🔒Shifting federal priorities create new landscape for architecture, engineering and construction firms

The landscape for design and construction is ever-changing. Two big factors driving that change are the economy and federal government.

In 2024, for instance, firms were navigating a market reshaped by the Infrastructure Investment and Jobs Act, while also contending with inflation and supply chain challenges.

Now, in 2025, a new mix of headwinds and tailwinds is emerging, and industry players must adapt to stay ahead.

These shifts play out across the industry. Federal funding priorities influence public infrastructure and energy projects, while rising labor and material costs affect everything from retail rollouts to residential development.

Evolving regulations — whether tied to environmental standards or workforce requirements — add another layer of complexity.

At times like these, agility isn’t just an asset; it’s a requirement for staying competitive.

Shifting federal priorities

On the policy front, the ground is already shifting. We’re still in the early days of the second Trump administration, but its rapid pace offers clear signals about where things are headed, particularly when it comes to infrastructure funding and regulatory focus.

One of the most immediate changes is a potential rollback in discretionary grants that have historically supported projects with environmental or social impact goals, including those that provide accessibility and enhancement improvements.

Infrastructure projects like programmatic road and bridge improvements will likely continue, but others tied to climate resilience or “green” initiatives may slow or stall as the administration shifts the government’s funding focus and strategies.

When it comes to regulation, the emphasis appears to be on speeding things up. Efforts to streamline permitting could reduce lengthy regulatory review, reducing some environmental permitting work while opening up opportunities in construction and development.

For the architecture and engineering industry, owners and builders, that could mean more shovel-ready projects on the horizon.

That doesn’t mean public dollars and regulation will disappear. We may see states taking a larger role in funding public projects and setting environmental standards for the public and private sector.

That is likely to take some time.

Tariffs impact

The economic outlook is a little murkier. Prolonged high interest rates continue to squeeze project budgets that are already stretched thin from years of inflation.

We have seen owners hit pause, or walk away entirely over the last couple of years, as the cost of capital climbed higher than many had anticipated.

And that pattern is likely to persist through 2025 at a minimum.

Adding more uncertainty are the range of tariffs introduced by the Trump administration, along with retaliatory measures from global trading partners. These new trade dynamics have created whiplash conditions for companies relying on imported materials and equipment.

With costs fluctuating and timelines disrupted, a single high-ticket item sourced from overseas can suddenly become the reason a project stalls or dies altogether.

In the long term, there may be some upside. The push to onshore manufacturing and reduce supply chain vulnerabilities could ultimately create more resilience for the U.S., and create additional opportunities for the architecture, engineering and construction industries.

But, in the short term, the concern and pain is real.

Staying engaged and agile

So, how do firms not only weather uncertainty, but position themselves to thrive in it?

It starts from within. During economic and policy shifts, a highly engaged company culture becomes a strategic advantage.

Senior leaders at architecture, engineering and construction firms should be gathering employees on a consistent basis to share the latest insights on both the state of the business and the broader market.

These meetings are where leaders can share what they should be monitoring. Everyone at the company should know what is in the pipeline and what is in hand to help stay ahead of potential challenges, while identifying new opportunities.

Senior leaders also need to practice active listening — with employees, partners and clients. These are your eyes on the ground and can sometimes surface concerns and opportunities earlier than data.

Finally, for firms offering integrated and multidiscipline services, this is the moment to double down on cross-training. A nimble workforce where engineers can step into surveying roles, or environmental staff can do both compliance and natural resource work, creates built-in flexibility.

That kind of agility not only keeps work moving, it provides learning experiences for employees and positions the firm to seize new opportunities, regardless of market turns.

Derek Kohl is vice president of operations at BL Companies, an integrated architecture, engineering, environmental and land surveying firm headquartered in Meriden.