For smaller or mid-sized construction firms, AI automation offers a bright spot — and a warning
- Smaller and mid-market construction firms struggling to overcome shrinking margins, rising costs and labor shortages will likely need to either turn to AI automation to relieve the pressure or risk going out of business.
- AI and automation technology can help construction businesses operate more efficiently, maximize resources and even improve jobsite safety.
- However, AI efforts frequently fail if not done with a focus on solving specific problems, so work with an advisor to find bottlenecks in your business and ask whether AI could help relieve them.
Right now, the construction industry faces an array of challenges like plateaued growth, labor shortages and job safety concerns. But AI automation is a potential bright spot, especially for smaller or mid-sized firms that haven’t yet explored using the technology.
Developing a thoughtful AI strategy can help your construction business to work more safely, efficiently and quickly. However, firms that ignore AI or automation technology entirely will likely go out of business within the decade, outpaced by competitors that figure out how to make smart use of it.
Keep reading to learn more.
Mid-market construction businesses don’t have it easy
For many mid-market construction firms, do more with less might as well be a motto right now. Even as economic challenges like tariffs, rising costs and thin margins put growing pressure on firms, leaders still also confront perennial problems like labor shortages and job safety concerns.
Here are some details on key areas construction is looking to solve:
- Rising costs: Tariffs have made everything more difficult. Materials cost significantly more than they did a year ago, which has cut into profit margins and made some projects less viable.
- Smaller labor force: This is a long-term industry concern, but one that has been exacerbated by retirements, declining interest among young workers and aggressive federal immigration policies.
- Materials tracking: While some large firms have more sophisticated tracking capabilities, many mid-sized firms are struggling to keep track of materials and supplies moving between warehouses and different job sites.
- Outdated systems: On the business side, especially, team members are still often stuck working with outdated systems and cumbersome manual processes like spreadsheets, hampering efficiency.
- Job safety: Worksite safety is an ever-present albatross for the construction industry, but one that continues to demand attention, as unlike in virtually every other sector, construction workers face significant risk of physical harm on the job.
- Institutional inertia: Historically, the construction business has been cautious and slow to change. While this makes sense from a safety perspective, it can also hamper innovation in the very businesses that need it most.
How can AI and automation help construction businesses overcome challenges?
AI, especially when used as an automation tool, can help soften the headwinds that mid-market construction firms face. AI automation represents a way for businesses to embrace what’s next, do more with less and improve job site safety — all with fewer barriers to implementation than you might think.
Make the most of limited resources
To be blunt, the future of the construction industry will belong to those businesses willing to adapt to meet the changing times. Driven by relentless cost and labor pressures, the era of firms doing things largely the way they have for generations is ending, and those willing to embrace AI automation will come out ahead.
It’s essentially a matter of math. Businesses that figure out how to automate more lower-level tasks can free up their team members to do more valuable work and will be less vulnerable to labor shortages.
In a moment of thin margins, this can make a huge difference for your bottom line.
Faster, more accurate work
AI automation can help with both speed and accuracy in multiple areas of your business, including sales, job planning and general operations. For example, you can more quickly develop sales proposals and pull in data from past projects for more accurate cost estimates.
Automation can also help deliver real-time analytics to help you predict labor issues or cost overruns before they actually happen. These tools can also assist with more accurate materials tracking and keep you informed of job site progress.
Improve job site safety
AI tools can help construction firms improve safety at job sites. For example, when combined with job site CCTV cameras, AI tools can watch for potential safety issues or people in distress and notify workers on-site immediately, allowing for faster opportunities to address dangerous situations.
Pilot studies suggest that this approach can improve safety by as much as 30%.
Analytics tools can also help you make more accurate risk assessments for particular aspects of a job. And as automation technology improves, robots will also be able to take over more high-risk work from humans entirely.
Easier implementation than in past years
Enterprise-level AI and automation are easier to implement than in the past. Cleaning up your data isn’t as hard as it used to be, because more of that work can be done by your ERP or similar platform.
You can also begin using AI automation faster. You no longer need many months and a huge team to get started here, and solutions have also come down in cost.
How can smaller or mid-sized construction firms begin implementing AI effectively?
Time for a dose of cold water: 95% of firms that have experimented with generative AI pilots say those pilots have failed to deliver meaningful results. So how should small or mid-market construction firms start using AI in a way that actually moves the needle?
Here are four key steps to follow:
1. Focus on solving specific problems within your business
One of the biggest mistakes businesses make with AI is getting caught up in the hype rather than taking a more thoughtful, strategic approach. That leads to wasted money and disappointment.
Instead, focus on identifying specific problems within your business that are holding you back. Work with an advisor to do an AI readiness assessment to find your bottlenecks and only then ask whether AI tools could help solve them.
By keeping a laser focus on finding and solving your specific business problems, you’ll avoid investing in tools you don’t need or a haphazard approach that sets you up to fail.
2. Prioritize based on impact
Don’t try to implement AI or automation everywhere at once. You’ll risk overwhelming your team and doing more harm than good.
Prioritize implantation based on impact. Once you’ve identified problems that need solving, rank them in order of priority. Pick the one that will help you the most and focus on solving that problem before moving on to anything else.
Alternatively, you could also start with low-hanging fruit: simpler solutions to get your team comfortable with AI and automation technology.
3. Define clear metrics for success
How will you know if AI is actually helping your business? You need to establish clear KPIs and benchmarks to measure success.
For example, if you’re experimenting with AI to speed up your sales process, you should have a sense of how long the typical sales cycle takes now, so you can measure if or how much AI can cut that time down.
4. Promote a culture of innovation
Finally, companies that succeed with AI understand that technology still always depends on people. If your team doesn’t know how to use new tech or it isn’t being deployed in a way that actually helps them to do their jobs, that tech will likely fail.
Encourage your team to get involved in your AI efforts from the beginning. Frontline team members, not just the C-suite, should be involved in pointing out business problems that need solving.
The more your team culture celebrates innovation, asking questions and experimentation, the easier it will be for your business to adapt to meet the moment.
How Wipfli can help
We help construction firms to grow, manage costs and adapt to a changing industry. Let’s talk about your challenges and how tools like AI and automation could help you solve them. Start a conversation.
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