The State of the Project Economy 2026: why construction must build more, with fewer people
Unveiled in exclusivity at Contech Connect 2026, Station F, Paris
On 28 May 2026, on the Master Stage of Contech Connect, Patric Hellermann, co-founder of the ConTech venture firm Foundamental, presented the first public look at The State of the Project Economy 2026. Co-authored with Jacopo Siniscalco, the 100+ page report is one of the most complete pictures of where the construction industry stands, and where it is heading.
Its message is simple and uncomfortable: demand for construction is accelerating, while the industry’s capacity to deliver is not.
A $15 trillion industry that has stopped getting more productive
Global construction spending has crossed $15 trillion. It is projected to grow 5.6% a year through 2028, putting the market on track toward $20 trillion.
Yet productivity has barely moved. According to the report, construction labour productivity has grown by just 0.4% a year since 2000, compared with 3.6% in manufacturing and 2.0% across the wider economy. Outside China, output per hour has been flat or declining in most regions for two decades.
At the same time, the workforce is shrinking. In the US, UK, Germany, France, Australia and Japan, the construction labour pool is projected to contract through 2040. Even China’s is getting smaller.
Costs have exploded since 2020
The report documents a sharp rise in input costs:
- US construction materials prices have doubled since 2020.
- Cement prices are up 2.5x and structural steel 2x over the same period.
- Construction machinery and equipment costs have risen by 40%.
- Materials (35.7%) and on-site labour (28.6%) now account for nearly two-thirds of total construction costs.
In Europe, producer prices have moved in lockstep with input costs since 2021, leaving contractors little room to pass increases on to clients.
Value is moving away from the jobsite
One of the report’s most striking findings concerns where value is being created. Since 2008, building products companies have expanded their return on invested capital by more than 9 percentage points, while contractors and materials firms have flatlined.
The geography of the industry is shifting too. Eight of the ten largest contractors in the world are Chinese state-owned companies. India’s Larsen & Toubro has outpaced Western peers, while European contractors keep growing revenue but are losing market value as margins lag behind.
The new drivers of demand
Foundamental identifies the structural forces that will shape construction through 2030:
- Western re-industrialisation: 47% of surveyed organisations have already invested in reshoring or nearshoring, and another 29% plan to within a year.
- Data centers: construction spend is projected to reach $459.5 billion by 2030, adding 10–15% to the global construction market. Lead times for critical equipment have roughly doubled.
- Energy infrastructure: European electricity demand is rising for the first time since 2010, and Europe is channelling €1.4 trillion into transmission and distribution grids through 2035.
- Civil infrastructure upgrades, the fastest-growing segment since 2020.
- Defense spending, which the report sees as a structural floor for demand.
Not every “silver bullet” has delivered
The report takes a hard look at past waves of innovation. 3D printing, alternative materials and modular construction all saw a burst of new companies around 2017–2018, followed by a sharp decline. Modular start-up creation fell from 22 new companies in 2018 to just 4 in 2024. The lesson: replacing the way we build is harder than helping the industry build better.
Where Foundamental sees the opportunity
To close the gap between demand and capacity, Foundamental highlights four technology categories:
- Data infrastructure for projects
- Robotics integration
- Pre-construction automation
- Working capital distribution
It also describes three types of companies it expects to win:
- Capacity Synchronizers, which aggregate demand across a fragmented supply chain
- Capacity Synthesizers, which create new supply from scratch
- Capacity Systematizers, which own the high-fixed-cost infrastructure the industry runs on
Why it matters for the Contech Connect community
For startups, these findings point to where buyers and investors are looking. For contractors and industrials, they show where productivity gains are expected, and already priced in by markets. For investors, they offer a clear map of the categories still under-served.
This is exactly the conversation Contech Connect exists to host. In 2027, it continues at Paris ConTech Week, 11–14 May, with Contech Connect as its flagship day on Wednesday 12 May at Station F.
Download the full report on Foundamental’s website →
Join us at Paris ConTech Week 2027 →
