The current contracting environment in the construction and services sectors in Italy is heavily impacted by poor economic conditions, making new methods and innovations in procurement and supply chain management attractive. Prior to the implementation of any new restructuring methods or innovations, a proper understanding of the overall state of the Italian economy, including legal implications, current contracting trends, and goals is requisite. Government reports, published statistics, and a recent industry survey are examined and compared. The main challenges in the Italian construction market are identified as: a primarily price-based selection criterion, difficulty for vendors to differentiate themselves, administrative challenges, and decreasing investment. A survey is developed and distributed to Italian construction professionals in order to gain insight into these current industry challenges. Targeted areas and strategies for potential improvement such as financing, procurement, selection, pre-planning, management, and supply chain innovations are suggested. Proposed solutions to the challenges identified are analysed and a future direction for potential Italian construction industry innovations is formed.