Artificial Intelligence in the Construction Industry

Artificial Intelligence (AI) is reshaping industries worldwide and the construction sector is no exception.

This article provides insights into how AI impacts the building industry, including its benefits challenges—all through a legal lens. As a lawyer, I have firsthand experience with how AI can assist legal professionals and clients alike while being aware of its risks and limitations, particularly in the construction industry.

What is AI?

Artificial Intelligence refers to technology capable of performing tasks that typically require human intelligence, such as ‘learning’, ‘analysing’ and ‘reasoning’ . AI learns from experience, adapts to new inputs and performs human-like tasks.

Types of AI?

1. General AI: AI with broad human-like cognitive capabilities, enabling it to learn, ‘remember’ and handle new tasks autonomously. (Note: General AI remains theoretical and has not yet been realised.)
2. Narrow AI: AI designed for specific tasks, such as image recognition or virtual assistants without the ability to learn independently (e.g., ChatGPT, Siri, Google Translate).
3. Reactive AI: AI that responds to immediate requests but cannot store memory or learn (e.g., spam filters, Netflix recommendations).
4. Self-aware AI: AI with a sense of self and consciousness, still theoretical (e.g., Sophia the humanoid robot).
5. Superintelligent AI: A hypothetical future AI capable of surpassing human intelligence across all fields, including creativity and problem-solving.
6. Theory of Mind AI: AI that can perceive and respond to human emotions. (Currently, this is still a conceptual stage of AI development.)
7. Singularity: A theoretical scenario where AI can grow at a rate which is uncontrollable, leading to significant civilizational level changes.

AI in the Construction Industry

AI is transforming the construction industry in numerous ways:

1. Design Phase

AI assists in creating efficient, innovative designs, optimising layouts and predicting structural performance. Generative design tools enable architects to explore multiple design alternatives efficiently.

2. Resource Management and Project Scheduling

AI enhances project management by optimising resource allocation, tracking progress in real-time and ensuring budget adherence. AI-powered scheduling tools assist in contract drafting and review, reducing human workload and improving efficiency.

3. Contract Negotiation and Management

AI streamlines the contract negotiation process by identifying standard clauses, detect anomalies and suggest revisions. AI-powered tools assist in contract drafting and review, reducing human workload, improving efficiency.

4. Work Health and Safety (WHS)

AI improves safety protocols by analysing historical data to predict hazards, monitoring vital signs, and suggesting preventive measures. It also automates incident reporting and provides actionable insights to prevent future accidents

Benefits of AI in Construction

1. Cost Efficiency: AI optimises processes and resource allocation, reducing costs.
2. Time Efficiency: Automation accelerates project timelines by handling repetitive tasks.
3. Reduction of Human Error: AI’s precise data analysis minimises mistakes and improves decision-making.

Challenges and Legal Considerations

1. Intellectual Property (IP) Rights
   Who owns AI-generated designs or images? Questions around IP rights remain unresolved and require careful navigation. Current laws do not always provide clear guidance on whether AI-created content can be copyrighted or patented.
2. AI and Human Judgement in Negotiations
   AI lacks human intuition and the ability to manage disputes or negotiations with the same finesse as human. While AI is excellent for administrative tasks, it struggles with nuances which are often critical in negotiations.
3. AI Errors and Legal Risks
   AI systems can produce incorrect or misleading results, often referred to as “hallucinations.” This highlights the importance of human oversight. AI is capable of reducing the administrative burden and summarising large volumes of documents. However, legal research and precise legal drafting are still prone to error and it is important that project managers continue to obtain legal advice.
   The Security of Payment regime – which governs progress payments in construction requires detailed understanding of the statutory provisions and case law. Any error in a payment claim or a payment schedule could be render it invalid, leading to substantial adverse legal and commercial consequences, making legal oversight essential.
   Often, generative AI such as ChatGPT, Co-Pilot and even AI tools created for legal practitioners in Australia, provide incorrect interpretation of legislative provisions and cite case authority and legislative provisions that do not exist. These often also fail to summarise court judgments correctly. Whilst experienced legal practitioners are capable of discerning these issues, individuals or businesses that do not have the legal training and do not have professional legal experience (particularly in terms of dealing with AI) would struggle to identify an errors.

For more information on Security of Payment, see our resources here.

How are Lawyers using AI?

AI is increasingly adopted in legal practices, including:

1. Legal Research: AI assists in filtering through large datasets but its capacity for advanced legal research remains limited.
2. Document Review and Summarising: AI helps summarise lengthy documents efficiently.
3. eDiscovery: AI categorises vast volumes of documents in litigation, saving time and resources.

While AI can reduce the administrative burden for legal professionals, it is not yet capable of drafting a sophisticated contracts or legal documents with precision. As already explained above, AI-generated legal research also remains prone to error.

Recently, the Chief Justice of the Supreme Court of NSW issued a practice note (Practice Note SC 23) (Practice Note) which substantially restricts the use of AI in preparation of court documents. The Practice Note highlights the shortcomings of AI. It states:

“Legal practitioners and unrepresented parties should be aware of limits, risks and shortcomings of any particular Gen AI program which they use. These may include:

a) the scope for “hallucinations”, that is, the generation of apparently plausible, authoritative and coherent responses but which are in fact inaccurate or fictitious. Examples include false citations and fabricated legislative, case or other secondary references;

b) the dependence of Gen AI on the quality and reach of underlying data sets, including the possibility that that underlying database(s) may include misinformation or selective or incomplete data, data that is not up to date or data that is not relevant in New South Wales or Australia;

c) the scope for biased or inaccurate output including by reason of the nature or limitations of the underlying data sets;

d) the fact that any search requests via a chatbot or interactions or prompts within a Gen AI program may, unless disabled, be automatically added to the large language model database, remembered and used to respond to queries from other users;

e) the lack of adequate safeguards, to preserve the confidentiality, privacy or legal professional privilege that may attach to information or otherwise sensitive material submitted to a public Gen AI chatbot; and

f) the fact that data contained in a Gen AI data set or database may have been obtained in breach of copyright.”

While the Practice Note permits the use of AI in preparation of general chronologies and indexes, it prohibits the use of AI in drafting key court documents such as affidavits, witness statements or other evidentiary material.

Legal practitioners are prohibited from using AI to draft court documents without obtaining the court’s permission and expert witnesses are not to use AI in drafting their reports without the leave of the Court.

Conclusion

AI has made significantly improved convenience in our daily lives. However, it remains in its early stage of development and is not yet capable of handling complex tasks such as legal research, contract drafting or interpreting legal documents with precision.

Businesses should be very mindful of the commercial and legal risks associated with using AI in negotiating contracts or legal drafting.