The AI Opportunity in Construction

The construction industry is at an inflection point. AI isn’t coming to construction… it’s already here. And the contractors who understand what that actually means for their business, right now, are the ones who are going to be positioned to win in the decade ahead.

In this episode of Builders Budgets and Beers, Reece Barnes sat down with Julie Adams, SVP of Construction and Real Estate at Sage, to dig into the real state of the industry — the headwinds, the opportunity, and what the best contractors are doing differently. Here’s what came out of that conversation.

The State of Construction in 2025: Cautious Optimism

If you’ve been paying attention to the macro environment, you know it hasn’t been a straight line. Tariffs, inflation, rising material costs, and labor shortages have created a climate where even healthy businesses are hedging. According to the AGC’s latest industry report, 60% of survey respondents had an owner either scale back, postpone, or cancel a project in the past year.

That’s a real headwind.

But here’s the other side of that number: backlogs are still healthy. Pipelines are still strong. And one sector is pouring rocket fuel onto construction demand at a scale that hasn’t been seen in decades.

AI infrastructure is driving a construction boom. Every data center, every power plant, every fiber backbone being built to support the AI economy is a construction project. And those projects don’t exist in isolation — they bring housing, commercial space, and community infrastructure with them. The ripple effect of AI investment on physical construction demand is enormous, and it’s just getting started.

So the picture is complicated: near-term uncertainty, long-term tailwind. The contractors who weather the first part are the ones who get to capitalize on the second.

What the Numbers Actually Say About AI Adoption in Construction

Here’s where it gets interesting. The same industry that’s dealing with real economic pressure is also, quietly, making a major pivot toward technology.

According to the AGC report:

• 61% of construction firms are now using AI, planning to use it, or actively increasing their investment in it — up from 44% the year before. That’s not gradual adoption. That’s a leap.
• 45% of AI deployment is focused on office and administrative tasks — the manual, time-consuming back-office work that most contractors know is eating their margin.
• 23% is going into estimating and takeoff.
• 20% into design and pre-construction.
• 16% into recruiting, training, and HR — a direct response to the labor shortage problem that’s affecting nearly every firm.

The firms that used to shrug at “AI” as a buzzword are now writing checks for it. The question has shifted from should we adopt AI? to where do we deploy it first?

Why Construction Has Been Slow to Change (And Why That’s Changing Now)

Construction has a reputation for being a laggard in technology adoption. That reputation is earned, but it’s also more nuanced than it sounds.

As Julie put it: “It’s absolutely hard to change something that’s working. I’ve always done it this way. This is how I built my business. And why would I stop or change what I’m doing?”

That’s not stubbornness. That’s rational behavior from people who built real businesses using the tools they had. The problem is that “the tools they had” are now a competitive disadvantage — and the margin for error is too thin to ignore it.

Two forces are driving change faster than anything the industry has seen before:

The generational shift. The next generation of builders grew up digital. They’re not asking whether to use technology — they’re asking why the systems they’re inheriting look the way they do. Family-owned construction businesses are going through a transition right now, and the incoming generation is fundamentally rethinking how things get done. Paper processes and manual workflows aren’t just inefficient to them. They’re baffling.

The cost of staying still. When margins are tight, leakage becomes existential. Missed billables, duplicate payments, unprocessed change orders, sub-payments going out before lien waivers come in — none of these are new problems. But in a 5–8% margin environment, they’re the difference between a profitable year and a painful one. Technology doesn’t just make things faster. It makes things accurate.

The Real Promise of AI in Construction Finance

This is where the conversation gets most relevant for contractors thinking about their back office.

There are two distinct ways AI changes construction finance, and it’s worth separating them:

1. Eliminating the “have to” tasks.

AP processing. Bill coding. Approval routing. Lien waiver tracking. Expense reconciliation. These are tasks that have to happen, but they don’t require human judgment — they require human time. That’s the category AI is already automating, and it’s significant. Teams that have made the shift report getting back 10+ hours per week and reducing accounting overhead by over $100K annually. That’s not a projection. That’s the math that’s working out for contractors running modern financial infrastructure.

As Julie put it: “It’s taking the administrivia out of it so that you can focus on things that really impact the business and grow the business.”

2. Surfacing the insight you used to have to build.

Here’s the one that doesn’t get talked about enough. The bigger shift isn’t that AI handles your AP — it’s that AI can now answer the questions you used to need a report for.

Which jobs are most profitable? Where are costs running hot? Should we be paying this sub right now, or does something need to be resolved first? What’s our cash flow position if this draw is delayed?

Those questions used to require someone pulling data, building a report, scheduling a meeting. Now, with AI integrated into your financial platform, they’re conversational. You ask. You get an answer. You act.

That’s not a small change. That’s a structural shift in how quickly construction businesses can make informed decisions — and in an environment where margins are tight and timing matters, speed of insight is a real competitive advantage.

The Cross-Functional View: It’s Not Just Finance

What Julie made clear, and what’s often lost when people focus narrowly on one software category, is that the power of AI in construction grows when it spans the entire business.

Financial data alone is valuable. But financial data connected to operational data, estimating data, project management data, and field activity? That’s a different category of insight entirely.

Think about what a project manager actually needs: real-time visibility into costs, schedule slippage, RFI status, and budget variance — without having to call the finance team and wait for a report. Think about what the CFO needs: a live view of WIP across every active job, not a snapshot from two weeks ago. Think about what the estimator needs: AI-powered takeoff that doesn’t require tracing blueprints by hand.

When all of that data lives in a connected system, the questions you can ask (and the decisions you can make) are fundamentally different from what’s possible when those functions are siloed.

What the Best Contractors Are Doing Differently

When Reece asked Julie what separates the contractors who are staying ahead of this shift from the ones who aren’t, three things came up.

Mindset first. The contractors who are growing are the ones who’ve decided to be open to doing things differently. Not because their current approach is broken — but because they’ve recognized that the ceiling on a manual, paper-heavy operation is lower than the ceiling on a technology-enabled one.

Clear wins, not cool tech. The contractors who successfully adopt new technology aren’t the ones who were sold on AI as a concept. They’re the ones who could see specifically which problem it was solving. The best technology partners make that clear. Not “here’s what our AI can do.” But “here’s the specific thing you’re doing right now that you won’t have to do anymore.”

Change management as a real discipline. Technology is only as effective as its adoption. The teams that see the best results are the ones that brought their people along — showed them specifically how the new way would free them up to do more of what they actually like doing. Not just mandating a new system, but making the case for it at the individual level.

The Bigger Picture: AI as Infrastructure for Construction’s Future

There’s a version of this conversation that gets lost when people frame AI as either a threat or a panacea. The more useful frame is this: AI is infrastructure.

Just like your ERP is infrastructure. Just like your project management software is infrastructure. The question isn’t whether to have it — it’s whether you have the right one, built for the complexity of what you’re actually doing.

Construction is not a generic industry. A fixed-fee residential build and a cost-plus commercial project have different billing structures, different compliance requirements, different risk profiles. An AI trained on generic business data isn’t the same as a platform built specifically for construction finance — one that understands draw packages, lien waivers, percent-complete billing, stored materials, and retainage by default.

The contractors who are building that infrastructure now — getting their data into a connected system, getting their processes out of spreadsheets, getting real-time visibility into job costs and cash flow — are the ones who are going to be in a position to take advantage of what comes next.

As Julie said in closing: “Having that technology platform in place is going to be critical for you to be able to see it and then leverage it and take advantage of it.”

The AI boom is driving construction demand. The right AI tools are making construction businesses more profitable and more resilient. Both things are true at the same time.

The contractors who act on that now are the ones who will look back in five years and say the same thing we hear from contractors who made the shift to modern financial infrastructure: I can’t believe we did it the old way for so long.

Frequently Asked Questions

**How is AI being used in construction right now?**According to the AGC’s 2025 report, 61% of construction firms are using or increasing investment in AI. The primary applications are office and administrative tasks (45%), estimating and takeoff (23%), design and pre-construction (20%), and recruiting and HR (16%).

**What does agentic AI mean for construction finance teams?**Agentic AI refers to systems that act autonomously within defined rules — not just responding to instructions, but initiating actions. In construction finance, that means AI that ingests a bill the moment it arrives, codes it to the right job and cost code, routes it for approval, flags missing documentation, and moves it forward. The finance team reviews and approves rather than managing each step manually.

**What are the biggest financial risks of not adopting AI in construction?**The main risks are margin leakage and decision lag. Margin leakage happens through missed billables, duplicate payments, unprocessed change orders, and compliance failures. Decision lag happens when financials are stale — when the numbers you’re managing the job on are days or weeks behind where costs actually are. Both are compounded at scale.

**Is AI going to replace construction finance teams?**No — but it will change what those teams spend their time on. The tasks that AI handles best are high-volume, rule-based, and repetitive: bill coding, approval routing, reconciliation, compliance tracking. What it frees people up to do is the work that requires judgment: analyzing profitability, managing vendor relationships, making strategic decisions about the business. The shift is from administrivia to impact.

**What should contractors look for in a construction AI platform?**Construction-specific design matters more than general AI capability. A platform built for construction finance should understand draw package formats, lien waiver workflows, retainage, percent-complete billing, cost code structure, and ERP integration out of the box. Generic software that’s had AI bolted on is not the same as a platform built from the ground up for how construction actually works.