The construction industry is no stranger to financial and operational challenges, many of which are increasingly well-suited to modern technology solutions. Time-consuming but critical processes such as profitability analysis and job cost estimates, progress of the project, labor and material cost considerations, and cash flow management have all been magnified in recent years by regulatory and compliance concerns. In response, business leaders are turning with a great deal of curiosity toward artificial intelligence (AI).
While the pace of adoption is not always matched by an ability to address problems, the integration of AI-driven tools into the finance and operations functions of construction firms already demonstrates opportunities to deliver lasting benefits for business owners.
This article examines some strategic applications of AI in the construction industry and some key components of an AI-ready construction business. This likely won’t be the final word on AI’s impact, but Windham Brannon’s Construction Practice continues to monitor the industry’s operating environment in search of real-time opportunities to address operational challenges and enhance business performance.
Financial Benefits
Risk Assessment and Bidding Strategy
Risk assessment, that is, the ability to facilitate data-driven decisions based on perceived risk of a potential project, has always been a valued part of determining whether a specific project aligns with the entity’s strategic goals. AI can improve decision-making around new pursuits by reviewing a firm’s bidding history and identifying promising opportunities based on past win rates and profitability. There is no reason companies should waste time bidding on work which, in the past, has not been successful or profitable. Fortunately, they don’t have to.
Cash Flow Process Improvements
AI can also assist with billing and accounts receivable workflows by predicting payment behaviors among clients based on past invoices, analyzing risks and assisting with cash flow forecasting. Because businesses deal with complex billing and delayed payments, AI can synthesize valuable cash flow data while handling routine tasks such as generating invoices, matching payments to open client bills and sending payment reminders.
Financial Visibility
Profitability is impacted by many factors including project efficiencies, material and labor (including subcontractor) costs, shifting project demands and market conditions. An AI-powered dashboard assists with high-level job cost tracking, budget evaluations and scenario planning. While experienced construction leaders understand the impacts of these factors, getting numbers and forecasts quickly will save a team time, and help determine which projects require the greatest investment of time.
Operational Benefits
AI-Powered Project Management Communications
AI tools can use natural language processing to integrate relevant project-related communications such as logs, safety reports, and meeting notes and summaries to pinpoint next-step action items. Project managers don’t need to drown in administration but can focus on strategic, collaborative client team activities and client-specific KPIs.
Labor and Cost Tracking
Time tracking can be automated with AI-powered tools such as geofencing and mobile check-ins, and integrated with scheduling tools to configure actual productivity levels against planned-for investments of labor. AI can also use historical data to forecast how long tasks should take, monitor overtime and tie labor data to cost reports. Overtime alerts and cost overruns in specific project phases provide additional value.
Process Automation
AI automates several important administrative processes such as:
- RFIs and change order classifications
- document reviews to ensure OSHA compliance
- environmental waste, emissions and water usage logs
- subcontractor bid evaluations
- equipment utilization and maintenance monitoring
In addition, AI can scan site photos and wearable cameras to identify safety violations and near-miss incidents. As mentioned above, the availability of an AI-powered dashboard can also synthesize significant amounts of project-related data to automate reporting.
Building an AI-Ready Construction Firm
Building an AI-ready construction firm means taking a broad view of all the financial and operational tasks that can benefit from digital-driven efficiencies. Identifying the right AI tools to automate time-draining processes, remove human errors, generate cash flow and profitability insights, and complete tasks to elevate project team attention to higher-level decision-making is the stuff of long-term enterprise-level goals.
Finally, AI can help construction firms that have multiple entities, and which require the complex integration of financial statements and operating workflows. AI can consolidate and create financial visibility from data tied to numerous sources, apply rules for shared expenses and ensure invoices and purchase orders are routed to the correct entities.
Looking Forward with AI
As more AI-driven capabilities become available to the construction industry, business owners should stay current with emerging tools such as AI agents and assistants to improve task completion and decision-making. While it takes time to identify AI’s best-fit options within a company, long-term efficiencies can be worth it.
Consider AI as more than a valued tool but an integral piece of success for a construction firm. AI can already help with numerous financial and operational tasks, and it is likely more advanced capabilities will be available in the future. For now, businesses should start where they can and continue to identify future investments to watch their business grow. Contact Bobby Vercoe, the Windham Brannon Construction Practice leader with any questions.
