AI in Construction

16 July 2024. Published by Georgina Haynes, Senior Associate

There is a lot of discussion around Artificial Intelligence ("AI") and its application to industry. We have considered what AI is, the benefits and risks, how it fits into the construction industry, the effect on insurers and what the future holds.

Published by RPC with commentary from Arch Insurance

The construction industry already uses AI and it will continue to experience an integration of improved AI. AI has many benefits for construction firms such as improvements to efficiency, accuracy, cost-effectiveness, design, improving outcomes for construction projects and compliance with legal and regulatory requirements.

Further advances in AI have applications to many professions within the construction industry, however firms will have to overcome the initial high investment costs and additional legal and regulatory requirements. There are also other factors and risks to consider, such as data accuracy, algorithm accuracy, data protection, intellectual property and data security. Associated with this is the cost of compliance and further regulation in this emerging area.

Uses for architects.

For architects, the Royal Institute of British Architects ("RIBA") says that 41% of architects are currently using AI and that, within the next two years, 54% of architects expect their practice to incorporate AI.¹

Architects have already experienced how computer-aided design (CAD) and building information modelling (BIM) technologies have revolutionised the digitisation process and so, in theory, the integration of AI should be easier. AI will likely significantly improve efficiency in the design process and algorithms could assist with analysing and optimising building designs for factors such as energy efficiency, structural stability, and cost-effectiveness. It will, however, be necessary to ensure that algorithms remain accurate, as this is an area where a claim could arise.

The RIBA survey suggests that architects have ethical concerns with AI², and that they will need to balance the ethical issues, alongside the benefits of AI and navigating legal and regulatory compliance.

Uses for other construction professionals.

Quantity surveyors will also benefit from the automation of cost estimation, project scheduling and material quantity take-off. AI will also be able to review and analyse large amounts of data, identifying problems quickly and accurately.

With the use of drones, building surveyors will be able to conduct more efficient and accurate inspections to identify issues in buildings that may have been overlooked previously. On larger projects, analysis from sensors will be able to detect safety hazards and predict maintenance needs, assisting building surveyors in prioritising high-risk areas.

As for structural engineers, they will see similar benefits to surveyors and architects relating to improving design, including enhanced error detection, and improvements in the creative processes, as well as helping with predictive maintenance.

Costs and risks with adopting AI solutions

Whilst AI has its benefits, it is likely to be at substantial initial cost to construction firms. This would be associated with development costs, data-related costs (such as acquiring, cleaning and managing data), setting up and maintaining the AI systems themselves and ongoing software tools. We assume, if the appetite is there, that larger constructions firms will be able to make the initial, albeit costly, investment in AI, to then benefit from the improved efficiency and costs savings in the long term.

As well as the high initial costs associated with adopting AI, there are also legal and regulatory considerations. A key takeaway from the UK Government white paper "A pro-innovation approach to AI regulation”, published on 29 March 2023, is the focus on accountability for AI systems. Placing the onus on construction firms, it will be imperative to ensure all staff have appropriate training on its use to maximise its potential, while ensuring compliance with legal and regulatory requirements.

Insurers will be able to benefit from the data gathered by construction firms when completing their risk assessments, allowing them to provide more accurate, tailored and competitive offerings. However, in the future, insurers may see claims relating to AI such as breaches of legal and regulatory compliance, plagiarism and data protection matters.

RIBA suggests that 1 in 3 businesses are currently developing the use of AI within their service, with 19% being noted as ‘early adopters of digital innovation’. With such high levels of early implementation, the possibility of a claim is likely to increase as historical data suggests that the more a service or system is used, the higher the frequency of claims arising out of that use. It is anticipated that data inputting errors are likely to be where a large proportion of claims will arise, but time will tell.

Therefore, when underwriting, insurers will look for prospective insureds to evidence that:

relevant and strict controls are in place within the organisation;
individuals using the programme or system are adequately trained;
the inputting of data is accurate to reduce the risk of an incorrect outcome being produced;
quality assurance processes or auditing of the AI results are in place to ensure there are no systematic issues.

These are standard requirements for when any form of system is used, so there are currently no significant changes to the information gathering process at renewal. The questions’ remit will simply just extend to include AI.

Whilst the natural route of a claim would likely fall under a professional indemnity policy in so far as a business has been ‘professionally negligent’ when using the AI programme or system, other issues such as copyright infringements and data breaches could arise, impacting additional insurance policies. There is even the possibility that the AI system itself could be the victim of a cyber security attack.

So, whilst AI offers great opportunities for many businesses, insurance companies included, careful consideration should be made to how and where it is implemented to mitigate any potential risks.

With thanks to Amy Corke (Claims Handler at Arch Insurance) for her contribution.