Strengthen Contract Protections
- Go over language in contracts regarding tariffs, escalation, schedule relief, and change order procedures.
- Track tariff and surcharge costs for potential recovery or credits.
- Enhance the WIP Process
- Reconcile the WIP to the trial balance every month and investigate any variances promptly.
- Use standardized templates for data such as forecast updates and margin fade analysis.
- Upgrade Data Reliability
- Establish a single reporting backbone for operations and accounting.
- Formalize access controls and audit trails for sensitive data.
- Strengthen Lender Communication
- Send a concise monthly package with commentary on backlog quality, cash, and risk mitigations.
- Schedule proactive discussions for large requests to help reduce approval delays.
- Invest in Practical Technology
- Use digital tools and AI to automate routine tasks to help improve operational efficiencies and for project management, including validating site progress and quantities.
- Create AI-supported SOPs and microlearning for faster onboarding.
- Conduct Post-Job Analysis
- Capture lessons learned and feed them directly into estimating and bid selection tools.
- Document successes and challenges for future bids.
“The best time to build liquidity and trust is before you need either.”
A Practical Way to Start
Pick three initiatives you can begin or complete within the next 90 days that can reduce risk. Many teams begin with a liquidity forecast, a standardized monthly project review, and a lender communication plan. Keep the scope narrow, assign clear owners, and measure the effect on cash predictability and margin protection.
How Forvis Mazars Can Help
Markets are still viable for well-prepared contractors. Healthy backlogs, a reliable information foundation, and consistent communication with capital partners form a stable base. Contractors can then make thoughtful decisions about where to deploy talent and capital, and how to adapt as signals change.
Our forward-thinking professionals work hard to help contractors improve their bottom line, increase cash flow, and maintain regulatory compliance. Our Construction team at Forvis Mazars can assist construction finance and operations leaders with cash and WIP disciplines, banking communications, and practical technology adoption. Please reach out to a professional at Forvis Mazars to discuss how these steps can fit your organization’s goals.
- 1“Business activity at architecture firms remains stagnant,” aia.org, December 17, 2025.