In construction, an overlooked contract clause can lead to million-dollar mistakes. You know that time spent on dense documents is time away from running your business, yet you can’t afford to blindly accept all the terms of a contract. The good news is that artificial intelligence (AI) is transforming this manual task into a fast, accurate and strategic advantage.
Getting Started: How to Test AI for Your Business
A good place to start is by experimenting with simple questions and validating the answers against your own judgment.
Try a general AI model, such as OpenAI’s ChatGPT, Google’s Gemini or Microsoft Copilot. It's wise to replicate the same task across these different AI platforms, as each model might yield different results. The performance can also vary between different subscription levels (e.g., free vs. paid versions). You’ll also want to test these tools periodically, since the field of AI is rapidly advancing with updated models released every few months.
For example, a chat with an AI could start with providing background information and context, such as the type of construction contract, what’s being built and where. Then, you can ask a specific question about a contract clause or even provide the AI with an anonymized section of the contract to analyze.
Does the AI’s response seem right to you? Sometimes you’ll need to give the model more information with subsequent prompts, such as, “Please also consider… in your analysis.” Try hypothetical situations. By testing the AI model, you’ll quickly discover where it's helpful and where its limits of knowledge are.
Concrete Examples In Action
Here’s how AI can work for you on a day-to-day basis:
Risk Mitigation
Instantly scan new subcontracts for high-risk clauses. For example, AI can check the indemnification clause to prevent you from accepting unlimited liability or verify that insurance requirements meet your company’s minimums.
Compliance Checks
Cross-reference contracts against regulations like OSHA safety standards to ensure every agreement is up to code before work begins, helping you avoid costly fines.
Payment Term Analysis
Quickly identify non-standard payment terms. If your policy is "Net 30," the AI can instantly flag a subcontractor's "pay-when-paid" clause that could hurt your cash flow.
Change Order Scrutiny
Compare change orders against the original contract to ensure scope and pricing are consistent and that no sneaky new terms have been added.
Policy & Guideline Analysis
Check for alignment with specific government policies. For instance, you can provide the AI with a public document, like Maryland’s Department of General Services Change Order Guidelines, and ask how a specific situation aligns with that policy.
Specialized Software vs. General AI
Should you buy a specialized platform or use a general AI model? There’s no one-size-fits-all answer, as each business’s volume, line of work and customer base are unique. Here’s a summary to help you decide:
General AI (like Gemini or ChatGPT) is flexible and low-cost for simple questions. However, these models lack specialized legal training, and uploading sensitive contracts poses a significant data privacy risk.
Specialized AI software is built for security and precision. These platforms come with models pre-trained on legal documents to recognize construction-specific clauses and provide a secure environment for your data.
When considering specialized software, be sure to exercise the same cautious due diligence you would for any major business investment.
The Final Verdict: AI Is a Tool, Not a Replacement
AI is a powerful assistant, not a replacement for your legal counsel and your own common-sense judgment. It flags risks and compares clauses at lightning speed, but the final decision must always rest with a human expert.
Remember that the AI does not have the full context of the business environment. Your expertise, your relationships with customers and vendors, and your knowledge of the industry’s inner workings are the value you bring to the table. Don't ignore them.
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