In the world of construction, where hammers meet spreadsheets, a new tool is emerging from the digital realm: artificial intelligence (AI). As builders grapple with razor-thin margins and complex cash flows, AI offers to reshape the industry's financial landscape, one algorithm at a time.
This week, Adaptive, a FinTech startup aiming to modernize construction finance, secured $19 million in Series A funding. The company's AI-powered platform tackles the unique challenges of managing money in an industry notorious for its boom-and-bust cycles and labyrinthine payment structures. It's part of a growing shift toward using AI in the construction industry.
"AI can analyze vast amounts of data from past projects to help predict potential roadblocks, optimize resource allocation, and identify design differences or compliance issues in plans," Vlad Hernandez, director of innovation at McCarthy Holdings, told PYMNTS. "Potential benefits may include fewer delays, reduced costs and a better overall building experience for construction companies, trade partners and owners."
Adaptive's system includes financial management tools such as budgeting, cash flow analytics, expense tracking, accounts payable and receivable, vendor management and electronic payments.
"The payment delays and cash flow problems we see in construction largely arise from outdated, manual back-office processes," Matt Calvano, co-founder and CEO of Adaptive, said in a news release. "Our platform leverages AI and automation to cut through this back office fog, delivering real-time clarity into financials and significantly accelerating payments."
Observers say AI is poised to enhance profitability and competitiveness by streamlining processes, reducing errors and optimizing resource allocation. Small- and medium-sized contractors with AI tools may be better equipped to compete for larger projects, potentially disrupting established market dynamics. Furthermore, integrating AI in construction finance could lead to more transparent and efficient payment systems, addressing long-standing issues of delayed payments and cash flow management that have plagued the industry for decades.
This data-driven approach is transforming project planning and design.
"Contractors can also create faster fundamental models and designs without too much effort to coordinate with other stakeholders," Eshan Jayamanne, CEO of Krane, an AI technology company for the construction industry, told PYMNTS. This leads to "increased efficiency, cost savings, improved accuracy and better data for better collaboration."
The potential of AI in generative design is significant.
"AI can automate and speed up the drafting process by using AI generative design processes, which leverage artificial intelligence to automatically generate a wide range of design solutions based on predefined constraints and objectives,"Denys Schwartz, a civil engineer, told PYMNTS.
In addition, Dustin Stephens, vice president of construction and real estate at Sage, said: "AI algorithms can analyze BIM data to automate design processes, generate optimized construction plans and identify potential design conflicts early."
Regarding scheduling and resource allocation, AI is proving to be a game changer. According to Hernandez, it acts as an "enhanced" project manager, "supporting smarter scheduling, improved budget management, and resource efficiency."
"AI can analyze historical and current data to help with project flow, predict durations and identify possible bottlenecks," he elaborated. "This may help create more realistic timelines that include real-world factors and potentially reduce delays to keep the project on track."
The clarity AI provides allows teams to "optimize resources to fit the goals of the project and stakeholders," as Jayamanne pointed out. "With AI, there is a single true source of truth; bringing data from multiple stakeholders and automating how it relates to the schedule are key."
AI-driven software has enhanced proactive construction planning and control. These systems "allow project teams to monitor progress continuously, identify potential delays early in the process and adjust schedules and resources proactively," Schwartz said.
AI can analyze information such as labor, equipment and materials for resource efficiency to ensure availability and identify potential issues. This helps avoid idle time, optimize resource utilization and lower project costs.
The impact of technology is particularly notable in the pre-construction phase.
"Predictive analytics are helping transform the pre-construction phase through the analysis of data and modeling of potential outcomes," Hernandez explained. "That way, we address issues or challenges before they become actual problems."
As construction firms grapple with the complexities of modern projects, AI's ability to provide data-driven insights is proving helpful.
"Superintendents can focus on solving the project's day-to-day issues and let AI systems show clear patterns in data for better decision-making," Jayamanne noted.
Experts say the potential for AI to enhance decision-making is immense.
"We can leverage AI to make informed decisions more quickly instead of relying on instinct or 'emotion,'" Hernandez said. "AI can analyze various project scenarios to help predict and identify impacts on budgets, schedules, resources, and risk. We can then review that information and our practical experience to help identify the most optimized action with the data to back it up."
