Client Alerts
June 16, 2023

Artificial Intelligence: Accounting for AI in Construction Documents

Stites & Harbison Client Alert, June 16, 2023

In 1984, by and through a young-muscle-bound-pre-California-Governor, James Cameron dreamed up the first "Terminator" movie. This was well before the advent of autonomous drones or advanced machine learning. However, fast forward almost 40 years, and artificial intelligence (“AI”) is no longer science fiction. It is increasingly becoming a way of life – including mainstream use in the construction industry.

So what is AI? AI is a term for describing when a machine mimics human cognitive functions, like problem-solving, pattern recognition, and learning. Various AI programs are being utilized in a number of industries across the globe in hopes of achieving efficiencies in both cost and time. AI software like ChatGPT, Bedrock, Bard, etc. have become increasingly mainstream in a number of industries and it appears that its use will only continue to gain steam. In fact, according to Vantage Market Research, the global market value for AI in construction is expected to rise from $594.6 million in 2022 to $4.9 billion in 2030 — a 35.2% compound annual growth rate from 2023 to 2030.

Construction firms, as well as law firms, are trying to determine AI’s best use to benefit construction projects including reducing cost, increasing safety, improving decision-making, and saving time. Given the inevitable increase of use of AI at all phases of construction, all parties who may have their hand in a construction project should consider the importance of risk and contract management related to its use. It will be important to discuss, define, and implement AI’s role in the construction methodology, delivery models, and pricing models of each project. Additionally, how will AI take part in workforce, project and contract management, and administration? Currently, AI programs are being utilized to manage employee absences, task reassignment, and work scheduling. AI is also being utilized in more important roles – essentially replacing the initial decision-maker role or other third-party neutral roles, at project level disputes. This logically leads to the next question. What are the limits of AI’s role in a construction project? This would likely be subject to an “I’ll be back” article as the technology continues to evolve and additional uses are discovered.

While it is uncertain how wide-ranging AI’s impact will be on project sites across the world, it is absolutely certain that AI is going to be a major part of the construction industry moving forward. Like with any other leap in technology, attorneys and construction firms must attempt to account for and manage the related risks at the time of contract. Understandably, the post-apocalyptic AI driven world previewed in “Terminator” may not invoke the warm and fuzzies, but AI is here to stay and all parties must take a proactive role in responsibly implementing its use and managing its risk – as well as determining how its benefits may be allocated. Certainly, with its rapid growth, there will be some growing pains but accounting for the use of AI on your project on the front end will more than likely serve as a worthwhile investment. For now, hasta la vista, baby.

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