Technological modernisation in the construction and engineering industry, conjures up images of humanoid robots wheeling barrows and laying bricks, and workers walking round sites using future-like smart glasses to improve safety. But while not quite as sexy, the truth is that what the industry urgently needs are AI agents to alleviate the back-office pressures of keeping major projects on time and on budget, as Kenny Ingram, VP of C&E and Chris Knight, global industry director, C&E, IFS, explain
For progress to be made, firms must first replace chaotic data silos with a unified ERP backbone to create the “single source of truth” required for industrial AI to build the foundations for industry change.
Futuristic glitzy robotic bricklayers and augmented reality-equipped construction site safety advisers only add complexity to the operational issues facing the construction and engineering (C&E) industry today.
The immediate and harsh reality facing organisations in the sector right now, according to a recent Censuswide survey, shows 41% of construction and engineering projects currently overrun on both budgets and target completion dates. Furthermore, more than one in two (54%) of projects are failing to meet their anticipated margins.
For an industry historically characterised by thin margins, these inefficiencies are dangerous. Small disruptions – whether from inflation, supply chain issues, labour shortages or extreme weather – can quickly turn small margins into losses and, in some cases, threaten the existence of the business.
In order to remain competitive, the Censuswide research found construction and engineering businesses state that delivering projects quickly (35%) and on budget (35%) are the most important differentiators.
There is a huge opportunity for this sector to leverage industrial AI and AI agents within their operations as they take essential and overdue steps to modernise their technology stack.
The industry is on the move toward industrial AI
Facing these headwinds, the industry is in need of a strong technological foothold. In its 2026 Engineering & Construction Industry Outlook, Deloitte sees that “firms are increasingly leveraging advanced digital tools to boost productivity, protect margins and adapt to rapidly changing market conditions. Leading organisations are deploying technologies such as AI-driven analytics, real-time project management platforms and connected jobsite solutions to streamline operations, enhance decision-making and stand out in a competitive landscape.”
The tide is already turning. IFS’s own research finds that, while C&E organisations have historically reported lower adoption rates of industrial AI compared with other sectors. IFS research into the “Invisible Revolution” of AI in industrial settings reveals that 91% of C&E firms expect to increase their AI investment in 2025 and beyond – a figure that ties for the highest among all industries surveyed.
The optimism is backed by early results: 89% of early adopters are already reporting profitability gains and 83% cite improved product and service quality.
Mind the gap
However, a critical gap remains between ambition and execution. While valuable, bricklaying robots, automated design tools or smart glasses for site safety sites are isolated tools and only add to the problems because they do not address the fundamental business process issues dragging down profitability.
Moreover, many C&E organisations don’t have the digital foundation in place to commence AI projects.
The backbone requirement: There is no AI without ERP
To exploit the true benefits of AI, construction companies must first address their data landscape. Currently, many firms operate on fragmented systems, trying to manage complex global projects using a complex web of spreadsheets locking away key data in a siloed manner.
But AI models are only as effective as the data that feeds them. If a company lacks a single version of the truth regarding projects, materials, workforces and subcontractors, AI cannot function effectively. A strong Enterprise Resource Planning (ERP) system is not just a system of record; it is the prerequisite foundation for AI.
The industry recognises this need for structural modernisation. The Censuwide study found that over 63% of construction and engineering businesses state they are in looking to replace their ERP systems within the next two years. They understand that to deploy and form of AI to make their operations smarter and faster, they first need consistent business processes and a robust digital backbone.
The unsung heroes: High-value AI use cases – powered by AI agents
Once the data foundation is in place, the most transformative initial AI use cases likely won’t be found on the physical job site but in the back office. These “unsexy” processes are the gears that drive productivity and labour usage, and there is a new breed of digital workers willing and able to lend support.
Unlike traditional automation, robotics and generative AI, digital workers powered by agentic AI manage complex workflows, make context-driven decisions and continuously improve operational performance while working right alongside employees to reduce manual tasks and amplify their impact.
Whether embedded in core ERP or even running alongside legacy systems, these digital workers provide immediate ROI and operational impact.
1. Transforming project financial forecasting
The most critical control process for any construction business is project cost control: predicting where a project will end up financially.
Currently, this is an extremely manual process done month-to-month, where many staff spend weeks manually compiling data to reforecast costs and revenue. AI agents can revolutionise this by continuously analysing real-time data to predict end-of-project outcomes autonomously.
Here’s where AI can make a huge difference. Instead of looking in the rear-view mirror once a month, AI can provide a forward-looking prediction, allowing project managers to mitigate margin fade before it happens.
2. Smart spend authorisation today
Controlling spend often involves a bureaucratic nightmare where a purchase order or subcontract might require 10 different signatures to get out the door. This often leads to “rubber stamping”, where busy managers sign off on requests without proper review just to keep the project moving. AI agents can introduce rigorous, non-emotional logic to this process.
But this is to undervalue the power of AI. An agent can review a request against budgets, contracts and project requirements instantly, ensuring strict compliance without the bottleneck of human fatigue or time constraints.
3. Procure-to-pay efficiency
Construction is a high-volume and high-value procurement environment. The perfect scenario for AI. AI agents can drastically reduce the friction in the procure-to-pay cycle by automating invoice matching and payment processing. This not only reduces
administrative overhead but ensures better supply chain relationships and cash flow management.
Laying a foundation for AI and industry success
AI can only deliver real value in construction when built on a strong ERP foundation. Fragmented systems and siloed spreadsheets prevent AI from functioning effectively, making ERP modernisation a critical first step.
With 63% of firms planning ERP upgrades within two years, the industry is moving toward consistent processes and a unified data backbone.
The path forward
The future isn’t just about robots on-site; it’s about intelligent AI agents managing business operations. By securing a robust ERP core and layering industrial AI, construction firms can shift from fragile spreadsheets to a resilient, AI-driven model that enhances efficiency, protects margins and ensures control in a volatile market. ERP and AI together form the technology partnership that will define industry success.
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