Building Smarter: AI and the construction industry

Artificial intelligence is the latest buzzword across various sectors – and the construction industry is no different. While one might have once imagined a robot taking the role of a construction worker, the advent of large language models and the push towards artificial general intelligence has meant that it is the office jobs in the construction industry that are being most significantly impacted by the introduction of AI.

We briefly look at the nascent opportunities being created - and the challenges posed - by the use of AI in the construction industry, and the consequential impacts on its insurers.

The design phase

Beyond image-creation AI tools such as Dall-E and Midjourney, a range of architectural-specific AI tools are now present in the market. Take for example XKool, a leading provider of AI applications in the building industry based out of Shenzhen, China, which was used to design and build the Shenzhen Bay International Hotel.

The use of AI in the design phase allows for significant cost savings. Clients are able to review a range of different designs and options to determine what works best for the space, with the ability to input different requirements to produce new iterations and changes, all in a matter of moments. Additionally, AI can suggest ways to make structures and designs more environmentally friendly, including by increasing energy efficiency and air quality.

While these impacts of AI on the architectural profession can achieve positive outcomes for clients, there are other risks and challenges posed by the use of AI in design.

“There's unexplainability, it is highly complex and we don't always know how the input is converted to output,” says Shajay Bhooshan, head of the computation and design research team at ZHA.

The ability for AI to create novel or untested designs may lead to unbuildable buildings, or buildings that are more prone to failure or defectiveness.


The efficiency of programming can be better maximised at the outset of a project, with AI being able to optimise a programme of works based on the data from previous projects.

The use of AI can allow contractors to optimise the use of their resources on site (or across multiple sites), increasing the efficiency of both labour and machinery. This allows for cost-savings by ensuring less time is spent where staff are twiddling their thumbs on site or where machinery is idly sitting still.

Additionally, by ensuring that works better remain on the critical path, there is a lesser chance of liquidated damages being levied for delay.

Contract negotiation

AI can be used when negotiating contracts, to automate risk analysis as against standard forms and alert users to more onerous obligations under a construction contract that requires manual consideration.

It can additionally review and analyse large volumes of construction documents to identify potential risks and key terms. This will save time and cost and help avoid the potential of human error when conducting such a review.

Additionally, in instances where simple contracts need to be put in place on a repeated basis (such as housing developments), AI could be used to generate generic contracts between parties to ensure that the agreement is documented. This would also prevent instances where no formal contract is signed, avoiding the stymying of one party’s ability to take legal action against another party when something goes wrong on site.

Contract management

AI will allow for greater efficiency and efficacy of contract management.

Instead of manually managing different construction contracts and the involved requirements and obligations under each, AI can be used to automatically monitor all contractual obligations and alert users to approaching deadlines. This will allow for more accurate and consistent contract management. This, in turn, will ensure compliance with all legal and regulatory requirements, thus reducing the risk of disputes. AI can also generate a detailed summary of all obligations and liabilities in a single document for easy reference on site.

Additionally, for employers or contractors with a large suite of different projects, AI will be able to assess and alert users to differences and anomalies between those contracts. In this way, users can focus on the key requirements for each site.

Health & Safety

Prior to commencement of works on-site, AI can be used to analyse the work area and past risks to better project possible risks. This allows for better risk management and the avoidance of dangerous and costly situations.

Additionally, during the course of the works, AI photo recognition capabilities can be used to detect potential hazards (such as the unauthorised use of hot works or failures to wear protective gear), to flag those hazards and ensure compliance with contractual and regulatory requirements.

Effect on Insurers

Insurers may face increased risk in instances where AI is used to generate architectural design in a way that utilises novel or untested design methods. Novel or innovative designs may be more prone to failure or defects. As such, there is an increased risk for insurers, who may be insuring unproven design methods and have to adjust their premiums accordingly to reflect this.

Additionally, the use of AI may make assessing the appropriate targets for subrogated recovery, in the case of an incident during the works, more difficult. For example:

  • If an insured’s building fails due to negligent or defective design, subrogated recovery against an architect may not be available if the developer forwent an architect in lieu of solely using AI.
  • If a timeframe for a particular notice – such as a variation or extension of time – is missed by AI responsible for contract management, insurers for other parties who were prejudiced by that failing may find it difficult to establish liability on the part of the party that utilised the AI for contract management purposes.

It isn’t all doom and gloom, however. The use of AI in the contract drafting stage will hopefully better prevent disputes between insurers regarding insurance arrangements, such as co-insurance. This could be achieved by ensuring contractual consistency in arrangements between all participants in the works and alerting those participants when they are required to obtain insurance (and who for).


In circumstances where a construction professional has used AI to supplement their work (rather than AI being used as a replacement), success of a claim against that party where the AI had failed would likely be dependent on whether the use of the AI system was reasonable and in line with relevant industry guidance. This is a point that is likely to be addressed by the courts as the use of these systems becomes more widespread.

Read other items in Construction Brief – March 2024

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