The State of AI-Based Construction Finance
How to be a better data-driven contractor.
How can you get in front of things that erode your fee and your profit? How can you better understand the labor hours needed to execute the projects you have in backlog? How can make sure your cost at completion projections are truly accurate? Most of these questions today are answered with judgement calls, intuition, and gut. How will technology like AI, Machine Learning, and Automation helps us make complex decisions more accurately at scale?
LET’S TALK FORECASTING
Humans are bad at predicting things. Even when we think something is going well, it can easily be derailed by an unforeseen incident. Sometimes we have stereotypes or biases, and we make decisions on those biases.
In construction, these biases can result in painful learnings. Even similar projects with the same owner in the same city can swing wildly in profitability. When every project is different in construction it’s paramount that teams have a “lessons learned” system to anticipate and course correct when something seems off-track on the next project. The problem with this is that even top performers are subject to bias and sometimes blind to leading trends. As a result, the average margin of error in construction, according to the consulting firm McKinsey, hovers somewhere around 80% when forecasting cashflow, cost at completion, or time to completion using human intuition or gut. As a wise man once said, "Projects never finish late or go over budget, we’re just bad at predicting how much they should cost and how long they should take!"
HOW DO YOU GET TO 5-6%?
Luckily, there’s a solution to this challenge: data. Using the Briq Decision Cloud, we can create more accurate forecasts and augment human judgement with the ability to analyze 10x more data points than a human can, as well as by detecting anomalies at a scale no human can. When we supplement human judgement with the Briq platform, we find our forecasts are 80% more accurate than the human forecast.
YOU NEED WORKFLOWS
Technology alone doesn’t transform organizations. Process change transforms organizations, and it is the technology that makes that transformation possible and scalable. One of the most efficient ways to help expedite process change is through Briq Automate. When applied, Briq Automate allows for the automation of tedious workflows such as payroll processing, expense report processing, and more. In this effort, automation creates more data more quickly, and ensures its accuracy.
At the end of the day, a prediction is only valuable if it leads to a change in behavior. Artificial Intelligence will indeed change the way general contractors make decisions about their projects, their market, and their people. The primary AI technologies– predictions, machine learning, analytics, and automation– will allow construction professionals to predict costs at completion, predict labor hours on jobs, predict cashflows through the business, more efficiently utilize and budget labor, and even understand which projects they should be bidding on. The outcome of AI is better decisions and higher profitability. Period.