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It is not the demand for housing and infrastructure, but rather the feasibility of projects that threatens to become the biggest obstacle to the European construction and infrastructure sector. While Europe is grappling with a housing shortage of millions of homes and a growing need to modernize existing infrastructure, labor shortages, complex regulations, financing issues, and outdated working methods are putting increasing pressure on the feasibility of projects.
The situation is urgent. The EU and the United Kingdom are facing a housing shortage of up to 9.6 million homes. According to the European Investment Bank, 2.25 million new homes were needed in 2025, but only half of that number were built. At the same time, housing construction in Europe declined by at least 10% in 2024 and 2025. The replacement and sustainability upgrades of existing infrastructure will also require substantial investments in the coming years.
The increasing pressure on project feasibility is caused by a combination of factors. Construction and infrastructure companies are facing a shortage of qualified personnel, lengthy permitting processes, rising costs, and operational processes that are inadequately designed to handle the complexity of modern projects. According to Robbert Ausems, Business Unit Director for Construction at 4PS, many of these challenges are directly interrelated: “Our power grid is at capacity, and we can’t connect new homes to it. In my area in the southern Netherlands, there’s a new neighborhood with 300 homes, only half of which can be occupied.”
The availability of skilled workers also remains a major limiting factor. According to data from Oxford Economics, 28% of construction companies report that a labor shortage is limiting their output. In addition, 14% of the companies plan to retain their workforce in 2026 to mitigate future risks. Robbert Ausems emphasizes that it’s not just about people, but above all about craftsmanship: “Labor is one of the biggest problems in the construction industry, but the bigger challenge is finding qualified workers.”
Companies are looking for different ways to ease the pressure on projects. In this regard, digitization appears to be particularly effective when technology is used to address specific operational challenges.
A real-world example from VolkerWessels UK shows that digital transformation delivers the most value when technology is applied in a targeted manner to specific operational challenges. By focusing on a limited number of digital applications that directly contribute to process improvement, project performance, and greater adoption, digital transformation becomes more manageable and effective.
According to Anita Harris, CFO at VolkerWessels UK, it’s not about more technology, but about the right technology at the right time: “By focusing on a smaller number of high-impact solutions, we can boost adoption and achieve better results.”
In addition to digitization, companies are looking for alternative ways to keep projects feasible. As a result, renovation, repurposing, prefabricated construction, industrialization, and supply chain collaboration are gaining in importance.
According to Robbert Ausems, many organizations are demonstrating that they are adapting to changing circumstances: “European construction companies aren’t simply scaling back. They’re exploring other options, such as tiny houses, adding stories to existing buildings, or converting offices into residential units.”
Prefabrication and industrialization also offer opportunities. Robbert Ausems notes that large housing developers are increasingly using their own factories to produce prefabricated homes, and that as a result, construction companies are beginning to resemble manufacturing firms. VolkerWessels UK sees modern construction methods primarily as a way to make projects more predictable and manageable.
Anita Harris describes this as a shift toward more controlled and predictable project execution: “By incorporating more planning and coordination into the preconstruction phase, we can provide greater certainty to our teams and clients.”
In addition to operational challenges, access to financing remains essential for the completion of housing and infrastructure projects. David Keniry, a consultant specializing in private and public development in Europe and the U.S., highlights the importance of private financing and collaboration “Private financing is essential to addressing the current challenges in infrastructure and housing in Europe.” He emphasizes that models such as design, build, finance, maintain, or operate can help achieve both short-term results and long-term value.
The common thread across the sector is clear: organizations that combine digitization with standardization, innovation in the supply chain, modern construction methods, and greater flexibility are better able to keep projects predictable and feasible. As a result, feasibility is increasingly becoming a strategic success factor for the European construction and infrastructure sector.
