The architecture, engineering, and construction (AEC) industry is ripe for disruption by artificial intelligence. As AI capabilities rapidly advance, construction companies have an immense opportunity to harness this technology to work smarter, reduce risk, boost productivity, and give them a competitive edge. According to McKinsey research, “Gen AI could generate $110 billion to $180 billion or more in value for the real estate industry.” This is huge earning potential that many in the industry seem too skeptical to approach.

Five Ways AI Can Transform Construction

1.    AI Takeoff Tools Boost Estimating Productivity

One of the most significant applications of AI is using it to automate tedious and time-consuming tasks that currently require manual work. Take automated takeoffs for example. Performing accurate quantity takeoffs is crucial for estimating costs and bidding competitively on projects. But traditional takeoff methods of manually reviewing 2D drawings or counting items in 3D BIM models is painfully slow. AI-powered takeoff tools can analyze digital designs and documents, instantly extract material quantities and dimensions, and generate detailed cost estimates.

There is significant momentum behind AI adoption to automate and improve productivity in critical tasks like cost estimating and bid preparation. The AI construction market is expected to grow rapidly from $3.21 billion in 2023 to $9.53 billion by 20281. Companies implementing new types of takeoff automation have seen takeoff times reduced from days to hours, depending on the scale, by implementing AI takeoff solutions. The associated cost savings and improvement in bid accuracy provides major competitive advantages over firms still doing manual takeoff. Adoption of these AI capabilities across the industry could dramatically improve productivity and unlock capacity for more strategic work.

“According to McKinsey research, ‘Gen AI could generate $110 billion to $180 billion or more in value for the real estate industry.’ This is huge earning potential that many in the industry seem too skeptical to approach.”

2.    AI-Enabled Contract Risk Assessment

AI can also be a game-changer for how firms approach contract review and project planning. Reading and analyzing contract documents to assess risk exposure traditionally requires specialized legal expertise. But natural language processing capabilities allow AI systems to rapidly scan contracts, extract key terms and conditions, flag potential risks, and highlight areas that need review. This allows construction firms to be better informed on contractual risks and obligations before signing and embarking on project execution.

In 2022, over 35% of the AI construction market constituted solutions for risk assessment and contract analysis, indicating AI’s elevated importance for project management2.

3.    Data-Driven Project Planning with AI

Additionally, generative AI models can ingest vast quantities of project documents, schedules, and data from past builds to optimize the project planning process. The AI can simulate millions of schedule permutations, identifying the optimal project timeline accounting for risk factors, task dependencies, and resource constraints. This data-driven project planning enabled by AI provides a level of speed and insight impossible through manual approaches.

According to an article published in ENR, “AI has transformed performance reporting for capital owners by providing a holistic view of activity and valuable insights that may not be immediately apparent.

North America accounted for 30% of global AI construction revenue in 2022, emphasizing regional demand for AI-enabled planning and management4.

4.    Proactive Hazard Identification through AI Analysis

Reducing health and safety risk is another major need within construction that AI is well-suited to address. Hazards like falls, electrical accidents, and struck-by/caught-in incidents frequently arise from environmental conditions and unsafe work practices. AI tools can analyze photos, videos, sensor data, and layouts of construction sites to automatically detect risks and immediately notify supervisors before incidents occur.

Rigorous safety standards in North America are influencing AI adoption to proactively identify hazards and enhance preventative measures5. Computer vision algorithms can identify workers not wearing proper PPE or situations that could lead to falls or equipment damage. Generative AI can also create highly personalized safety training programs by assessing each worker’s skills and the site hazards they will encounter. This application of AI has incredible potential to cut incident rates and promote a culture of safety.

5.    Enhanced Incident Investigation

After incidents do unfortunately occur, AI empowers construction firms to understand root causes and prevent recurrences more effectively. Traditional incident analysis relies on safety manager insights and eyewitness accounts. But AI systems can compile data from numerous sources, including equipment sensor logs, weather conditions, site layout changes, schedules, and more, to identify correlations and causational factors for incidents. This capability enables targeted mitigations to address systemic risks.

The data-crunching power of AI will provide construction companies with many opportunities to gain intelligence from their own project records. For instance, natural language processing of historical incident reports can reveal common precursors and risk factors for certain incident types. Identifying these leading indicators allows proactive interventions. AI analysis of equipment sensor data and maintenance logs can predict failures before they happen, minimizing downtime. The options are vast once quality data is coupled with AI.

“The rapid advances in AI research and applications certainly warrant major investment and focus industry-wide.”

Key Enablers for Unlocking AI’s Full Value

To fully benefit from AI, companies will need to focus on key implementation enablers. Developing robust training datasets, upgrading digital capabilities, mitigating algorithmic bias risks, and building staff expertise in managing AI systems will be critical in unlocking the full benefits. A strategic roadmap for AI adoption coupled with change management will ease the transition. However, the potential for improved productivity, risk reduction, and increased competitiveness makes this technology difficult for any firm to ignore. The rapid advances in AI research and applications certainly warrant major investment and focus industry-wide.

With the market expected to grow from $2.57 billion in 2022 to $15.16 billion by 2032, the integration of IoT sensors is strengthening the competitive advantage of AI adoption6.

Competitive Advantage Through AI Adoption

Construction companies that embrace AI early have an opportunity to lead the next wave of innovation in the industry. Contractors, subcontractors, engineers, safety managers, and all project stakeholders stand to gain from these rapidly developing AI capabilities. As more real-world examples demonstrate the technology’s value proposition, adoption will accelerate7. Forward-thinking firms should actively plan how they will strategically incorporate AI to prepare themselves for the approaching disruption. The firm that leverages AI to work smarter will have a clear competitive edge in the future.