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Dispatches from ABC National Convention 2026, Salt Lake City - Part 2

Friday morning, Salt Lake City. Day three of ABC National Convention 2026.

I had ridden a mechanical bull. I had walked the expo floor with 100+ vendors. I had sat in on four technology sessions and had more conversations about AI than I have had in any single week of my career.

And then Dr. Anirban Basu walked to the podium.

If you have never seen Basu present, picture the smartest professor you ever had, the one who actually made economics feel like something that applied to your life, and give him 30 years of construction industry data and a talent for delivering hard news with a surgeon's precision and a satirical sharp wit. He is ABC's Chief Economist and the CEO of Sage Policy Group. He has been reading the construction tea leaves longer than most of us have been in the industry. And when Basu speaks, the room gets quiet.

It stayed quiet for most of Friday morning.

The Headline: Complicated, But Not Catastrophic

Here is the summary Basu did not quite say out loud, but that every contractor in that room heard anyway: 2026 is going to be a grind. The firms that navigate it well are not necessarily the biggest, they are the most operationally disciplined.

The good news first, because there is good news.

Construction is not in freefall. Basu projects modest growth for 2026, driven by continued strength in data center construction, power infrastructure, and institutional work. The AI infrastructure buildout alone is generating project volume that did not exist three years ago. If your firm is in that lane, or adjacent to it, there is real work on the table.

The second half of 2026 looks better than the first. As interest rates finally begin to ease, projects that have been sitting on the shelf waiting for financing to pencil out are expected to start moving. Basu sees a gradual rebound that accelerates into 2027 for firms that are positioned for it.

Now for the complicated part.

Tariffs: The Material Reality

If there is one theme that ran through Basu's session like rebar through concrete, it was tariffs. And the numbers are not abstract, they are showing up on your bid sheets right now.

Read that again. These are not rounding errors. These are structural changes to what it costs to build anything.

Steel and aluminum tariffs have hit 50% in key import categories. Copper, which runs through virtually every electrical, mechanical, and data infrastructure project, has been hit with a 50% tariff. The ENR Building Cost Index is up 4.2% year-over-year. Overall project costs are estimated to have risen 4-6% from tariff effects alone, with some categories seeing far worse.

For Arizona contractors — where electrical, mechanical, and structural work are the bread and butter of commercial and industrial projects — this is not a national news story. It is a line item problem on every job you are pricing today.

What Basu made clear: the firms that are surviving this environment are not the ones waiting for tariffs to reverse. They are the ones who have built procurement discipline, supply chain relationships, and operational systems that let them move faster and smarter than competitors who are still running on tribal knowledge and spreadsheets.

The Labor Market: Still Tight, Getting Harder

Here is the other weight on the scale. The industry needs to add roughly 349,000 net new workers in 2026 just to keep supply and demand in balance and that is a more modest number than recent years, which tells you something about how muted growth expectations really are.

The harder truth: those workers are increasingly difficult to find. About one in five electricians in the country is over 55. Immigration policy changes have reduced the flow of workers that some sectors of construction have historically relied on. Wage rates keep climbing because competition for skilled trades is not easing.

And in Arizona specifically? The electrician shortage is compounding fast. Data center and semiconductor fabrication projects, both of which are active in our market, require precision electrical work. That specialty is being pulled in three directions at once.

The operational implication: when your best people are spread thin, you cannot afford to have them fighting your technology instead of using it. Every hour a project manager spends troubleshooting IT issues, chasing down a file that is not in the right folder, or dealing with a system that is not synced, that is an hour of your most expensive resource doing the wrong job.

The Backlog Signal Every Small Contractor Should Know

Buried in Basu's data was a finding that I think deserves more attention than it gets in the headlines.

Translation: the smaller the firm, the thinner the cushion right now. The big contractors, those doing $100M+, have access to data centers and power infrastructure projects that smaller firms mostly do not. Only 6% of firms under $30M in revenue are under contract for data center work, versus 37% of firms over $100M. That gap is consequential.

If your firm is in the small-to-mid range say, under $30 million in annual revenue, the backlog pressure is real. And the way you compete in that environment is not by lowering your price until you win work at margins that cannot sustain your business. It is by being more efficient, more responsive, and more operationally reliable than the competitor down the road who is still running the same way they were five years ago.

What This Means for Your Technology Decisions

I have been sitting with Basu's data for a few days now, and here is the through-line I keep coming back to.

Every economic pressure he described: tighter margins, rising input costs, labor scarcity, competitive pressure on smaller firms, points in the same direction for technology investment. Not away from it. Toward it. But toward the right kind of it.

This is not the moment to buy a shiny AI tool and figure out the foundation later. This is the moment to get the foundation right, because the firms that are going to outperform in a tighter market are the ones whose systems are working for them, not against them.

Here is what that looks like in practice:

• Operational efficiency is now a margin protection strategy. When your bid price has to absorb a 7% annualized increase in input costs, every dollar of waste in your operations is a dollar you are not recovering. That includes IT waste: systems that do not talk to each other, manual processes that eat 20% of a PM's week, downtime from preventable failures.

• Cybersecurity is not optional in a tight market. A ransomware event on a thin-margin job is not an inconvenience. It is potentially a business-ending event. The firms we work with who have taken cyber seriously are not paying for it, they are protected by it.

• Document and data discipline is the AI prerequisite. Every AI tool Basu implicitly validated: procurement optimization, demand forecasting, contract review, requires organized, accessible, cloud-stored data to function. If your data is scattered, the AI layer is not available to you, regardless of what you spend on software.

• Reliable systems enable labor efficiency. When workers are expensive and hard to find, you cannot afford to have them slowed down by technology problems. Field connectivity, device reliability, and seamless access to project information are not IT luxuries. They are workforce productivity tools.

The Bottom Line

Basu's message was not that the sky is falling. The construction industry has weathered worse, and it will weather this. But the shape of what comes next is clearer than it has been in a few years, and it favors the prepared.

Modest growth. Compressed margins. Tight labor. Material costs that are not going back to where they were. A second half that looks better than the first, for firms that can hold on and hold their operational discipline together.

The firms that come out of this cycle ahead are not going to be the ones that spent 2026 hoping the environment would improve before they had to change. They are going to be the ones who decided that a tighter market was exactly the right reason to get their. Want to talk? Schedule a free assessment with our team.

If you want to talk about where your firm sits on that curve, we would love to have that conversation. We have been building IT infrastructure for Arizona construction companies for over 20 years. We know what \"ready\" looks like from the inside.

Book a Free Consultation Review with Computer Dimensions.

For over 20 years, Computer Dimensions has been the trusted IT partner for Arizona's architecture, engineering, and construction industry. We help AEC firms communicate better, collaborate smarter, and actually use the technology they've invested in. Because in construction, the tools only work if your team does.

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