How AI is driving innovation in construction finance

You’d have to live under a rock and wear pretty good noise-canceling headphones to avoid the current buzz around AI, especially about generative AI models like those used in ChatGPT or Dall-E.

AI has become the hot topic in the news across almost all industries from art and entertainment to software development, to marketing, healthcare, cybersecurity, and finance. The list goes on and on.

But, if you’re in construction finance, you just might be asking how real the impact of AI can be.. Will AI bring true innovation to construction finance? Can AI really improve how my finance team operates?

The short answer is yes. Let’s look at a slightly longer one, though, shall we?

First, construction finance teams are — by and large — not exactly large. They do, however, deal with a tremendously large amount of data. A single construction company will have numerous projects on the go, with a seemingly endless array of change orders or other variables such as labor, equipment, or design bringing constant changes.

The result is a small team having to juggle a huge volume of data, often across several systems. Traditionally, this is done manually, which slows down the team and everyone relying on the information to make critical decisions.

AI changes all that, and here’s how:

Automating repetitive tasks

Instead of tying up professionals with routine, repetitive tasks like data entry (and re-entry, and, sometimes, re-entry…), AI can automate those tasks with bots. These bots perform processes your team would otherwise have to, freeing them up for higher-value activities.

Now, your team members can focus on strategy, working smarter and not harder, and helping the company grow and be more profitable. Automation leads to greater productivity, but also improves job satisfaction. After all, few people want to spend long days of inputting numbers over and over. (Note: it’s worth noting that repetition is a major cause for human error.)

Detecting anomalies automatically

AI is a master at recognizing patterns. Already, advanced AI algorithms can use that ability to automate anomaly detection for construction projects, detecting irregularities in financial data and alerting the team to them. This way, errors are uncovered quickly and corrected with alacrity.

Also, potential issues and pitfalls can be noticed early, allowing the company to respond quickly to critical situations before they become real problems. Combined with its ability to root out errors, this ability for AI to detect risks reduces re-work, improves accuracy, and leads to better financial outcomes.

Creating critical reports quickly

All that manual data management, and traditional manual financial workflows, cause delays and makes reporting a slow tedious process.

Automating financial workflows naturally allows critical financial reports to be generated quickly — in real time if need be. Real-time reporting for construction finance leaders gives true insights into the business’s current financial health, not simply an idea of how the business is doing based on six-week-old numbers.

Armed with that, decision makers can respond rapidly to what’s really going on, gaining a competitive edge.

Improving quality and saving money

You know the adage, “A stitch in time saves nine?” Undiscovered human errors in data entry have a tendency of unraveling things — with costly repercussions.

In 1992, authors George Labovitz and Yu Sang Chang developed a simple way to describe the hidden cost of having poor data: the 1-10-100 rule. It looks at the cost of data quality during three stages: prevention, remediation, and failure. While it may hypothetically cost $1 per record to verify data quality, it costs $10 per record to correct it — or, as the adage goes, 10 stitches — culminating with a $100 per record per year cost of inactivity. 

AI can prevent human error in two ways. First, by automating data entry, and then by detecting anomalies. AI ensures quality data, ultimately saving money and keeping budgets from coming undone.

Maximizing human potential

It might seem counter-intuitive, but AI makes people better. Your teams are your most valuable resource, and AI enhances their ability to do great work.

After all, AI can provide numbers, automate processes, catch errors, and speed up reporting, but, at the end of the day, it’s all about what people do with that cleaner, timelier and more accurate information. The great news is that by taking on the repetitive “grunt work,” AI frees people up to bring creativity and critical thinking to the table.

Put simply: AI helps identify problems; people solve them.

AI isn’t going to completely innovate construction finance overnight. It’s still an evolving technology but it can already achieve all the things we’ve discussed and more. Also, AI models must learn the ins and outs of the specific business to achieve even more, and that takes time.

Many of the manual processes that AI can help with have been in place for decades and are still common across the industry. But AI will transform the industry. Today’s finance leaders need to take a long, hard look at their existing processes, and just how AI solutions might help streamline reporting, forecasting, and other essential, but currently time-consuming, money workflows.

Want to learn more about the transformative potential of AI for your construction finance team? Talk to the Briq team at briq.com/demo