Properties Magazine - September 2024

Artificial Intelligence (“AI”) has roared into the discourse of the new economy. While the construction industry has lagged behind in its implementation, there is no doubt that AI has become an inescapable reality. Opportunity for improvements in efficiency make the construction industry primed for a boom in the expansion of construction-related AI applications. The Stanford Institute for Human-Centered Artificial Intelligence reports, in its seventh edition of the AI Index Report, that several studies suggest AI enables labor to operate faster and with improved outcomes.[1] Inevitably, as AI expands into new industries and erupts in existing uses, the need to assess risk and prepare for the challenges that accompany AI cannot be ignored. Contractors, design professionals, owners and construction practitioners are wise to take stock of where AI applications have materialized in the industry and how to stay ahead of the curve.

Applications of Artificial Intelligence in Construction

Estimation and Scheduling: Estimating project costs and optimizing schedules are key components of measuring a project’s success, especially in the early stages of a project. AI modeling assists in computing millions of data points to enhance existing Building Information Modeling data. Assessing criteria of a project, while accounting for external factors, additional materials, resources and waste, enables managers to more accurately predict overruns and improve the utilization of existing resources.

Risk Mitigation: Site safety is and will continue to be a priority for construction managers. AI applications have the ability to turn a job site into a smart site. Construction site analytics are collected through sensors, cameras, and other digital technology capable of generating reports on predictive and proactive safety management. For example, an existing application of AI software evaluates whether the use of personal protective equipment is properly implemented by processing images and videos of a site.

Robotics: Think 3D printing, drone mapping, and highly specialized equipment that mimics physical human actions. Machine learning in automated equipment proposes to fill a gap in the shortage of skilled labor. The construction industry is witnessing developments in machines that are capable of bricklaying, welding, performing sitework, grading, excavation, demolition and paving.

Legal Landscape and Emerging Trends

As new as AI is to the market, even more novel are the legal challenges related directly and indirectly to AI. Given the lack of a definite regulatory framework, construction professionals may look to comparisons in other industries where AI litigation grapples with unresolved questions of liability. As of yet, there is no known litigation related to the use or misuse of AI utilized in a construction project. The only known real estate specific AI litigation involves unfair competition challenges against a real estate software and data analytics company that is accused of artificially inflating the prices of residential real estate rents, creating a data-driven rental property cartel.

Litigation involving AI has been heavily characterized by privacy, copyright, and trademark claims, although there is sure to be an increase of legal theories involving the use or misuse of AI in tort, breach of contract, defective design, product liability and negligence.

Despite having reached the market several years ago, there is little guidance from courts regarding liability in the context of self-driving cars. A number of suits brought against car manufacturer, Tesla, highlight the uncertainty of outcomes in AI litigation. In at least two instances, Tesla was found not responsible following jury trials in California state courts. Tesla recently settled a case involving the death of an Apple engineer, and several other cases are set for trial this year. Outcomes of these cases and cases with similar machine learning applications, appear to hinge on whom to attribute liability for mistakes involving AI systems: the user, the developer, or the AI by and of itself?

Modeling the Future

Construction professionals are encouraged to be considerate of mechanisms to mitigate risk in the immediate future: 1) continue to follow how the courts resolve questions of liability involving AI, and how that might translate in the construction industry; 2) evaluate how insurance coverage might be leveraged to mitigate risk (although AI-specific coverage is limited, property insurance, general commercial liability, and errors and omissions coverage can play an essential role in protecting against loss); and 3) inclusion of contract language that contemplates the risks of AI (subject to a future article).

[1] “The AI Index 2024 Annual Report,” AI Index Steering Committee, Institute for Human-Centered AI, Stanford University, Stanford, CA, April 2024.