Construction, contractors, and developers in Pacific Northwest are facing headwinds on multiple fronts—from uncertainty related to tariffs and funding of federal projects to state issues that include managing Project Labor Agreements in Oregon and a freeze on new contracts from Washington state.
Tariffs on steel, aluminum, and lumber can obviously have a significant impact on construction projects, from supply chain to budgets. The 2018 tariffs on steel and aluminum imported into the US resulted in increased material costs for construction, which often turned into significant budget overruns, so construction executives need to prepare for similar impacts in 2025. When combined with some of the regulatory challenges in the Pacific Northwest, ongoing issues finding and retaining top talent, and general economic uncertainty it’s never been more important for construction company owners to really understand every aspect of their operations.
Five Focus Areas for Construction in 2025
It’s critical that construction company owners and leaders consider how this changing environment will impact their jobs. Here are five areas where we suggest focusing to meet the challenges of today.
- Material Costs
Raw materials such as lumber, steel, and aluminum are often sourced from abroad, and finished products may also pass through a country that the US has imposed tariffs on. Considering the change in your costs not just for lumber and steel but also for things like pipes, beams, and machinery will help you manage project budgets. Also, considering potential mitigation strategies for tariffs can add predictability to your costs.
- Supply Chain Disruptions
Long-term relationships with suppliers may become strained. An industry-wide movement to source raw materials and finished products from countries not affected by tariffs could cause delays and shortages. Without foresight, you risk extended timelines and increased labor or equipment rental costs as workers are waiting for materials to arrive.
- Talent Challenges
Almost every construction leader I talk to cites talent as their top issue. The challenge of finding and retaining the right people is not going away, so focusing on ways to be an employer of choice will be increasingly important. Whether it’s your brand in the market, compensation and benefits, training and advancement opportunities, or recommitting to safety and mental health, think about ways you can stand out to top talent.
- Budgets and Scenario Planning
When prices go up, construction companies have two options—absorb the additional expenses or pass the costs on to their clients. Absorbing costs will squeeze profit margins and limit the ability to hire additional workers and invest in new projects. Passing the costs on to clients may reduce the demand for new buildings and infrastructure, since construction projects become less attractive. By scenario planning for different situations and meeting regularly with your project managers, supervisors, and accountants, you can stay on top each job to monitor costs and mitigate profit fade.
- Operational Excellence
Now is the time to really go deep into every aspect of your operations to ensure you are maximizing opportunities for efficiency. Areas like cash flow, tax credits and deductions, funding, financial reporting, bonding, and R&D tax credits have never been more important, as well as ensuring you have access to real-time data and insights about your business so you can make the right strategic decisions.
About Matt Van Doren
Matt Van Doren is a partner at Aldrich CPA + Advisors, where he has dedicated his career to serving the construction industry. Matt provides financial and accounting services, tax planning, and consulting services including construction accounting, cash flow modeling, financial projections, and construction best practices.
The Aldrich construction practice was ranked 16th in Construction Executive’s 2024 list of the Top 50 Construction Accounting Firms and is one of the largest practices based on the West Coast.
About Aldrich
For more than 50 years, Aldrich has helped businesses, their owners, and their employees achieve their professional and personal financial goals. We pair deep industry experience with a full suite of integrated financial, tax, accounting, wealth, corporate retirement, and business transition services to help bring clarity to every phase of our client’s personal and professional life cycles.
The Aldrich Group of Companies is composed of:
- Aldrich CPAs + Advisors LLP, one of the top 70 accounting firms in the US
- Aldrich Wealth LP, a registered investment advisory firm with more than $6.5B in assets under advisement that offers services for individuals and corporate retirement plans
- Aldrich Capital Advisors LP, which provides advisory services for business transactions
