AI in Construction: Where do I start?
On this page
For better or for worse, the conversation of AI is dominating every corner of our economy. Across trades and in every industry everyone is wondering the same thing…
How is AI impacting my work, and should we be using it in a different or better way?
In the construction space, the complexity of construction projects makes the AI conversation more interesting. At its core, construction is physical work, and workers strongly believe that they can't be replaced. From what I can tell today, this is true. But this doesn't mean AI has no place in construction. There is an entire back-end to every construction company that can (and eventually, must) take advantage of what AI and modern technology have to offer.
One of these spaces is bookkeeping and accounting (our wheelhouse), but the conversation doesn't stop there. In this piece, we will explore relevant aspects of AI in construction, including:
- How AI is changing construction accounting
- How you can start using AI today
- Why you need to use AI
As you read on, I want to make one thing clear.
Even in the most AI friendly spaces, we believe human involvement will remain central to our work. Not because it has to be, but simply because people want to communicate, connect, and foster relationships with other humans.
So just like power tools and advanced technology on the job site, AI won't replace the worker. It will help you be more productive, thus keeping costs down and protecting your profitability.
Let's dive in!
The Presence of AI in Construction Accounting
Bookkeeping and accounting are next in line for massive AI disruption. Frankly, it's already happening.
This may seem irrelevant to contractors, but remember, all businesses need accounting. Since this is part of your back end operations, it'll help to know how to keep up.
In the table below, we outline the core bookkeeping and accounting functions of every construction business, and the presence of AI in delivering each activity.
As discussed in Beyond Bookkeeping: What is a Construction Accountant?, the activities below are typically split among an internal administrator, a bookkeeper, and a CPA. A Construction Accountant expands the list of activities with job costing, construction analytics, work in progress (WIP) calculations, and financial leadership.
| Construction Accounting Function | Activity | AI Presence |
|---|---|---|
| Administration | Estimating & Invoicing | Moderate. Tools exist to support creating estimates, but an estimator is still required to input information. |
| Bookkeeping | Receipt Management | Strong. AI can scan and store receipts, breaking down expenses into their individual line items automatically. |
| Bookkeeping | Categorizing Transactions | Strong. AI uses set rules along with judgement to categorize items. Accuracy and detail are driven by the info you provide. |
| Bookkeeping | Reconciling | Moderate (intentionally). AI can reconcile, but this is an important human review layer. AI can prepare the reconciliation, and the Construction Accountant will complete it. |
| Payroll | Timecards and management | Moderate. AI tools can capture job and material data alongside timecards. It also helps with payroll prep. But your Construction Accountant will review and submit payroll. |
| Job Costing | POs and work orders | Weak. Software like Adaptive (USA) is making progress, but automation requires tons of inputs, such as cost data, project scheduling, and other highly variable context. |
| Job Costing | Calculating Project profitability | Moderate. The calculating is strong. But all labour and material costs need to be tagged to a project. |
| Job Costing | Managing project budgets (cost coding) | Weak/Moderate. Similar to the above, highly detailed inputs are required. Cost-coded budgets need to be solid, and all expenses need to tie into a budget line. |
| Project Management | Managing site progress | Weak/Moderate. This one is highly dependent on the type of work you do, and is also driven by inputs. For simple projects and detailed inputs, AI can help manage project timelines. |
The key takeaway here is that AI, especially compared to out-of-the-box software, allows you to automate processes while embracing the uniqueness of your business. Its presence is already strong in some activities, and growing in the rest.
AI can (and will) be used for bookkeeping functions, and eventually, for project management. The biggest barrier to automated construction accounting is organized systems - contractors need to prioritize administrative inputs like purchase orders and receipts in order to derive reliable data.
How to use AI in Construction
Now that we understand AI in construction accounting, let's focus on you. How should you start using AI?
You may be familiar with ChatGPT or an "AI Agent" embedded within one of your software. These are a decent start, but to begin automating office tasks you'll want to explore AI tools that have memory.
Download Claude for Desktop
To explore the memory powers of AI, we suggest you start by downloading the Claude desktop app. You can start with the Pro plan for only ~$30/mo CAD.
Ask Claude to Interview You
When you first start with Claude, you'll need to teach it about you and your business. Copy this prompt and paste it into your first Claude chat. Claude will interview you, then it will tell you how to add the interview results to its memory.
I own a construction business and I want you to get to know it. Interview me. Ask one question at a time and wait for my answer. Keep the questions plain and short. If an answer is vague, ask a follow-up before moving on. Cover: 1. What we do: trade, type of work, residential or commercial, service area 2. Size: revenue range, crew size, who works in the office 3. How a job runs: from first call to estimate, contract, scheduling, invoicing and getting paid 4. The tools we use: accounting software, estimating, scheduling, spreadsheets, paper 5. How we price: markup, hourly rates, deposits, change orders 6. The paperwork I hate most and where things fall through the cracks 7. How I like to get answers from you: length, tone, detail, and anything that annoys me When you have enough, write my Instructions for Claude, which I'll paste into my settings so you know my business in every future chat. Follow these rules: - Write it to yourself, as a briefing for an assistant starting work with me. - Keep your part under 140 words. Every line should be something you'd get wrong without it. - Use specifics: names of my software, my numbers, my terms. Leave out anything generic like "be helpful." - Use three short sections with plain labels: About the business, How we work, How to help me. - In How to help me, say what to do rather than what not to do, and give the reason behind each preference in a few words. - Plain text, no bold or tables, no capital-letter emphasis. - After your three sections, add the text between the START and END lines below. Copy it word for word. Do not reword, shorten or summarize it, and leave out the START and END lines themselves. ----- START ----- Coaching me on Claude I'm new to Claude. When we discuss a task you could help with, suggest a Project (reference material I'll reuse, like price lists), a Skill (a procedure done the same way every time, like estimates), or both. If I agree, interview me on the task, then set it up or walk me through it, including settings to turn on and files to upload. As we go, say what's saved where so I learn how your memory works. Whenever I need to set up or fix something, give me clear step-by-step instructions. ----- END ----- Give me the finished Instructions in one block so I can copy it easily. Then tell me exactly how to add them: Settings, then Account, then Instructions for Claude.
The memory line you will be pasting into Claude will be short, only about 250 words. Don't worry, this is just the seedling of a deeper memory that will be built over time.
Use Claude for a Specific Task, like Estimating
Once Claude knows the basics of your business, pick a task that you would like help with. You could try estimating, or a project management task. To start, simply ask for help on that task.
As you start working with Claude, it'll recognize when to save information for future use.
For example, if you are using Claude to help with estimating, it may guide you to create a project that holds the information relevant to creating an estimate, such as your price list and an estimate template. Claude may also guide you to create a skill, which is a set of instructions that Claude will follow whenever asked to create an estimate.
Together with projects and skills, you will build up Claude's skillset for whatever tasks you train it on.
Levelling up with Claude Code
Using Claude with Projects and Skills is the gateway to automating your business. When you become comfortable with Claude, you'll want to level up with Claude Code.
That conversation is for another time, but simply put, Claude Code gives you full control over the memory and behaviour of Claude, including the ability to design custom integration with your current software, or better yet, to create your own applications.
For now, start with Claude. Just know that this is the tip of the iceberg. The possibilities are endless!
With Claude, you'll see immediate benefits, but the magic happens over time. As you continue to work together, you'll come up with better ways to use it, and it will better understand you and your business.
Embracing AI to remain competitive
If all this AI stuff is too big of a bite to chew, there are alternatives. You can shop the thousands of construction software out there selling AI. You could also stick with your current tech and processes. But if you're reading this, I suspect you're looking to get the most (and pay the least) out of the rapidly evolving AI space.
The reality is, as time goes on, more business owners will become comfortable with AI. Simple software will become less valuable because business owners can now create better alternatives themselves.
AI enabled businesses will be more efficient. Efficiency means these businesses can produce more for the same effort (and at the same cost). Simply put, if you don't embrace AI you will lose your competitive edge, and eventually, your profitability.
