Why Smaller Contractors Should Bet on Public Works in the Year Ahead
By Shandon Harbour, President & CEO of ABC San Diego
It’s that time when construction businesses are looking forward to 2026. They’re figuring out what they need to budget for and asking some key questions: How should we allocate our limited resources to ensure we’re successful? What economic headwinds do we need to brace for, and what market trends should we capitalize on?
That last one – trying to predict construction trends – can be tricky. I spend a lot of time talking with our members and many are excited by recent data showing that the market is holding firm, despite the fact that backlog has declined across commercial, institutional, and heavy industrial categories over the past year.
As ABC National recently reported, contractor member backlog and confidence have not diminished. What’s more, ABC’s Chief Economist Anirban Basu predicts that we’ll see a significant number of large-scale data center projects come online in 2026. As Basu noted, one in five contractors was under contract to work on a data center project in September, and contractors that have data center work had “significantly higher backlog than those who did not.”
But while that’s great news for our industry, as an organization that focuses on the needs of small-to-medium-sized businesses, we recommend that contractors first evaluate which market trends they should be keeping their eye on, based on the size and scope of their particular operation. Data center construction projects will likely be awarded to the largest companies, so that may not be where smaller businesses should invest a majority of their resources.
Instead, smaller operations should be watching another construction trend: public works projects. As ABC National made clear in its recent press release, public sector activity “has held up far better than its private counterpart, and that is supporting elevated backlog in the infrastructure category.”
Most likely, you’ve already got these kinds of projects in your portfolio, but as we see more of them coming online, the competition will intensify. So it’s critical that you take steps to get out in front by ramping up your knowledge of ever-changing regulations so you’re ready to seize on just about any RFP that comes your way.
Here are some tips on how to do that:
- Do your compliance-focused homework. Take the time to learn the latest regulations impacting every project you want to bid on. This might involve bringing in a consultant or attending educational webinars.
- Take advantage of ABC’s offerings. We have a host of programs designed to get you up to speed on compliance. A great example is our soon-to-be released training modules that cover recently passed annualization of public works compliance.
- The change means that contractors working on public works must be more careful about how they apply fringe‐benefit credits (for example, pension contributions, health/welfare, training programs) when calculating prevailing wages.
- Work with our in-house Compliance Manager. Aleksandra Matenko is available to meet with contractor members with apprentice training approvals, updating internal procedures, and conducting member orientations.
It can be tempting to grab on to the brass ring of every positive-sounding industry trend. But that’s a slippery slope – one that can leave a business stretched thin and unable to fulfill strategies in a holistic way. It’s best to focus on trends that are appropriate for your particular business and invest in resources accordingly.