Construction stress climbed sharply in March as geopolitical tensions tied to the Iran war disrupted global oil flows and drove up costs, leading to a significant increase in project abandonments, according to new data from ConstructConnect.
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The Cincinnati-based firm reported that its Project Stress Index rose 4.2% month over month in March, fueled largely by a 22.8% surge in project abandonments. The index tracks projects that are paused, abandoned or experiencing delayed bid dates, offering a snapshot of industry strain.
The spike in abandonments coincides with growing instability in global energy markets, particularly as the conflict has impacted shipping through the Strait of Hormuz — a critical corridor for oil transport.
“This escalation marks the largest month-over-month rise in abandonments since late 2025, when stress conditions heightened during the longest government shutdown in U.S. history,” Devin Bell, associate economist at ConstructionConnect, told Construction Dive. “The current increase in abandonments coincides with the developing conflict with Iran, as it continues to disrupt the flow of key goods through the Strait of Hormuz.”
Higher oil prices have had a cascading effect on construction input costs, intensifying financial pressure on developers and contractors. Input costs rose at a 12.6% annualized rate during the first two months of 2026, and economists warn that the full impact of the Iran war on pricing has yet to be fully realized.
Despite the rise in abandonments, some indicators offered modest relief. Delayed bid activity dipped 1.2% month over month, while projects placed on hold declined 9.9%, suggesting that fewer projects are being paused even as more are being scrapped altogether.
The latest data shows that the private sector is bearing the brunt of the current volatility. Developers are increasingly walking away from projects as escalating costs and uncertainty erode project feasibility.
“March’s rise in abandonments has predominantly impacted the private sector,” said Bell. “The combination of already elevated construction input costs and disrupted oil trade flows is potentially driving private sector owners and developers to abandon projects as they grapple with escalating input costs.”
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Over the past year, private construction activity has already been under strain, particularly outside of the booming data center segment. Excluding data center projects, commercial construction planning has fallen 12.7% since March 2025, highlighting broader weakness in the sector.
On a year-over-year basis, total project abandonments have actually declined, with public and private abandonments down 17.2% and 4.6%, respectively. However, shifts within project pipelines reveal changing dynamics. Public projects placed on hold increased 9.4% over the past 12 months, while private projects on hold dropped sharply by 79.7%.
“The decline in private on-holds is primarily due to the high levels we tracked in the first half of 2025,” said Bell. “Now, private on-holds have returned to levels much closer to historic averages.”
Although overall stress levels remain below last year’s peak — when high interest rates and tariff concerns dampened activity — the March uptick signals renewed volatility. Industry stakeholders now face mounting uncertainty as geopolitical risks continue to ripple through supply chains and cost structures.
Originally reported by Sebastian Obando, Senior Reporter in Construction Dive.
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