Selective Cost Pressures Are Back
After a period of relative calm, construction material pricing is fragmenting again in 2026. Instead of broad inflation, cost pressure is concentrated in specific materials, mainly metals and electrical components, driven by data center, healthcare, and infrastructure demand.
The takeaway for owners and developers: escalation hasn’t disappeared, it’s just gotten more selective. Early planning and procurement matter more than ever.
What’s driving it: higher energy and transportation costs, intense demand from data centers and healthcare/infrastructure projects, constrained electrical equipment, tightening skilled-trade labor, and ongoing geopolitical and supply-chain volatility. Unlike the early-2020s inflation spike, today’s pressure is more localized, but still significant for projects with heavy electrical, steel, or mechanical scopes.
Material-by-Material Snapshot
Steel, back in the spotlight. Gordian reports renewed escalation in structural steel entering Q2, driven by energy costs and industrial and infrastructure demand. BLS data shows steel mill products up approximately 86% since January 2020. Expect continued volatility on steel-heavy projects; procure early and build in contingency.
Copper and electrical, the biggest risk. Copper mill shapes are up approximately 103% since January 2020, 27% year-over-year; aluminum is up approximately 99% since 2020, 49% year-over-year. Data center growth is straining transformer and switchgear lead times. Electrical scopes remain the most vulnerable to escalation and schedule slippage.
Lumber, notably calmer. After years of swings, lumber is up only about 37% since 2020 and just 4% year-over-year. Normal fluctuations remain, but the extreme volatility of prior years has faded.
Concrete, generally stable. Ready-mix is up about 6.5% year-over-year for eight consecutive quarters, and concrete about 2.5% over the same period, so recent increases have been modest. Concrete remains one of the more predictable line items, though tariff-driven cement and rebar costs are worth watching.
HVAC and mechanical, an emerging pressure point. Rising steel, copper, and compressor costs, plus tariffs and freight, are pushing equipment pricing higher across the HVAC supply chain. Large systems remain a long-lead item, especially in healthcare, data center, and manufacturing work, and refrigerant-driven redesigns are adding another layer of complexity. Early equipment selection and lead-time verification are now essential.
Labor Is Still Part of the Equation
Material costs are only half the story. Data center, healthcare, manufacturing, and infrastructure work continue to tighten labor availability, especially in MEP and low-voltage trades. Demographic and workforce constraints are expected to keep wage pressure elevated through the back half of the decade. Labor availability may matter as much as material pricing when building schedules and budgets.
What This Means for Owners and Developers
Risk today is concentrated, not universal. Successful projects will identify exposure early and plan around it:
- Start procurement earlier than in past cycles
- Watch steel, copper, aluminum, and electrical equipment markets closely
- Evaluate alternative materials and suppliers where it makes sense
- Build labor constraints into preconstruction planning
- Set contingencies around high-risk scopes rather than a blanket assumption across the whole budget
Putting AI to Work in Preconstruction Planning
There’s a lot of noise in the market around AI in construction. Our approach has stayed simple: test what’s real, measure it, and only scale what actually creates value for our clients and projects.
Where We Are Today
Last year, we highlighted how AI-assisted plan review was helping teams evaluate drawings and catch scope gaps earlier in design. Since then, we’ve tested multiple AI tools across plan review and project management on live projects. The honest update: we’re identifying issues earlier in plan review, but that hasn’t yet translated into measurable cost or schedule impact at the project level. AI in construction is improving quickly, but it isn’t a finished solution today.
What We’re Learning
Even with early, intentional adoption, implementation has been harder than the marketing suggests, consistent with what we’re hearing across the industry:
- Most tools overpromise relative to their current results
- Implementation and workflow integration matter as much as the technology itself
- Submittal review tools can reliably catch inconsistencies or missing information
- How a team uses AI, including prompting, inputs, and training, has the biggest impact on outcomes, and it’s the one area where we’re already seeing real, measurable improvement
In short, the technology alone isn’t the differentiator; how it’s applied is where value is created or lost.
Our Approach Moving Forward
We’re staying disciplined: testing tools on live projects, running ROI analysis tied to real dollars and days rather than assumptions, and staying close to AI developers to understand where the technology is actually headed, not just where it’s marketed to go. That lets us move quickly when something works, without exposing clients to unproven tools.
What This Means for Owners and Developers
AI isn’t something you need to rely on yet to protect your project, but it will incrementally improve planning, coordination, and decision-making over time. Our role is to absorb the risk of testing it early and only implement it once it tangibly improves budget certainty, schedule reliability, or issue detection before construction begins.
We’re ahead of most of the market in testing and applying these tools, but even with that head start, meaningful impact takes time. We’re committed to filtering out the noise, testing what actually works, and delivering proven value, not promises.
Want a deeper look at where this started? Read our earlier article, AI Assisted Plan Review, or reach out to our preconstruction team. We’re happy to walk through what it could mean for your next project.
Bottom Line
2026 isn’t defined by broad inflation; it’s defined by targeted pressure points. Steel, copper, electrical equipment, and skilled labor are driving most of today’s risk, while lumber and concrete remain comparatively steady. Owners who engage early in procurement and preconstruction planning can manage these conditions well. The key is spotting the volatility before it becomes a budget or schedule problem.
Disclaimer: The information contained in this document is based on general market research and current and past experience in the construction industry and represents estimations and opinions only. Any reliance, action, or inaction based on any of this information is at your own risk and MCP has no responsibility, obligation, or any liability relating thereto.