How AI can be used in construction bidding, negotiation

Take heed to the article
5 min

This audio is auto-generated. Please tell us in case you have feedback.

Brian Kassalen is a principal and the development trade chief with Baker Tilly, a Chicago-based advisory, tax and assurance agency. Opinions are the writer’s personal. 

As inflation, labor and tariffs proceed to strain the development trade, contractors are in search of alternatives to guard revenue margins. Synthetic intelligence presents builders new methods to stay aggressive and worthwhile earlier than initiatives even begin.

Undertaking estimates and AI

Building is an trade the place many of the work is awarded to low-bid contracts, so any instrument that helps a contractor’s success on mission estimation by means of mission completion is extraordinarily helpful. That’s the place AI is available in.

AI can considerably enhance the accuracy of bid improvement by utilizing algorithms to estimate potential prices based mostly on knowledge gathered from a variety of sources — previous bids, provide chain databases, market knowledge and publicly out there contract information. 

When prompted accurately, AI reduces the danger of human error and accelerates the estimation course of, and analyzes key pricing and mission variables in seconds as a substitute of days. 

The suitable knowledge

Whereas AI’s function in development is comparatively new to development contract creation, a phrase relationship again to the early days of computing stays true: “rubbish in, rubbish out.”

It’s essential for contractors to know that the standard of the information that AI makes use of determines the usefulness of its output. If the information is flawed, inaccurate or biased, AI’s output can even be flawed or incomplete.  

For instance, if a contractor is growing a aggressive bid for a development mission, they usually think about the price of uncooked supplies, subcontractors, labor and tools and will spend days — even weeks — reviewing paperwork and manually compiling data. These sources of information may very well be from inside the firm itself or exterior. 

AI may use design knowledge immediately from constructing data modeling platforms. As a substitute of counting on static spreadsheets or handbook amount takeoffs, AI methods can learn BIM fashions to establish particular supplies, portions and development components, then apply clever cost-mapping to every unit. This integration lets estimators modify pricing in actual time as design modifications happen, supporting extra versatile and responsive budgeting. 

AI does not change BIM — it really works alongside it, turning uncooked mannequin knowledge into actionable, cost-specific insights through the design and preconstruction phases.

That stage of precision turns into particularly essential as soon as a contractor’s bid is accepted and pricing is locked in, except change orders are authorised. If an estimate is off, it may well shrink revenue margins or flip the mission right into a monetary loss. 

By utilizing predictive analytics, AI can flag and quantify potential dangers early, together with market volatility, labor shortages or scope gaps. These insights will be constructed into unit value estimates to create extra resilient bids and assist keep away from pricey surprises down the road.

Negotiation

AI can be utilized in negotiation, particularly for addressing potential points proactively, permitting justification for specific mark-ups in a contract. As well as, if unexpected modifications trigger delays or further prices after the contract is signed, AI could also be useful find frequent floor between two negotiating events.

For instance, as a substitute of submitting incomplete or delayed change orders, contractors can use AI to provide quicker, data-driven justifications for each scope and value changes. This could result in extra well timed approvals from mission house owners and scale back disputes throughout last value reconciliation. 

With higher knowledge upfront, contractors are much less more likely to face disagreements later over what the change was price. 

Safety

Contractors additionally have to be cognizant of privateness and safety when utilizing AI to develop bids. A closed, proprietary AI system will help stop exterior disclosure of estimates, bids and delicate data.  

Then again, if contractors use open-source AI to develop bids, they danger exposing this data to the competitors, dropping person belief and probably violating knowledge safety laws. 

At a minimal, contractors want to judge their {hardware}, software program, licenses and safety controls to make sure a protected setting for AI deployment and use. 

The place to start

With the trade altering so shortly, many contractors are at a loss the place to start out their AI integration journey. Some corporations are “all-in,” whereas others are in a “wait-and-see” strategy. 

For these contractors on the fence, step one is to acknowledge the necessity for change and start to have exploratory conversations about how AI will be built-in into the bidding course of and different facets of development. A 3rd occasion that’s skilled in AI integration will help a contractor develop an AI technique to assist with the bidding and negotiation course of. 

As with all AI, human oversight will stay obligatory within the bidding and negotiation course of. The know-how might save 1000’s of handbook work hours and enhance accuracy, permitting the workforce to make use of their time on extra strategic duties.

Contractors additionally want to acknowledge that AI integration into development bidding is greater than a one-time occasion. By its very nature, the usage of AI by contractors remains to be evolving.