Structural bottlenecks and a potential lack of domestic and international skills could derail the recovery in Ireland’s construction industry, according to AECOM’s annual review of the sector.

Despite forecasting modest growth this year, the industry remains constrained by these issues, which threaten to undermine the delivery of housing and infrastructure, the engineering and consultancy group warned.

It expects construction output will rise by about 4% in volume in 2026, with tender price inflation easing to around 3%, but it said that completions are likely to remain well below demand.

John O’Regan, AECOM’s country lead for Ireland, said strong public finances and an active policy agenda had created favourable conditions on paper, but delivery capacity had not kept pace.

“Delivery agencies are now managing pipelines at an unprecedented scale, within a system that remains well funded on paper but constrained in practice, and 2026 must be a year of delivery readiness if Ireland is to meet its social and economic goals,” he said at the review launch.

The company acknowledged that many government reforms are still at an early stage, while deep-rooted constraints continue to impede progress, with multiple gateways and frequent delays caused by appeals and judicial reviews, discouraging investment.

The report also highlights growing “report fatigue” across the industry and warned that prolonged delays risk deterring international contractors from entering the Irish market. At the same time, some domestic contractors and consultants have already sought work abroad, raising concerns about the long-term availability of skills.

Geopolitical instability and ongoing global conflicts also continue to weigh on investor confidence, AECOM said, even as supply chains have proved more resilient than expected, which has dampened private sector engagement and construction activity.

“While capability will take time to build, strengthening readiness internally and across the delivery ecosystem will allow organisations to manage constraints, accelerate timelines and meet Ireland’s urgent delivery needs, making readiness a critical enabler for accelerated delivery,” O’Regan said.