Industrialization, intelligence and risk management are reshaping Canada’s construction industry in 2026.
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Canada's construction industry enters 2026 at a turning point, shaped by data centre growth, infrastructure investment, industrialized construction and more technology-driven risk management.

As contractors respond to labour shortages, modular construction, mass timber adoption, AI-enabled project delivery and evolving insurance requirements, the firms best positioned for the year ahead will be those that align delivery models, workforce strategies and risk programs with a faster, more complex construction environment.

Key insights

  • Data centre and infrastructure projects are driving growth but come with unique risks and challenges.
  • Data-driven operations, powered by artificial intelligence (AI) and Internet of Things (IoT), are enhancing project management and safety.
  • Insurance initiatives now focus on technology-driven safety measures like forward-facing cameras and telematics.
  • Construction manufacturing is introducing new risk profiles, particularly with materials like mass timber.
  • Modular construction is transforming project coordination but requires specialized insurance considerations.
  • Flexible staffing solutions and hybrid roles are bridging the skill gap and labour shortage.

1. Construction market focus shifts to the data centre boom and infrastructure

AI adoption and hyperscaler cloud expansion are fueling a new wave of data centre development, with the cost of data centre construction in Canada hitting $4.6B (USD3.34B) in 2025 and expecting to grow to $8.6B (USD6.27B) by 2031.1

Infrastructure projects — including transportations, utilities, water and energy — remain active in Canada, with $1.25B invested in the first quarter of 2026 alone.2

These fields of new opportunities aren't without risks and challenges.

For example, the sheer size of data centre projects requires thousands of workers to operate on 24/7 shifts. Since these projects need immense energy, there's an additional demand for major power and electrical infrastructure to be built alongside the data centres.

Data centre projects commonly exceed $5 billion to $15 billion in value, stretching lender requirements and insurance capacity. Many sites require separate core/shell and equipment programs with heavy contractor involvement. Several of the larger and more complex projects require a builder's risk to property stabilized asset transition program reflecting the unique interface between the construction and operational phases.

Such mega infrastructure projects involve long timelines, regulatory oversight and coordination among multiple public and private stakeholders. Many projects also rely on owner-controlled or project-specific insurance programs, prompting firms to reassess how risk is managed at scale.

2. Forward-facing cameras and fleet management are becoming important risk mitigation strategies

The rising number of large liability verdicts is tightening insurance expectations for contractor fleets. Insurers are prioritizing technology-driven safety controls such as dash cameras and telematics systems. Driver-facing cameras are being used in higher-risk fleets to track driving behaviour, record incidents and measure fleet performance.3

Consistent usage of camera and telematics programs supports safer driving. If there's an accident, the camera footage can be investigated to determine claim outcomes. Adopting this safety measure aligns with improved underwriting results and can get fleet operators favourable premiums and terms.

By using telematics data, an organization can reduce repair costs, fuel consumption and accident risk while rewarding efficient drivers. Over time, this can strengthen its risk profile and support greater insurer appetite, more favourable terms and broader capacity.

3. Changing risk profiles in construction manufacturing

To gain more control over schedules and supply chain challenges, many contractors are shifting toward industrialized delivery models and manufacturing components in controlled environments. While this approach improves predictability and quality, it also expands risk beyond the traditional jobsite and introduces exposures more commonly seen in manufacturing operations.

Mass timber, including cross laminated timber (CLT), illustrates this shift clearly. As contractors take on greater responsibility for producing or handling engineered timber components off-site, construction phase risks change.

Water and moisture exposure during manufacturing, storage and transport become critical concerns, particularly before structures are fully enclosed. Damage can lead to delays tied to drying, remediation or remanufacture, extending project timelines and increasing cost exposure.

Broader challenges stem from limited industry experience with mass timber and uneven exposure, which can lead to increased scrutiny during inspections and permitting.

From an insurance perspective, construction manufacturing shifts both the location and nature of exposure. Builder's risk programs may not always reflect off-site values, storage durations or production related risks, while product and defect related considerations increase as contractors take on responsibilities traditionally held by manufacturers.

4. Modular construction

Modular construction transforms how work is planned and coordinated by assembling buildings from large, prefabricated sections transported to the site.6 General contractors play a key role as integrators, ensuring factory output, transportation, site readiness and installation are seamlessly aligned.

This approach introduces specific risk and insurance considerations. Key exposures include potential damage or delays during transport, off-site storage, lifting or installation, which can lead to immediate schedule disruptions and increased costs if modules are damaged or delayed. Insurance coverage focuses on areas such as cargo and in-transit protection, installation floaters, builder's risk endorsements for off-site or property in transit and coverage for delay in start-up or soft costs to address schedule impacts.

Off-site fabrication can be a disadvantage because workers may be unable to make field modifications to adjust for fabrication errors. Because modular elements need to be manufactured off-site to exacting tolerances, there's a concern about long lead times to replace damaged elements, which can lead to greater builder's risk claims. When procuring builder's risk insurance for a project involving modular construction, the design and construction teams will need to work closely with their broker to explain their approach to addressing these risks.

5. Data-driven decisions in construction

Data has evolved from a byproduct of project management to the primary, strategic asset of a construction business.

According to Gallagher's AI Adoption research, 79% of construction industry business leaders are already seeing a positive impact on business revenue from their investments in AI. Just over half are actively measuring their return on investment and expect it will take two years, on average, before the value delivered by AI outweighs the cost of implementation.

Technologies such as IoT sensors, 3D scanning and AI-powered cameras are reducing manual data entry. Job sites are increasingly capturing information automatically, creating a more accurate and reliable picture of project progress.

Historical data and digital twins are helping teams move beyond rear-view reporting toward earlier visibility into safety and performance trends.7

6. Labour issues and flexible staffing solutions

According to Gallagher research, labour costs, access to skills and worker availability are top concerns for the construction sector. The retiring workforce is yet to be replaced by new talent, so the industry is embracing a flexible staffing solution by merging human resources with technology.

To address the skills gap, contractors are creating hybrid roles that combine traditional craft skills with basic technology use. These workers support modern construction methods while remaining hands-on in the field.

On-demand labour, specialized subcontractors and temp-to-hire arrangements are increasingly common, particularly for project managers and superintendents familiar with digital tools.

Canada's construction workforce is projected to reach 1,404,200 workers by 2034 to meet demand — up from 1,292,600 in 2024 — but current projections suggest this need will not be fully met due to retirements and incoming workforce levels.8

Looking ahead

Firms that align their delivery models, workforce strategies and insurance programs with industry trends are better positioned to manage larger, more complex projects.

Gallagher's construction practice works with clients to assess how these trends affect current projects and insurance programs, helping identify practical steps to strengthen protection as delivery models continue to evolve.

Sources

1 "Canada data center construction market size & share analysis - growth trends and forecast (2026 - 2031)," Mordor Intelligence, accessed Jun 1, 2026.

2 "Table 34-10-0293-01 Investment in Building Construction," Statistics Canada, accessed Jun 1 2026.

3 "How Telematics, Cameras, and MVRs Can Mitigate Your Fleet's Auto Liability Risks," Safety National, accessed 18 Mar 2026.

4 "State of Mass Timber in Canada: Interactive Map," Natural Resources Canada, accessed Jun 1, 2026.

5 "The State of Mass Timber in Canada 2021," Natural Resources Canada, 2021. PDF file

6 "Prefabricated Modular Construction: Faster, Smarter Building," MR Civil Engineer, 24 Oct 2025.

7 "Smart Construction: How Digital Twins are Transforming Project Delivery," World Construction Today, accessed 18 Mar 2026.

8 "Canada construction & maintenance looking forward. Highlights 2025-2034," BuildForce Canada, April 2025. PDF file

Disclaimer

Arthur J. Gallagher Canada Limited ("Gallagher") provides insurance, risk management and consultation services for our clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance/risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general informational purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers control.

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