SANTA ANA — Healthcare, education, technology and multifamily housing are driving some of the region’s largest construction projects this year, even as contractors deal with rising costs, financing hurdles, labor shortages and uncertainty over tariffs and material prices.

This year, the Business Journal is introducing a new list that ranks the largest construction projects, valued at $15 million or more, in Orange County. Ten made the inaugural list, with a total combined value of $1.4 billion in construction contracts that cover more than 4 million square feet of development.

At the top of the list is McCarthy Building Companies Inc., whose $583 million Hoag Memorial Hospital Presbyterian contract covered some of the expansion work at the hospital’s Irvine campus.

The second and third largest projects were W.E. O’Neil Construction’s work on The James senior living community in Irvine at $223.9 million and Clark Construction’s revitalization of the Garden Grove Civic Center at $152 million.

Together, these three projects total nearly $1 billion, about two-thirds of the Top 10’s total contract value.

Navigating Costs

Rising costs remain one of the industry’s biggest challenges.

Jamie Macartney, project executive at C.W. Driver Companies, said several construction indexes have risen about 42% to 60% since 2019, depending on the material, building system, and market sector.

“As a result, we are seeing fewer projects move into construction, with more being delayed, re-scoped, or canceled altogether,” Macartney told the Business Journal.

Domenic Koyama, senior pre-construction director for McCarthy, said the company is keeping an eye on fabricated metals, electrical, and mechanical equipment for impacts from tariffs, supply chain issues and longer lead times.

“The biggest challenge is often uncertainty—knowing what a material will cost, when it will be available, and if another source can meet the project’s quality and performance needs,” Koyama said.

Contract values can also change after construction starts if the scope expands or unexpected issues come up.

Hoag’s contract increased after more work was added, such as a medium-pressure gas line, an underground tunnel connector, and tenant improvements, according to McCarthy.

UC Riverside also asked for several upgrades during construction, including a water feature and better stair lighting, said Koyama.

On another project, Costa Mesa-based Innovative Construction Solutions found much more impacted soil than expected, which doubled the amount of disposal and imported fill needed, according to Project Manager Jayson Short.

Scheduling is another challenge.

Rick Dalton, president of RM Dalton, said rain and wind made construction more difficult as crews tried to meet Anduril Industries’ move-in schedule at the 313,000-square-foot South Coast Technology Center in in Santa Ana, developed by C. J. Segerstrom & Sons.

Despite the weather, Dalton said his team finished all three buildings a few days ahead of schedule.

“We’re always happy to be able to bring projects in on time,” Dalton said. “It was really important that we do this on these projects, and everybody worked together to make that happen.”

Selective Market

Even with billions of dollars in projects underway, contractors say the market is becoming more selective and competitive.

“Commercial construction is relatively slow,” C.W. Driver President Karl Kreutziger said, pointing to weakness in multifamily and office construction while education projects backed by public funding remain active.

Kreutziger said higher construction costs and trouble getting financing are leading more owners to choose redevelopments and modernizations instead of building from the ground up.

McCarthy sees some growth in healthcare, higher education, public infrastructure, and other institutional sectors.

“Owners are taking a more deliberate approach to timing, funding, scope and risk, particularly on privately financed projects,” Koyama said.

Many contractors on the list said that projects moving forward now need early cost planning, tighter schedules and the ability to adapt as things change.

Research Director Desmond Celo contributed to this report.