The ongoing Iran conflict is sending shockwaves far beyond geopolitics, with mounting evidence that the global construction sector could face severe disruption. According to Pick Everard’s Market Intelligence Report 2025, escalating instability in the Middle East is already influencing supply chain, costs, and investor confidence. If these pressures continue unchecked, the report warns, the construction industry risks becoming effectively “paralysed”.
At the heart of the issue lies the globalised nature of construction. Modern projects depend heavily on international supply chains for materials such as steel, cement, glass, and mechanical components. The Iran conflict threatens key shipping routes, particularly through the Strait of Hormuz, a critical artery for global energy supplies. Any disruption here has a cascading effect on oil and gas prices, which in turn drives up manufacturing, transportation, and operational costs across construction projects worldwide.
Energy prices are a particularly acute concern. Construction is an energy-intensive sector, from material production to on-site operations. Rising fuel costs increase the price of raw materials while simultaneously inflating logistics expenses. This double impact places enormous strain on project budgets, many of which are already finely balanced. As a result, developers may delay or cancel projects, leading to reduced activity across the industry.
The Pick Everard report highlights that uncertainty is proving just as damaging as actual disruption. Investors and developers are increasingly hesitant to commit to new projects in such a volatile environment. This “watch and wait” approach is slowing decision-making and stalling pipelines, creating a bottleneck that could significantly hinder growth.
Gavin Mason, Operations Director at Pick Everard, emphasises that inaction poses a major risk. He said that sitting tight is not an option and urged construction companies to adopt a proactive risk-management approach.
“It’s not a lack of intent that is the issue now,” he said, “but a ‘watch and wait’ mentality that is threatening growth.
“The problem is that the shockwaves from the Iran war are likely to be felt by construction for some time – regardless of how peace talks play out. In these volatile times, we need to collaborate and foster agility through strategies like advanced procurement and data sharing.”
This perspective reflects a broader industry concern: that hesitation could compound the challenges already facing construction. Labour shortages, inflation, and regulatory pressures were already testing resilience before geopolitical tensions intensified. The Iran conflict adds another layer of complexity, increasing the likelihood of project delays, cost overruns, and contractual disputes.
Supply chain fragility is another critical factor. Many construction firms rely on just-in-time delivery models to manage costs and efficiency. However, geopolitical instability exposes the vulnerability of this approach. Delays at ports, sanctions, or restricted trade routes can quickly disrupt schedules. The report suggests that companies may need to rethink procurement strategies, including diversifying suppliers and holding greater stock reserves, even if this increases short-term costs.
Insurance and risk premiums are also rising. Projects in regions perceived as high-risk may face higher financing costs or difficulty securing investment altogether. This tightening of financial conditions could further restrict the flow of capital into construction, particularly for large-scale infrastructure and commercial developments.
Despite these challenges, the report underscores that the industry is not without options. Proactive risk management is a recurring theme, with an emphasis on collaboration, innovation, and data-driven decision-making. Advanced procurement strategies, for example, can help firms secure materials earlier and at more stable prices. Meanwhile, improved data sharing across the supply chain can enhance visibility and allow companies to respond more quickly to disruptions.
Digital tools and predictive analytics are also gaining importance. By modelling different scenarios, firms can better anticipate risks and plan contingencies. This shift towards a more agile and responsive operating model could help mitigate the worst effects of geopolitical instability.
However, adopting these strategies requires a cultural shift within the industry. The traditional reactive approach—waiting for clarity before acting—is no longer sufficient in a world characterised by constant uncertainty. Instead, companies must embrace a mindset of continuous adaptation, where risk is actively managed rather than passively endured.
The potential for paralysis arises when uncertainty, rising costs, and delayed decision-making converge. If too many stakeholders adopt a cautious stance simultaneously, the entire ecosystem slows down. Projects are postponed, supply chains contract, and confidence erodes. In such a scenario, even firms that are willing to proceed may find themselves constrained by external factors beyond their control.
Ultimately, the Iran conflict serves as a stark reminder of how interconnected the construction industry is with global events. While the immediate impacts are being felt through costs and supply chains, the longer-term consequences could reshape how the sector operates. Companies that act decisively, invest in resilience, and embrace collaboration are more likely to navigate the turbulence successfully.
Those that do not, risk being caught in a cycle of hesitation and delay—one that could indeed leave the industry “paralysed” at a time when infrastructure development and economic growth are more critical than ever.
