According to NBC News, labor shortages, inflation, and supply chain issues are driving costs in construction to heights not seen in more than 50 years. Contractors and construction firms are definitely feeling the effects, making money-saving efforts and actions a major priority.
Compounding the issue, cost overruns are a common occurrence in the construction industry. In fact, the International Journal of Innovation, Management, and Technology states that 86% of projects experience over-budget costs - averaging approximately 28% more than originally planned. Larger construction projects tend to yield relatively lower profit margins (from 2 to 8%), which means costs in excess of the expected budget pose an even bigger threat to GCs and developers.
Over the past few years, new digitally-driven tools have been developed to help construction companies increase profit margins. ConTech solutions that utilize emerging technologies like artificial intelligence, machine learning, and reality capture can streamline information collection, organization, and analysis - preserving budget, by improving efficiency, and reducing the time and attention required to manage these tasks.
As reported by ABC News, the use of AI in construction technology can deliver significant savings. For example, a complex project worth $500 million in construction value could see in the vicinity of $30 million in savings via reductions in expenses related to labor and equipment allocation.
For those interested in learning how to save money on construction projects with AI, we’ve prepared a quick overview on best practices for cutting costs while increasing efficiency - and how ALICE can help.
If you’re wondering how to reduce construction costs, adopting and implementing emerging technology is your best bet. Careful selection and use of the right tools and software will increase productivity and speed up the rate at which construction projects are completed, while streamlining operations, reducing expenses, and eliminating unnecessary waste.
A common misconception is that implementing emerging technology will be costly, when it may actually lower long-term costs. For example, a 2018 study on artificial intelligence (conducted by independent researchers at McKinsey) showed that, while construction is slower to adopt AI compared to other industries, AI has the potential to solve the issue of cost overruns by helping construction firms reduce overhead expenses.
Automating tasks and processes can significantly cut costs, generating additional revenue while increasing profit margins. Here’s how AI can save you money during each phase of the construction project lifecycle.
New technologies for construction planning and scheduling (or construction optioneering platforms, such as ALICE) make planning and design far easier for your team.
Contractors are empowered to make better decisions when they have accurate data analysis informing the process of planning and scheduling. Optioneering platforms also allow you to weigh the impact of different scenarios and actions, so you can develop the plan best-suited to a specific project’s needs.
For design, look for platforms that leverage building information modeling (BIM) technology and allow you to upload 3D models. This helps designers, architects, and managers collaborate and better conceptualize a building, adding transparency to the planning process by connecting scope, schedules, and estimates.
AI helps to reduce construction costs by improving resource management. Big projects often result in substantial waste. Optioneering platforms such as ALICE allow contractors to optimize the allocation and utilization of resources, effectively reducing waste, cutting costs and increasing profit margins.
For example, the ALICE software platform can calculate resource requirements and allocations based on your input, generating detailed, resource-loaded schedules that you can adjust as needed. ALICE reduces costs in construction by analyzing how much material, labor, and equipment is needed for every step of every activity - providing users with the data needed to create an optimal project schedule and resource mix.
Manual processing of the same tasks is not only time consuming and expensive, it’s far less accurate - and there’s often a disconnect between what is and isn’t viable.
AI can also cut costs in construction during the building phase, by supporting visualization, iteration, and simulation of possibilities, so you can consider how to best proceed with a project as conditions change.
For example, if plans for a building are adjusted or extended mid-construction, a contractor can use generative construction software such as ALICE to quickly and efficiently iterate and optimize the build plan. GCs can assess impact to cost, profit, and time to completion, while updating important milestones, and factoring in quality and safety constraints.
It’s common to encounter delays during the build phase - but AI systems can streamline and speed project recovery. Modified schedules can be adjusted quickly, without wasting time or resources on frequently changing circumstances. With automated resequencing, plans and schedules can be updated on-the-fly, requiring just a few clicks to get your project back on track. Today’s AI-driven tools can even model and predict challenges and delays before they occur - so you can proactively identify and mitigate project risks.
All in all, construction firms that leverage the right technology can significantly reduce expenses during any phase of the project life cycle. With construction costs expected to increase even further over the next few years, leveraging technological solutions can counteract the rise in cost, and help GCs and stakeholders maintain their profits.
ALICE is an optioneering platform that helps construction firms save money. Users can easily generate "what if" scenarios and resource-loaded simulations, explore building solutions, and allocate and reallocate project resources efficiently.
ALICE helps general contractors and owners cut costs in construction, increasing profit margins while mitigating risk. Construction professionals who use our platform recognize - on average - 17% reduction in project duration, 14% in labor cost savings, and 12% in equipment cost savings. ALICE has been used successfully on high-impact projects around the world.
Eliminate “guesstimating” and inaccurate planning. ALICE does the math for you, using the power of technology to accurately and quickly evaluate solutions and scenarios. Put an end to conventional planning, and easily recover projects that are off-schedule and over-budget, minimizing financial impact to your project.
ALICE also leverages BIM technology to encourage collaboration and improve the design process. Upload a 3D model to ALICE, and quickly create a buildable 4D schedule. If you don’t have a BIM model, the ALICE team can help you create one. ALICE works with a 4D schedule that includes activity details, KPIs, resource curves, and cost over time calculations. You can easily export information for further analysis or customization.
Quantify the impact of potential choices, and make more informed decisions that help you build faster, better, and more cost effectively. Ready to reduce construction costs? Request a demo and see ALICE in action today!