4 Safeguards for Contractors Working With AI
Artificial Intelligence (AI) is reshaping how contractors bid, schedule, and manage projects. It offers faster decisions and smarter planning, but it also introduces new risks, especially when AI begins influencing work that affects performance and bonding.
Many tools on the market promise efficiency through quicker estimates, automated workflows, and improved planning. These benefits can be valuable, but speed without oversight can magnify errors. A missed detail or unrealistic schedule can lead to delays, financial strain, and complications for bonded contractors.
Unlock AI's Potential By Knowing Its Limits
AI tools analyze historical project data and generate recommendations quickly. Contractors often turn to AI to address tight margins, labor shortages, or a desire to operate more efficiently.
These tools can reduce guesswork and improve documentation, but only when data is accurate and human oversight stays central. AI should support decisions, not replace second judgment.
1. Protect Your Projects by Spotting AI Risks Early
AI results are only as reliable as the data behind them. Inaccurate, incomplete, or inconsistent inputs can lead to flawed bids, unrealistic schedules, or incorrect resource forecasts.
Because AI moves fast, mistakes move fast too. Contractors must ensure people still review and validate AI outputs.
2. Strengthen Surety Confidence by Managing AI Decisions Wisely
For bonded contractors, AI becomes part of the risk landscape. Sureties evaluate management practices, financial stability, and job performance, all of which can be influenced by AI-driven decisions.
From a surety perspective, AI introduces both opportunities and new risk factors. Underwriters may pay more attention to:
- Data quality: unreliable inputs can produce misleading forecasts.
- System integration: tools that don't connect with core systems create blind spots.
- Change management: technology is only as effective as the people using it.
That does not mean AI is discouraged. It means contractors must show how the technology supports, rather than replaces, sound business operations.
3. Start Small With AI To Prove Value and Minimize Risk
To embrace AI safely and strategically, contractors should:
- Start small. Test tools on lower-risk projects before expanding use.
- Keep oversight in place. Technology should assist decisions, not replace them.
- Maintain transparency. Let partners, including your surety, know how tech is impacting operations.
- Protect your fundamentals. Strong financial and reporting practices still matter.
Adopting AI is not about chasing the latest trend, it’s about making smarter business decisions that support long-term stability. When technology is introduced with care and clarity, it can strengthen operations instead of disputing them.
4. Ask the Right Questions Before You Invest in AI
Before adopting a new AI tool, agents and contractors should consider these five key questions to gauge readiness and manage risk:
-
What problem are you trying to solve?
Start small and measurable — one clear pain point, one workflow.
-
How reliable is your existing data?
AI thrives on clean, structured data. Inaccurate records produce unreliable insights.
-
Who owns and understands the output?
Ensure supervisors and project managers can interpret and act on AI recommendations.
-
How does it integrate with your systems?
Tools that don't sync with commonly used digital platforms, like Procore or Safe, create inefficiency and risk.
-
What's your plan for training and change management?
Even the smartest tool fails without proper training and team buy-in.
Build Smarter & Safer with AI Tools That Work
With the right safeguards in place, contractors can use AI to navigate labor shortages, rising material costs, and growing project complexity. AI can automate routine tasks, predict risks, and connect data silos that slow communication and data-making.
As a result, AI adoption in construction is accelerating. It strengthens bidding, scheduling, estimating, and job site monitoring, and it enhances documentation and oversight for surety partners.
Of the many tools on the market, five categories stand out for improving performance without adding unnecessary risk. The sections below explain where AI delivers the greatest value for contractors and why each area matters for surety and risk management.
| Project Management & Collaboration Platforms |
|
AI Capabilities / What it Does:
- Automates submittals, RFIs, and scheduling
- Summarizes project documents and communications
- Surfaces project risks early, helping identify delays or budget issues
Best Fit (Contractor Type / Scale):
- Mid-large general contractors and construction managers
- Teams with multiple concurrent projects needing centralized coordination
Why it Matters for Risk & Surety:
- Establishes a single source of truth for progress and financials
- Improves underwriting confidence through greater transparency
- Supports proactive issue resolution before risks escalate
Considerations Before Adopting:
- Success depends on consistent data entry and process discipline
- Adoption challenges possible among field. teams
- May require integration with existing accounting systems
|
| Schedule Optimization & Simulation Tools |
|
AI Capabilities / What it Does:
- Applies machine learning to analyze project schedules and sequencing
- Tests “what-if” scenarios to predict potential delays and impacts
- Enhances visibility into schedule dependencies and resource conflicts
Best Fit (Contractor Type / Scale):
- Larger contractors and infrastructure builders with complex project sequencing
- Teams managing multiple schedules across trades or project phases
Why it Matters for Risk & Surety:
- Strengthens time-performance predictability and project forecasting
- Helps identify risk factors before they become costly issues
- Improves confidence in completion timing and overall project reliability
Considerations Before Adopting:
- Requires clean baseline schedules and consistent progress updates
- Not ideal for smaller projects with simple timelines
- May need integration with existing project management platforms
|
| Estimating & Pre-Construction Analysis Tools |
|
AI Capabilities / What it Does:
- Uses AI to read drawings and detect scope items automatically
- Calculates quantities and generates material lists from digital plans
- Enhances estimating efficiency with machine learning-driven insights
Best Fit (Contractor Type / Scale):
- Estimators and pre-construction teams within growing general contractors
- Specialty subcontractors managing frequent bids or complex scopes
Why it Matters for Risk & Surety:
- Improves bid accuracy and reduces cost overruns
- Supports more reliable budgeting and financial forecasting
- Helps manage cost risk, especially in volatile material markets
Considerations Before Adopting:
- Requires high-quality, detailed plan sets for best results
- May need integration with cost databases or estimating software
- Training needed for estimators to validate and trust AI outputs
|
| Risk Forecasting & Predictive Analytics Tools |
|
AI Capabilities / What it Does:
- Analyzes historical project data to identify patterns linked to delays or cost overruns
- Forecasts contractor performance risks using predictive models
- Provides dashboards and alerts for early risk detection and decision support
Best Fit (Contractor Type / Scale):
- Enterprise-level construction firms, project owners, and control teams
- Organizations seeking data-driven oversight of multiple active projects
Why it Matters for Risk & Surety:
- Enhances proactive risk management and forecasting accuracy
- Supports performance bond evaluation with data-backed insights
- Improves underwriting confidence and long-term contractor assessment
Considerations Before Adopting:
- Requires access to extensive, high-quality historical data
- Typically enterprise-priced with complex implementation needs
- Ongoing maintenance to ensure data accuracy and model relevance
|
| Safety & Quality Monitoring Tools |
|
AI Capabilities / What it Does:
- Uses computer vision and IoT sensors to detect hazards, missing PPE, and quality defects in real time
- Analyzes site video or sensor data to predict potential incidents
- Provides automated alerts and safety compliance reporting
Best Fit (Contractor Type / Scale):
- Field-intensive contractors or organizations with high safety exposure
- Companies with dedicated safety or quality management programs
Why it Matters for Risk & Surety:
- Reduces incident rates and enhances safety culture
- Supports proactive risk management and performance tracking
- Improves long-term contractor reliability and surety profile
Considerations Before Adopting:
- Hardware and data integration costs can be significant
- Requires field training and ongoing calibration for accuracy
- Ensure compliance with data privacy and workplace safety regulations
|
According to StartUs Insights, the global AI-in-construction market is projected to grow from $4.9 billion in 2025 to nearly $22.7 billion by 2032, representing a compound annual growth rate (CAGR) of approximately 24.6 percent (StartUs Insights, "AI in Construction Market 2025-2032," 2024).
The Bottom Line
AI isn't a shortcut, it magnifies what already exists. Contractors with strong processes, disciplined data practices, and clear communication are best positioned to benefit.
At Merchants Bonding CompanyTM, we believe innovation works best when it is paired with experience. Contractors who take the time to understand their tools, protect their workflows, and communicate with partners are better positioned for long-term success.