Robust infrastructure is a critical enabler of economic competitiveness, climate resilience, and social equity. Ireland has committed to transformative investments across transport, housing, energy, and healthcare under the National Development Plan (NDP) and Climate Action Plan. However, the country faces a persistent delivery gap that threatens to undermine these ambitions.
Despite record levels of public capital investment, major projects and new initiatives, such as the proposed offshore renewable energy development, continue to face challenges, including delays, cost escalations and planning bottlenecks. These issues are compounded by complex regulatory environments, skills shortages, and fragmented governance structures.
The Irish government has launched initiatives such as the Accelerating Infrastr ucture Delivery Taskforce, and has emphasised the urgency of reform if Ireland is to meet its climate and housing targets.
The challenge is not unique to Ireland. Across Europe and the UK, governments are grappling with similar constraints, ranging from inflationary pressures in construction to the need for digital transformation in both infrastructure planning and execution. Across EU member states, 81% of wind capacity is in the permitting phase, with many projects taking five to ten years or more before construction begins.
As the world faces renewed uncertainty, it is critical that infrastructure delivery remains a national priority. With the potential onset of a global trade dispute, maintaining momentum in public capital investment is essential to ensure resilience and long-term economic strength.
In this piece, we will explore the key challenges and outline mitigating strategies to help reduce the risk.
Key challenges:
Cost management complexities
Due to the complexity of large-scale infrastructure projects, cost control and management is difficult. Timescales for major infrastructure projects can be between five to ten years or more, and it is difficult for contractors to adequately forecast that far into the future. At the same time, government stakeholders seek cost and schedule certainty in order to deliver on government promises. Many infrastructure projects are significantly longer than the lifetime of one government, and such projects require cross-party commitment to ensure completion.
The complexity of future forecasting has been particularly evident over the past five years. The global economy was impacted by a series of ‘black swan’ events that could not have been accounted for, including a global pandemic, worldwide supply chain disruption and commodity inflation as a result of the Russia-Ukraine conflict, and more recently, conflicts in the Middle East, as well as the introduction of tariffs by the new US administration.
Regulatory and environmental compliance
Infrastructure projects are particularly complex due to compliance requirements for local, national and EU regulations. Environmental impact assessments and obtaining necessary permits can delay projects.
Stakeholder management
Stakeholder management is hugely complex for public sector construction projects and is often underestimated. Unlike the private sector, public sector projects may involve stakeholders whose primary expertise lies outside the construction domain. As a result, there can be varying levels of familiarity with the complexities of construction delivery, particularly in understanding how market dynamics, such as material cost inflation or supply chain disruptions, can impact project budgets and timelines.
Effective project management of the various stakeholders, including contractors, subcontractors, suppliers, and government agencies, is critical for success.
Supply chain disruptions
The construction industry is heavily reliant on a global supply chain for materials and equipment. Disruptions due to geopolitical issues, natural disasters or pandemics can cause significant delays and cost increases.
Procurement complexities
Public procurement for major infrastructure projects is complex and time-consuming, and pre-qualification criteria can exclude contractors from the process.
Difficult contractual terms in public procurement can create substantial financial and operational risks for contractors. Furthermore, public sector contracts often include stringent performance bonds, retainage clauses and detailed compliance requirements.
These conditions can deter contractors who are wary of the financial risks associated with potential delays, penalties, and disputes over contract terms. In contrast, private sector projects typically offer more flexible and negotiable terms, making them more attractive to contractors.
Government bureaucracy
A key driver of cost inflation in public sector construction is government bureaucracy. Lengthy approval processes and complex regulations can significantly delay projects. For instance, infrastructure projects often require extensive environmental studies, public hearings, and approvals from multiple agencies. These steps, while necessary for ensuring safety and compliance, can add years to project timelines and increase costs, due to prolonged administrative overheads and inflationary pressures.
Commodity inflation has become a significant issue in the construction industry, particularly in recent years, following the series of ‘black swan’ events mentioned above. Volatility in the supply and pricing of core materials, such as steel, cement and concrete, can impact project budgets. Additionally, extended lead times for critical components like electrical systems pose risks to delivery schedules, potentially resulting in cost escalations and timeline delays.
Public sector projects, which are often bound by strict timelines and budgets, are particularly vulnerable to these delays. Contractors may prefer private sector projects where they have more control over procurement schedules and can negotiate better terms with suppliers.
Prices for construction materials, such as steel, copper and lumber, have seen significant volatility due to global demand and supply chain constraints. Public sector projects, which often have fixed budgets and longer timelines, are more susceptible to cost overruns caused by sudden spikes in material prices. In contrast, private sector projects can often absorb these costs more flexibly or pass them on to clients.
Skills shortages
The construction of high-tech facilities, such as hospitals, demands a workforce skilled in specialised areas, such as cleanroom environments, precision engineering and advanced manufacturing processes. However, Europe is already facing significant labour shortages, particularly in MEP trades. This growing demand is prompting companies to invest in workforce development through upskilling initiatives and collaborations with technical institutions across the continent, although this is a more medium to long-term solution than resolving the current requirements.
A pronounced shortage of skilled labour is notably affecting the construction industry throughout Europe. The migration of workers during the COVID-19 pandemic and the Russia-Ukraine conflict has played a role in this shortage, but other factors, such as rising inactivity rates due to an ageing population, decarbonisation efforts and the growth of high-tech industries, have also contributed to this challenge.
Labour shortages remain one of the top constraints on construction activity across Europe. In Germany alone, more than 18,000 construction electrician positions remained vacant in 2024, with a severe 80% skills gap. Expert-level roles face even more pronounced shortages. In the UK, falling apprenticeship rates and a projected shortfall of 15,000 electricians from 2024 to 2029 indicate the talent shortage in the local industry.
These trends are also echoed in the latest CEDEFOP EU-wide Labour Shortage Index, which highlights significant labour shortages, especially among building trade workers, driven largely by skill mismatches. Construction and mining labour also reflect similar struggles in sourcing qualified talent. Countries like Spain, Finland and Ireland are hit hardest, facing acute shortages fuelled by widening supply-demand gaps. The Irish Government’s Skills Analysis Report (2023–2030) highlights that over 30,000 new entrants are expected to be required in craft skills alone, which includes apprenticeships in trades like plumbing, carpentry, and electrical work to meet Ireland’s construction demands by 2030.
Investments in energy upgrades under recovery and resilience plans have also impacted the availability of specialist labour within the construction industry.
- Buildings account for the largest share of total EU final energy consumption (40%) and produce about 35% of all greenhouse emissions.
- As per the EU green deal 2020, there is a target to double the current energy renovation rate by 2030, renovating 35 million buildings.
- Approximately 0.1 million Occupational Safety and Health (OSH) Managers are required for the renovation wave.
Contractor availability
The high demand for private sector projects, particularly data centres and semiconductor facilities, has intensified competition for skilled contractors. These projects are not only more profitable, but also offer more predictable timelines and fewer bureaucratic hurdles. As a result, many contractors are shifting their focus away from public sector projects, leading to a reduced pool of bidders and higher costs for public construction.
European contractors have increasingly focused on data centre construction over the past five years. The European data centre construction market has seen significant growth, with the market size projected to reach USD $32.2bn by 2030, rising at a CAGR of 18.59%. This growth is largely driven by the rising demand for digital infrastructure and cloud computing services, with sector investment growing significantly between 2023 (€5.4bn) and 2024 (€8.7bn). Between 2025 and 2030, the multi-year volume of investments is likely to exceed €87bn.
These factors collectively highlight the strategic shift of European contractors from traditional infrastructure projects, and several factors contribute to this trend:
- Low profit margins: Public infrastructure projects often have lower profit margins compared to sectors like data centre construction due to competitive bidding, fixed-price contracts and regulatory oversights.
- Bureaucracy: The complexity and length of approval processes for public infrastructure projects can deter contractors.
- Delays in awarding tenders: Prolonged tendering processes can lead to uncertainty and financial strain.
The 2014 reform of the EU directives aimed to make procurement more flexible with simplified procedures, improve the access of SMEs to public contracts, and facilitate a more strategic use of public procurement to deliver better outcomes. The reform also aimed to reinforce transparency requirements and strengthen provisions on integrity, to help prevent corruption and fraud. However, the data in dicates a significant increase in single bidding overall, a high level of direct contract awards in most member states, and a limited level of direct cross-border procurement between member states.
Conclusion
Ireland’s infrastructure ambitions as outlined in the National Development Plan and Climate Action Plan are both necessary and urgent. A persistent gap between vision and delivery continues to exist and even widen, driven by a complex set of challenges: cost volatility, regulatory delays, skills shortages, and an increasingly competitive contractor landscape. These issues are not unique to Ireland; they reflect broader European trends, where labour market imbalances, supply chain disruptions and shifting contractor priorities are reshaping the infrastructure delivery ecosystem.
To close the delivery gap, there are a number of routes for consideration, from regulation and procurement streamlining, to marked investment in workforce development. Delivering infrastructure for the transformative goals in sight remains a national imperative, with the coming years being crucial in this journey.
