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Let's be honest about something nobody in your industry is saying out loud.

QuickBooks is a perfectly fine tool. For a landscaping company with one truck and no employees. For a freelance bookkeeper working out of a home office. For your brother-in-law who just started flipping houses for the first time and thinks he's a real estate developer now.

But if you're running a construction company or real estate operation with multiple projects, multiple entities, a growing team, and a month-end close that feels like a full-contact sport, QuickBooks may be the single biggest thing standing between where you are and where you're trying to go.

Here's the part that stings: most contractors and real estate firms don't realize their accounting system is the problem. They think they need more staff. They think they need better processes. They blame the people, the volume, or the complexity of the work itself. And all of that might be partly true. But the deeper truth is this: you can't run a $30M, $50M, or $100M construction business on software that was designed for a $1M one.

At Alliance Solutions Group, we are 100% focused on contractors and real estate firms. We've helped over 4,000+ customers modernize their financial and operational systems so they can see their numbers clearly, protect their margins, and make faster decisions. We've been Sage Intacct Construction Partner of the Year since the product launched. We are, without false modesty, the largest Sage construction partner in the country.

We have seen every version of this problem. And it almost always starts with the same seven warning signs.

A Quick Word Before We Get Into the List

We want to be clear about something. This is not a hit piece on QuickBooks. It served a real purpose for a lot of businesses at a specific stage of their growth. The problem is that growth is exactly what it can't handle.

Construction and real estate are among the most financially complex industries in existence. You're managing job costing across dozens of projects simultaneously. You're dealing with retainage, change orders, AIA billing, subcontractor payments, and lien waivers. You may have multiple legal entities, multiple locations, or joint ventures that require their own sets of books. Your revenue recognition is complex. Your compliance obligations are real. Your margins are thin enough that a few bad months can wipe out a year of profit.

QuickBooks was not designed with any of that in mind. It was designed to help a small business owner track income and expenses and print an invoice. That is a meaningful product for the right customer. That customer just isn't you anymore.

So if you recognize yourself in any of the signs below, know that you are not behind. You are growing. The question is whether your systems are growing with you.

Sign #1: Your Month-End Close Is Basically a Second Job for Your Entire Finance Team

If "closing the books" sounds less like an accounting process and more like a coordinated emergency response, that is not a people problem. That is a system problem.

Think about what a typical month-end close looks like in a QuickBooks environment at a growing construction company:

• Someone is manually pulling job cost data from one system and reconciling it against invoices in another
• Someone else is chasing down approvals over email because there's no formal workflow
• A third person is building consolidation spreadsheets because QuickBooks can't do it automatically
• Everyone is working evenings and weekends just to hit a close date that still somehow slips by a week

And the worst part? By the time the books are finally closed, the data is already old. Leadership is making decisions based on numbers that are three weeks behind. In a business where margins can shift fast and cash flow can turn on a dime, that delay is not just inconvenient. It is genuinely dangerous.

Modern construction accounting platforms can cut monthly close time by up to 79%. That is not a rounding error. That is the difference between a finance team that's constantly putting out fires and one that's actually helping run the business strategically.

When your close takes two weeks, you lose two weeks of decision-making clarity every single month. Multiply that across a year and ask yourself what that's costing you in missed opportunities, reactive decisions, and organizational stress.

What this looks like in practice: A multi-entity general contractor we worked with was spending 18 to 22 days closing their books each month. Between manual intercompany entries, spreadsheet consolidations, and chasing down approvals across four entities, their controller was essentially unavailable for any strategic work from the 25th of one month to the 15th of the next. After implementation, they closed in under five days. That controller now spends her time analyzing job performance, not rebuilding spreadsheets.

Sign #2: You Have a Spreadsheet for Your Spreadsheets (And Everyone Is Afraid to Touch the Original)

We are not judging. We have seen this hundreds of times, in every variation imaginable.

It usually starts innocently enough. QuickBooks can't quite produce the report your VP of Operations needs, so someone builds a workaround in Excel. It works well enough that people start relying on it. Then they add tabs. Then more tabs. Then formulas that reference other workbooks. Then password protections because one too many people accidentally deleted something. Then the person who built the whole thing leaves the company and takes the institutional knowledge with them.

What you're left with is a fragile, undocumented shadow accounting system that nobody fully understands and everyone is afraid to touch.

The risks here are not theoretical:

• Version control is a disaster. Which spreadsheet is the source of truth? The one your CFO has? The one the controller updated last Tuesday? The one that got emailed around last week with "FINAL" in the title, which was then followed by "FINAL_v2" and "FINAL_ACTUAL"?
• Error propagation is a real threat. One broken formula, one deleted row, one wrong paste can corrupt data that flows through every downstream report. And you may not catch it until it's already been presented to your board or your lender.
• Single points of failure create enormous operational risk. If one person owns the spreadsheet and that person gets sick, takes a vacation, or moves on to another company, your financial reporting capability goes with them.
• Audit exposure is significant. When your financials are built on a patchwork of spreadsheets with no clear audit trail, explaining your numbers to an auditor, a banker, or a potential acquirer becomes a very uncomfortable exercise.

The spreadsheet problem is not a symptom of poor financial management. It is a symptom of a system that can't do what your business needs it to do. The people building those spreadsheets are often your sharpest finance professionals doing their best with inadequate tools.

The solution is giving them better tools, not asking them to build smarter spreadsheets.

Sign #3: Your Reports Tell You What Happened Last Month. Your Business Needs to Know What's Happening Right Now.

There's a question we ask every construction and real estate company we work with early in the relationship: "If your CFO walked in right now and asked for job-level profitability across all active projects, how long would it take to produce that report?"

The answers we hear most often are:

• "Probably a day or two"
• "End of the week, realistically"
• "That would be a big ask"
• "We don't really have that"

That is a problem. In construction, job-level visibility is not a nice-to-have. It is the foundational requirement for protecting your margins and running your business well. If you can't quickly see which jobs are trending over budget, which subcontractors are driving cost overruns, and which project managers are consistently delivering and which aren't, you are managing by approximation.

The construction and real estate industries are unforgiving in this regard. Your contracts have fixed scopes. Your materials have volatile prices. Your labor costs are subject to market conditions, union agreements, and weather delays. Your change order management can make or break a project's profitability. None of that complexity shows up in a standard QuickBooks report.

What growing companies actually need from their reporting:

• Job costing visibility at every phase of every project, updated in real time
• Entity-level P&L that doesn't require a weekend of manual assembly
• Dimensional reporting that lets you slice data by project, department, location, manager, or any combination thereof
• Cash flow forecasting that accounts for retainage, scheduled billings, and upcoming subcontractor payments
• Custom dashboards so that your CFO, your COO, and your project managers are all seeing the right information without having to wait for someone in accounting to pull a report for them

Generic reports might confirm that revenue went up. That's nice. But revenue going up on a job that's also going over budget on labor and materials is not a success story. It's a warning sign. If your reporting can't tell the difference, you are not running a data-driven business. You are making educated guesses and calling it strategy.

Sign #4: You Have Multiple Entities or Locations, and Managing Them Is Consuming Your Team

This is where QuickBooks goes from "limited" to "genuinely can't do this."

The construction and real estate industries are full of multi-entity structures. General contractors with separate holding companies. Real estate developers with individual LLCs for each asset. Construction groups with regional operating companies under a parent. Joint ventures that require standalone reporting. Property management operations that sit alongside development entities.

These structures exist for good legal, tax, and liability reasons. But they create accounting complexity that QuickBooks simply was not built to handle:

• Intercompany transactions require manual journal entries in multiple sets of books, with no automated reconciliation or elimination process
• Consolidated reporting has to be assembled by hand, pulling data from separate QuickBooks files and combining it in a spreadsheet (see Sign #2)
• Shared service allocations (shared payroll, shared insurance, shared equipment) have to be manually tracked and allocated across entities, often with inconsistent methodology
• Entity-level visibility requires switching between company files, which is cumbersome and error-prone
• Audit trails across entities are fragmented and difficult to trace

Every one of those manual touchpoints is a place where errors happen, time is wasted, and your close cycle extends. And the more entities you add, the worse it gets. This is not a scalable model.

For a multi-entity contractor or real estate firm, the right accounting platform handles intercompany transactions automatically. It eliminates them in consolidation without manual intervention. It allocates shared costs according to rules you define, not according to whoever had time to do it this month. And it lets you see each entity individually or consolidated together with a single click.

That is not a luxury. For a growing multi-entity organization, that is a baseline operational requirement.

The real cost of getting this wrong: Errors in intercompany accounting don't just create reconciliation headaches. They can distort entity-level profitability, complicate tax filings, create exposure in audits, and produce consolidated financials that misrepresent the performance of your business. When you're seeking bonding, a line of credit, or a potential partner, your financial statements need to be airtight. Manual consolidations are rarely airtight.

Sign #5: Your Best Finance People Are Spending Their Days on Data Entry

This one is frustrating to write, because it's so common and so avoidable.

When did re-keying invoices become an acceptable use of a senior accountant's time? When did three-step email approval chains become a standard internal control? When did manual reconciliation of subcontractor payments become a routine monthly task for someone with 10 years of accounting experience?

The answer, in most cases, is: when you outgrew your system but didn't replace it.

Here's what excessive manual work looks like in a construction finance environment:

• Accounts payable staff manually entering invoices that could be captured automatically
• Project managers emailing change order approvals to accounting instead of routing through a system
• Controllers manually reconciling job costs against contract values because the system can't do it
• Finance teams re-entering data from project management software into the accounting system because the two don't integrate
• Payroll data being manually imported from a separate system every pay period
• Month-end journal entries being built from scratch each month instead of recurring automatically

Every one of those tasks has a cost. Direct labor cost, obviously. But also: error cost, because humans doing repetitive tasks make mistakes; delay cost, because manual processes take longer than automated ones; and opportunity cost, because every hour your senior finance professional spends on data entry is an hour they're not spending on analysis that could actually improve your margins.

There's also a talent cost that often goes unmentioned. Strong finance professionals don't stay long in environments where their primary job is administrative work. If your accounting system is making your finance team's jobs harder instead of easier, turnover becomes a real risk, and the institutional knowledge that walks out the door with each departure is irreplaceable.

Automation in construction accounting is not about replacing people. It is about letting your people do the work they were actually hired to do.

Sign #6: The Words "Audit" and "Compliance" Make Your Controller Visibly Nervous

There's a version of this conversation that happens in almost every company we work with.

We ask about internal controls. There's a pause. Then someone says something like, "Well, our controller handles most of that," or "We have a review process, it's just not super formal," or the classic: "We've never really had a problem."

"We've never really had a problem" is not an internal control. It's luck. And luck, as anyone who's been in construction for more than a few years knows, eventually runs out.

Here's why controls matter more than ever for growing construction and real estate companies:

Lender and bonding requirements are intensifying. Surety companies and construction lenders are asking more detailed questions about your financial processes, your internal controls, and the reliability of your reporting. If your financial statements are built on a manual, spreadsheet-heavy process, that scrutiny is uncomfortable at best and deal-breaking at worst.

Owner and GC requirements are getting stricter. Public-sector work, large commercial contracts, and work for sophisticated private owners increasingly comes with compliance requirements around financial reporting, audit trails, and internal process documentation. If you're pursuing this kind of work and your back office can't support those requirements, you're competing with one hand tied behind your back.

Fraud risk is real and underappreciated. Construction has historically had significant exposure to financial fraud, particularly in accounts payable, subcontractor billing, and payroll. Without proper segregation of duties, role-based access controls, and automated approval workflows, that exposure is hard to manage.

Tax and regulatory complexity is growing. Multi-state operations, diverse entity structures, revenue recognition requirements, and evolving tax regulations all require a level of financial rigor that manual processes struggle to maintain consistently.

What modern construction accounting platforms provide in this area:

• Role-based permissions that control exactly what each user can see and do, down to the transaction level
• Complete, system-generated audit trails for every entry, approval, and modification
• Automated approval workflows that enforce your policies consistently, regardless of who's reviewing
• Separation of duties built into the system so that the person creating a payment can't be the same person approving it
• Compliance reporting that makes audits faster and less painful

None of that is possible in QuickBooks at the scale or with the reliability that a growing construction company needs.

Sign #7: You Are Growing. Your Accounting System Is Slowing You Down.

This is the one that matters most, and it's the one that's hardest to see when you're in the middle of it.

Growth is supposed to feel like momentum. More revenue, more projects, more complexity, all moving in the right direction. But in too many construction and real estate companies, growth creates a paradox: the bigger you get, the more your accounting system becomes a drag on your ability to operate.

More projects mean more job cost data to track manually. More entities mean more intercompany entries to reconcile. More staff means more approval workflows to manage over email. More revenue means more scrutiny from lenders and bonding companies. More complexity means more things that fall through the cracks of a system not built to handle them.

If you're scaling your business while still running on a platform designed for small businesses, every growth milestone creates more friction instead of more momentum. And that friction has real consequences:

• Decisions get delayed because the data isn't ready in time
• Bids get priced conservatively because there's no confidence in the cost data behind them
• Good people get frustrated and leave because the tools make their jobs harder
• Leadership spends time managing financial chaos instead of pursuing strategic opportunities
• Lenders and sureties ask harder questions because the financials don't inspire confidence

The goal of modern financial management is to make growth easier, not harder. The right platform scales with you, handles complexity without adding headcount, and gives you the visibility to run your business proactively instead of reactively.

That is what construction companies that compete at the highest level have in common: financial infrastructure that enables their ambitions instead of limiting them.

The Real Question: What Is Staying on QuickBooks Actually Costing You?

Most of the conversation about accounting software focuses on features and functionality. That is the wrong frame.

The right frame is cost. What does it actually cost your business every year to stay on a platform that can't keep up with you?

Consider the following:

• Labor costs for manual processes can run $50,000 to $100,000 annually, and that is a conservative estimate for a company doing more than $20M in revenue
• Errors in financial reporting can create tax exposure, bonding issues, and audit findings that are expensive to resolve
• Delayed closes mean delayed decisions, which means missed opportunities to correct job performance problems before they become losses
• Compliance failures on public-sector or large commercial contracts can result in penalties or disqualification from future work
• Turnover in finance driven by frustrating manual environments carries replacement costs that often exceed an entire year of a senior employee's salary

And then there are the costs that don't show up on any income statement: the strategic cost of not knowing your numbers well enough to pursue the right opportunities, price jobs with confidence, or manage your cash position proactively.

The investment in modern financial management software is not an expense. It is a return on invested capital. Companies that make the switch typically recover their implementation investment within a few months and continue to realize efficiency gains for years afterward.

What Growing Contractors and Real Estate Firms Are Doing About It

They are switching to Sage Intacct, and most of them ask the same question afterward: why did we wait so long?

Alliance Solutions Group is the largest Sage construction partner in the country. We have been Sage Intacct Construction Partner of the Year since the product launched. We are 100% focused on construction and real estate. Not retail. Not healthcare. Not manufacturing. Your industry, your complexity, your numbers.

We have served over 4,000 customers and we know what happens when a construction business finally gets financial infrastructure that matches its ambition:

• Month-end closes that used to take three weeks now take three to five days
• Consolidated reporting across multiple entities that used to require a full weekend now runs on demand
• Finance teams that used to spend 60% of their time on manual data entry are now spending that time on analysis that actually improves the business
• Controllers who used to dread audits now walk into them with confidence
• Leadership teams that used to wait for month-end to see their numbers now have real-time visibility every day

If any of the seven signs above felt uncomfortably familiar, you are not behind. You are growing. The question is whether you are going to let your systems grow with you.

Here is what you can do today:

Read the Full E-Book

Go deeper on every warning sign, get a detailed breakdown of what to look for in a replacement system, and hear how other construction and real estate companies made the transition successfully.

 Take a Self-Guided Tour

See what modern construction accounting actually looks like, at your own pace, on your own time, with zero sales pressure. Explore the platform and decide for yourself.

Book a Demo

Talk to one of our construction accounting specialists. We will show you exactly how Sage Intacct would work for your specific business: your entities, your projects, your team, your reporting needs.

Alliance Solutions Group solves one problem: when your back office can't keep up with the complexity of your projects and the ambitions of your business. If that sounds like where you are, we should talk.

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The construction industry is heading into 2026 with a mixed bag, and at Alliance Solutions Group, we've been watching these shifts closely.

Every year, we dig into the data from the Associated General Contractors of America and Sage's annual Construction Hiring and Business Outlook to understand where the industry is headed. This year's report, titled Dampened Expectations, tells an honest story: there's real demand out there, but the landscape has gotten more complicated.

Data centers and power facilities are surging. Five market segments have flipped to negative expectations, up from just two last year. Sixty-two percent of firms say recession risk is their top concern. And the labor shortage? It's not getting easier. Eighty-two percent of contractors are struggling to fill craft positions.

For contractors, the question isn't whether there's work. It's whether your business is set up to manage the complexity that comes with it.

Here's what we're paying attention to, and what we think you should be thinking about, too.

Data Centers Are Booming. That Doesn't Make Them Simple.

The biggest headline in this year's outlook is the continued surge in data center demand. According to the AGC and Sage report, data centers posted a net reading of 57 percent, the highest of any market segment and the only one to see double-digit growth from a year ago. Power facilities came in second at 34 percent, and those two segments are the only categories where contractor confidence actually increased compared to last year.

The demand is real, and it's being driven by AI, cloud computing, and the broader expansion of digital infrastructure.

But here's the part of this story that doesn't always get enough attention: data centers are resource-intensive in ways that directly affect the communities where they're built. They require significant energy, large volumes of water for cooling, substantial land, and major infrastructure investment. As these projects multiply, the conversations around them are getting bigger, and rightly so. Communities are asking harder questions about environmental impact, strain on local utilities, long-term sustainability, and who bears the cost of supporting these facilities.

As a firm that works closely with contractors, we think this matters. Growth is good, but not if it comes without careful planning.

For contractors, data center work can be a real opportunity, but it also demands strong cost controls, accurate forecasting, and clear visibility into project performance from day one. These are complex, resource-heavy projects, and the margin for error is smaller than it might look from the outside.

The takeaway isn't just that data centers are a growth area. It's that the kind of work driving demand right now requires contractors to manage risk more carefully than ever.

The Rest of the Market? Contractors Are Playing It Cautious.

While data centers and power projects are running hot, the broader picture is more guarded.

The AGC report shows that five market segments now carry negative net expectations, up from just two in last year's survey. Retail, private office, and hotel construction are seeing the weakest outlook. And even the segments that are still expected to grow, like healthcare, manufacturing, water and sewer, are seeing lower confidence compared to a year ago.

That said, contractors aren't sitting on their hands. Nearly 40 percent report backlogs that are bigger than a year ago, and 63 percent still plan to add workers this year. The work is there. But firms are being more selective about the work they take on and more focused on protecting their margins.

From where we sit, this is actually the right instinct. When the market shifts, the contractors who come out ahead aren't the ones chasing every opportunity. They're the ones who know exactly which projects are profitable, where costs are moving, and how fast they need to act on financial decisions. That kind of clarity doesn't come from spreadsheets updated once a month. It comes from having real-time visibility into your numbers.

Economic Uncertainty Isn't Going Away

If there's one theme that runs through this entire outlook, it's uncertainty.

Sixty-two percent of contractors cited an economic slowdown or recession as their top concern for 2026. That's not a small number. And it's compounded by everything else on the list: tariff policies that keep shifting, tighter project financing, rising material costs, and immigration enforcement pressures that are affecting labor availability in certain regions.

The AGC report also notes that many firms have already seen owners postpone, scale back, or cancel projects. That's the kind of environment where one delayed decision or one missed cost trend can ripple through a contractor's entire pipeline.

We talk to construction firms every day, and what we hear is that the challenge isn't just winning work. It's understanding whether the work is financially sound before you commit to it. That requires up-to-date job cost data, connected reporting, and systems that let leadership act on current information rather than catching problems after the fact.

If your financial data lives in disconnected spreadsheets or your reports are running weeks behind, that's not just an inconvenience. In this kind of environment, it's a real business risk.

The Labor Shortage Is Still Squeezing the Industry

The skilled labor shortage has been a headline for years now, and 2026 is no exception.

According to the AGC and Sage report, 82 percent of firms are having difficulty filling hourly craft positions, and 80 percent are struggling with salaried roles. Those are the highest numbers in the past three years. And 63 percent of firms still plan to grow their headcount, which means the competition for qualified workers is only going to intensify.

When your teams are stretched thin, every inefficient process costs you more. It costs you in time, in errors, and in the energy your people spend on work that could be automated or streamlined. Whether it's project accounting, approvals, payroll, or field reporting, the processes that still rely on manual entry are the ones most likely to slow your team down and introduce mistakes.

We've seen this firsthand with the contractors we work with. When firms invest in reducing the manual burden on their teams, they don't just save time. They create room for their people to focus on the work that actually moves projects forward.

AI Investment Is Accelerating, But the Foundation Matters

One of the most striking findings in this year's report is how quickly AI adoption is growing in construction.

Sixty-one percent of firms now say they're either using AI or planning to increase their investment in it, up from 44 percent just a year ago. That's a significant jump. Contractors are putting AI to work across administrative functions (45 percent), estimating (23 percent), design and preconstruction (20 percent), and recruiting and training (16 percent).

This isn't a trend that's going to slow down. But here's what we keep coming back to in our conversations with clients: AI is only as good as the data and systems underneath it.

If your financial data is scattered across disconnected tools, if your reporting processes are manual, if your accounting system wasn't built for the way construction actually works, then layering AI on top of that isn't going to solve the underlying problem. It's going to amplify the gaps.

The firms that are getting the most out of technology right now are the ones that invested in a solid cloud-based foundation first. Centralized data, connected workflows, clean reporting. That's the groundwork that makes everything else, including AI, actually useful.

What We Think This All Means

The 2026 outlook is complicated. Some segments are thriving, others are pulling back. The labor market is tight. Costs are unpredictable. Owners are cautious. And at the same time, the pace of technology adoption is accelerating.

For construction leaders, this is a moment to step back and honestly assess whether the systems behind your business are keeping up with the demands in front of you.

Can you see your financial performance clearly and in real time? Do you know which projects are making money and which ones aren't? Can your teams get what they need without chasing down spreadsheets or waiting on manual reports? Are you positioned to adopt new technology when it makes sense, or will outdated infrastructure hold you back?

These aren't hypothetical questions. They're the ones that separate the firms that navigate years like this successfully from the ones that spend the whole time reacting.

At Alliance Solutions Group, this is the work we do every day. We help construction businesses modernize the financial and operational systems that everything else depends on, from Sage Intacct Construction to connected solutions that support reporting, project visibility, and workflow efficiency. Our goal is to help contractors build a foundation that's strong enough for what's coming, not just what's here today.

If any of what you've read here hits close to home, we'd love to have a conversation.

The data referenced in this article comes from the AGC and Sage 2026 Construction Hiring and Business Outlook report. You can read the full report here.

‍

The construction industry is heading into 2026 with a mixed bag, and at Alliance Solutions Group, we've been watching these shifts closely.

Every year, we dig into the data from the Associated General Contractors of America and Sage's annual Construction Hiring and Business Outlook to understand where the industry is headed. This year's report, titled Dampened Expectations, tells an honest story: there's real demand out there, but the landscape has gotten more complicated.

Data centers and power facilities are surging. Five market segments have flipped to negative expectations, up from just two last year. Sixty-two percent of firms say recession risk is their top concern. And the labor shortage? It's not getting easier. Eighty-two percent of contractors are struggling to fill craft positions.

For contractors, the question isn't whether there's work. It's whether your business is set up to manage the complexity that comes with it.

Here's what we're paying attention to, and what we think you should be thinking about, too.

Data Centers Are Booming. That Doesn't Make Them Simple.

The biggest headline in this year's outlook is the continued surge in data center demand. According to the AGC and Sage report, data centers posted a net reading of 57 percent, the highest of any market segment and the only one to see double-digit growth from a year ago. Power facilities came in second at 34 percent, and those two segments are the only categories where contractor confidence actually increased compared to last year.

The demand is real, and it's being driven by AI, cloud computing, and the broader expansion of digital infrastructure.

But here's the part of this story that doesn't always get enough attention: data centers are resource-intensive in ways that directly affect the communities where they're built. They require significant energy, large volumes of water for cooling, substantial land, and major infrastructure investment. As these projects multiply, the conversations around them are getting bigger, and rightly so. Communities are asking harder questions about environmental impact, strain on local utilities, long-term sustainability, and who bears the cost of supporting these facilities.

As a firm that works closely with contractors, we think this matters. Growth is good, but not if it comes without careful planning.

For contractors, data center work can be a real opportunity, but it also demands strong cost controls, accurate forecasting, and clear visibility into project performance from day one. These are complex, resource-heavy projects, and the margin for error is smaller than it might look from the outside.

The takeaway isn't just that data centers are a growth area. It's that the kind of work driving demand right now requires contractors to manage risk more carefully than ever.

The Rest of the Market? Contractors Are Playing It Cautious.

While data centers and power projects are running hot, the broader picture is more guarded.

The AGC report shows that five market segments now carry negative net expectations, up from just two in last year's survey. Retail, private office, and hotel construction are seeing the weakest outlook. And even the segments that are still expected to grow, like healthcare, manufacturing, water and sewer, are seeing lower confidence compared to a year ago.

That said, contractors aren't sitting on their hands. Nearly 40 percent report backlogs that are bigger than a year ago, and 63 percent still plan to add workers this year. The work is there. But firms are being more selective about the work they take on and more focused on protecting their margins.

From where we sit, this is actually the right instinct. When the market shifts, the contractors who come out ahead aren't the ones chasing every opportunity. They're the ones who know exactly which projects are profitable, where costs are moving, and how fast they need to act on financial decisions. That kind of clarity doesn't come from spreadsheets updated once a month. It comes from having real-time visibility into your numbers.

Economic Uncertainty Isn't Going Away

If there's one theme that runs through this entire outlook, it's uncertainty.

Sixty-two percent of contractors cited an economic slowdown or recession as their top concern for 2026. That's not a small number. And it's compounded by everything else on the list: tariff policies that keep shifting, tighter project financing, rising material costs, and immigration enforcement pressures that are affecting labor availability in certain regions.

The AGC report also notes that many firms have already seen owners postpone, scale back, or cancel projects. That's the kind of environment where one delayed decision or one missed cost trend can ripple through a contractor's entire pipeline.

We talk to construction firms every day, and what we hear is that the challenge isn't just winning work. It's understanding whether the work is financially sound before you commit to it. That requires up-to-date job cost data, connected reporting, and systems that let leadership act on current information rather than catching problems after the fact.

If your financial data lives in disconnected spreadsheets or your reports are running weeks behind, that's not just an inconvenience. In this kind of environment, it's a real business risk.

The Labor Shortage Is Still Squeezing the Industry

The skilled labor shortage has been a headline for years now, and 2026 is no exception.

According to the AGC and Sage report, 82 percent of firms are having difficulty filling hourly craft positions, and 80 percent are struggling with salaried roles. Those are the highest numbers in the past three years. And 63 percent of firms still plan to grow their headcount, which means the competition for qualified workers is only going to intensify.

When your teams are stretched thin, every inefficient process costs you more. It costs you in time, in errors, and in the energy your people spend on work that could be automated or streamlined. Whether it's project accounting, approvals, payroll, or field reporting, the processes that still rely on manual entry are the ones most likely to slow your team down and introduce mistakes.

We've seen this firsthand with the contractors we work with. When firms invest in reducing the manual burden on their teams, they don't just save time. They create room for their people to focus on the work that actually moves projects forward.

AI Investment Is Accelerating, But the Foundation Matters

One of the most striking findings in this year's report is how quickly AI adoption is growing in construction.

Sixty-one percent of firms now say they're either using AI or planning to increase their investment in it, up from 44 percent just a year ago. That's a significant jump. Contractors are putting AI to work across administrative functions (45 percent), estimating (23 percent), design and preconstruction (20 percent), and recruiting and training (16 percent).

This isn't a trend that's going to slow down. But here's what we keep coming back to in our conversations with clients: AI is only as good as the data and systems underneath it.

If your financial data is scattered across disconnected tools, if your reporting processes are manual, if your accounting system wasn't built for the way construction actually works, then layering AI on top of that isn't going to solve the underlying problem. It's going to amplify the gaps.

The firms that are getting the most out of technology right now are the ones that invested in a solid cloud-based foundation first. Centralized data, connected workflows, clean reporting. That's the groundwork that makes everything else, including AI, actually useful.

What We Think This All Means

The 2026 outlook is complicated. Some segments are thriving, others are pulling back. The labor market is tight. Costs are unpredictable. Owners are cautious. And at the same time, the pace of technology adoption is accelerating.

For construction leaders, this is a moment to step back and honestly assess whether the systems behind your business are keeping up with the demands in front of you.

Can you see your financial performance clearly and in real time? Do you know which projects are making money and which ones aren't? Can your teams get what they need without chasing down spreadsheets or waiting on manual reports? Are you positioned to adopt new technology when it makes sense, or will outdated infrastructure hold you back?

These aren't hypothetical questions. They're the ones that separate the firms that navigate years like this successfully from the ones that spend the whole time reacting.

At Alliance Solutions Group, this is the work we do every day. We help construction businesses modernize the financial and operational systems that everything else depends on, from Sage Intacct Construction to connected solutions that support reporting, project visibility, and workflow efficiency. Our goal is to help contractors build a foundation that's strong enough for what's coming, not just what's here today.

If any of what you've read here hits close to home, we'd love to have a conversation.

The data referenced in this article comes from the AGC and Sage 2026 Construction Hiring and Business Outlook report. You can read the full report here.

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