How AI Estimating Software Increases Profitability Of Construction Firms With Faster Takeoffs
How AI Estimating Software Increases Profitability Of Construction Firms With Faster Takeoffs
The construction industry continues to grow and remains a major sector of the world economy. The global construction market is expected to reach more than $22 billion in 2026 at a compound annual growth rate of 10.8%.
Despite its continuous growth, the construction industry is still slow to adopt new technologies and remains one of the least digitalized fields. Hence, its total economic output per worker or productivity remains flat. In contrast, labor productivity rose in 47 of 86 manufacturing industries in 2021 with the railroad rolling stock industry having the largest productivity gain of 20.6 percent.
Having been slow to adopt new technologies, one aspect of the construction process remains among the most laborious - construction cost estimation. It still takes weeks or months to get the final price estimates for a single project, which translates to roughly $66,000 in annual spending per contractor just for the preconstruction process alone.
This delay is not only costly but also impacts a construction firm’s ability to get awarded more projects because they:
- Appear less qualified than other bidders.
- Are late when submitting proposals.
- Submit less proposals each year.
Fortunately, the use of AI estimating software in speeding up the takeoff process has led to dramatic results for construction firms. Major global construction leaders report that leveraging technology has enabled them to increase their efficiency and focus on value-generating tasks like scoping, pricing, and value engineering. It also enabled them to increase the productivity of their estimators while improving the accuracy of their takeoffs.
Not only does this result in lower preconstruction costs, it also enables firms to submit more competitive proposals that lead to increased profitability. Read further to gain more insight on leveraging technology and artificial intelligence to speed up the takeoff process and increase profitability.
The Advantages of Using Artificial Intelligence
Artificial intelligence is becoming a widely recognized technology even if few people understand its mechanism. Its application ranges from healthcare, retail, manufacturing, and other industries including construction.
The Impact of AI on Various Industries
There is no doubt that AI is positively influencing the way various industries operate. For example, in healthcare, AI provides data-driven support to medical professions. This is achieved by identifying patterns and delivering automated insights that help with applications such as medical records management, treatment, and digital consultations. It has also been improving workflows from routine tasks to data management and drug creation.
These benefits easily translate to other industries such as agriculture. For instance, according to the United Nations’ prediction data, the world’s population will increase by 2 billion people in 2050. Artificial intelligence and machine learning are showing the potential to help meet the 60% increase in food productivity to food them.
In the retail industry, brands like Amazon Go are leveraging artificial intelligence to introduce checkout-free stores. The technology enables people to simply take products from the shelf, walk out of the shop, and their Amazon account will automatically take money for the purchase. The technology removes the need to wait in line to pay. It can also provide insights on customer preferences, thus helping retail brands improve customer experience based on data.
In fact, because of the technology’s impact on various fields, the global AI market is valued at an estimated $136.6 billion as of 2022. Meanwhile, the value of the AI industry is projected to increase by over 13 times to $1.81 trillion by 2030.
The Impact of AI on the Construction Industry
With AI’s advantages being acknowledged in multiple industries such as healthcare, manufacturing, banking, and agriculture, its use in construction is steadily growing. AI is starting to transform the way buildings are designed and built. Some of its applications can be seen in construction management, auditing and optimizing the preconstruction process, AI takeoffs, cost estimation, architecture, interior design and so much more.
With artificial intelligence, general contractors and other construction experts can leverage the following benefits.
Reduced Work-Related injuries
The construction sector is considered one of the most dangerous industries. Intelligent robots powered by AI can be programmed to replace some of the riskiest jobs, including lifting heavy equipment and digging hazardous fuels. They can also be designed to effectively engage with the surroundings and autonomously operate in dangerous environments.
Improved Building Designs
The 3D model of a building should incorporate the architecture, engineering, mechanical, electrical, and plumbing (MEP) plans, as well as the sequence of activities carried out by each team. The aim is to keep the models from the sub-teams from clashing with each other. Industry professionals are now leveraging machine learning in the form of generative design to detect and resolve the clashes between the models during the design phase to avoid rework.
Increased Efficiency and Productivity
In the preconstruction process, takeoffs done by AI are completed much faster compared to manual or digitalized methods. It can be done in seconds, instead of weeks or months with 97% accuracy. This enables estimators and general contractors to reduce the risk of human error and allows them to complete their proposals faster than their competitors.
During the implementation stage, construction firms are also projected to boost productivity by up to 50% through real-time analysis of data. Hence, more construction companies are adopting AI and machine learning to improve the planning and distribution of labor and machinery across jobs. Autonomous and AI-powered robots and drones can identify the location of workers, detect equipment and evaluate job progress. This informs project managers which job sites have sufficient workers and equipment to prevent delays.
Prevent Cost Overruns
One of the main causes of cost overruns is inaccurate cost estimates. The manual and even the digitized process of rollers and rulers with a mouse to do takeoffs and cost estimations are often impacted by human error.
With artificial intelligence, manual processes that are prone to human error such as cost estimation can be automated. In addition to having greater efficiency, it is also more accurate. Thus, reducing the risk of cost overruns, and ensuring the profitability of both the construction firm, the subcontractors, and the project owner.
Streamline Tedious and Repetitive Tasks
Repetitive and tedious tasks such as cost estimations can be completed by machine intelligence. They are faster and can work tirelessly 24/7. In comparison, the human brain becomes tired and less focused after working long hours, which increases the risk of mistakes and inaccuracies.
Intelligent machines will never get tired or lose focus on what they’re programmed to do. If maintained correctly, they can work non-stop without requiring lunch breaks, sick days, or thousands of dollars in wages.
Despite the obvious advantages of artificial intelligence, there is still resistance to adopting this technology because of its perceived threat to construction jobs.
However, the evidence above highlights that AI is unlikely to replace the human workforce. Instead, it will alter and optimize the business model of the construction industry. Its impact isn’t limited to reducing expensive errors, increasing efficiency, and reducing worksite injuries. Automating repetitive tasks will enable teams and leaders to focus on value-generating tasks that have a bigger influence on profitability.
AI Estimating Software
A great example of repetitive or tedious tasks is cost estimation. Performing takeoffs and cost estimation remains to be one of the most laborious stages of construction despite having zero guarantees of ROI. It can take weeks to months to complete and can cost thousands of dollars.
But with an AI-powered construction estimating software, takeoffs can be done in seconds, which in turn allows general contractors to shift their focus toward value-generating activities like scoping, pricing and value-engineering. This translates to increased effectiveness, efficiency, and profitability.
Here’s the difference between using construction estimating AI, manual takeoffs, and digital takeoffs.
This is the traditional approach to executing construction takeoff. It’s tedious, prone to human error and requires a lot of manpower. It can also take weeks and even months to complete.
Despite being digital, the standard estimation software is still labor-intensive and mundane. On average, one full-time estimator can take 90-minutes per page to complete an area analysis and a linear takeoff.
There are many digital takeoff software programs that claim to be automatic. However, they often have a steep learning curve and require a lot of manual editing to fit the estimator’s needs. This can negatively impact the team’s productivity and output.
Construction Takeoffs by AI
AI-powered takeoffs can be completed within three to ten seconds with an AI construction estimating software. This means general contractors and their team of estimators can save roughly 90-minutes per sheet while performing 80% faster takeoffs.
Takeoffs using AI construction software also have a 97% accuracy, which significantly reduces the risk of human error and cost overruns. Furthermore, this technology can go far beyond automation. For example, it can remember previous classifications of symbols based on previous use. This means, the more estimators and general contractors use it, the faster and smarter it program gets.
The Bottleneck in Getting Awarded Construction Projects
In today’s aggressive market, general contractors need to work smarter, cut costs, and submit accurate bids on time. Unfortunately, a winning proposal continues to be complicated and time-consuming to prepare. However, by addressing the bottlenecks, a general contractor can thrive, remain competitive, and get awarded more work.
Some of the bottlenecks that need to be addressed are the following:
Slow and Costly Preconstruction Process
Despite not directly profiting from doing cost estimations, estimators and general contractors can spend months on this process because of outdated digital estimation software and manual takeoffs. On average, firm can spend more than $66,000 per person annually just for the preconstruction process with no guarantees of getting awarded the project.
It’s basic statistics, the more competitive proposals submitted, the higher the chance of getting awarded the project.
Unfortunately, takeoffs can take weeks or months to complete, which reduces the number of bids a firm can submit annually. The delay can also position the general contractor as less qualified than other bidders, reducing their competitive edge.
Inaccurate Cost Estimates
While missing the deadline is a surefire way to get rejected, simply submitting a bid on time is not enough to get awarded the project. The most important aspect is that the numbers are in range for the scope of work and what the owner is expecting. The proposal must be submitted on time without sacrificing quality and accuracy.
Unfortunately, even with an experienced estimator, manual takeoffs are still prone to human error because it involves a lot of guesswork. On the other hand, some estimation software claim to be “automated” but performs with low accuracy and requires a lot of manual editing.
There are a lot of programs available that are outdated and that have a complicated interface, which means the user will have a steep learning curve. These programs also require hours of manual editing to suit the estimator’s needs. As a result, general contractors and their team of seasoned estimators report that they spend up to 60% of their time only doing takeoffs.
Accelerate the Estimating Workflow with Artificial Intelligence
Leaders in construction technology are redefining digital cost estimation with the latest technology. Both artificial intelligence and machine learning are being leveraged to accelerate the estimating workflow, and overcome the bottlenecks discussed above, inaccuracies and inefficiencies. Thus, enabling estimators to arrive at accurate and profitable estimates within limited timeframes.
The new AI-powered solutions are empowering estimators and general contractors to achieve the following:
Automate the Takeoff Process
With the help of deep learning AI models, general contractors can automate up to 80% of the takeoff process. Their team of estimators can finish proposals faster, and work on higher value tasks making the client happier.
Sharpen the Competitive Edge
By leveraging AI-powered construction estimation software, general contractors can submit more competitive and accurate proposals faster than their competitors. Thus, enabling them to appear more competent and capture the client’s attention. This, together with the ability to submit more bids annually, ensures that general contractors are likely to win more work.
Human error and inaccurate estimates
An AI-powered construction program can interpret plans with up to 97% accuracy. Through this technology, general contractors can eliminate manual, error-prone calculations and spreadsheets. This enables them to run profitable and predictable construction projects.
AI-powered estimating technology is easy to integrate into the general contractor and estimator’s workflow. The technology allows them to collaborate with ease, as it’s compatible with any device and accessible through the internet. It can also integrate with existing construction tools, resulting in a more efficient workflow.
Get Competitive Edge With AI Estimating Software, Togal.AI
As we’ve discussed, some of the main factors that stop general contractors from running competitive firms are the slow and costly preconstruction process, the inefficient workflow, and the inaccurate estimates.
Our construction estimating AI technology, Togal.AI, solves this by providing general contractors the competitive edge by speeding up the takeoff process with 97% accuracy.
The Origin of Togal.AI
Togal.AI is led by our CEO, Patrick Murphy, who served in the U.S. House of Representatives for Florida’s 18th Congressional District. His work focused on leading the future-of-work initiatives, and after serving two terms, he rejoined Coastal Construction as Executive Vice President and applied the same mindset to the firm.
Murphy sought to use technology to cut costs and improve efficiency and found himself focusing on the estimation process.
With 50% of their time spent on square foot analysis and manually measuring each room of the house the firm was building, they found an untapped opportunity to leverage artificial intelligence.
This is how the idea of Togal.AI became realized. Once the program was developed, the initial thought was to keep this cutting-edge technology solely for Coastal Constuction’s benefit; however, they realized this deep-learning AI technology could make such a tremendous impact on the construction industry that it would revolutionize the way buildings are made in the future.
With seed funding from Coastal Construction, Murphy founded the startup in 2019 and released the technology to the public. Since then, Togal.AI has won a $420,000 investment after taking home the grand prize at the 2022 eMerge Americas Startup Showcase.
How Togal.AI Works
Togal.AI automates the cost estimation process by utilizing machine learning and artificial intelligence. The technology can automatically calculate plans, label walls and rooms, and update construction blueprints, reducing weeks or even months of work into seconds. This means:
- Instead of manually drawing and coloring, general contractors and their team of estimators can spend time on higher-value activities.
- Firms can reduce the preconstruction expenses
- Firms can create greater efficiency resulting in improved productivity and reduced overhead costs.
The preconstruction process can cost general contractors more than $66,000 per person annually. By speeding up the takeoff process, Togal.AI instantly increases general contractor’s profitability
80% Faster Takeoffs
With Togal.AI, estimators can process takeoffs in less than 10 seconds, saving roughly 90-minutes per sheet. This removes extra overhead and cuts down preconstruction costs. Thus, allowing general contracts to offer more competitive prices, that ultimately increases their chances of getting awarded the project.
Inaccurate cost estimates can lead general contractors to spend months working on an unprofitable project or spend thousands of dollars in legal disputes. To prevent this, it is important to eliminate error-prone manual calculations and inaccurate takeoff tools. Togal.AI can help.
By interpreting drawings with 97% accuracy, it’s easy to consistently run profitable and predictable projects. With its deep-learning technology, general contractors can produce estimates with high levels of accuracy, which reduces the risk of cost overruns and losing money.
Imagine using traditional takeoff methods to submit 150 proposals annually. If it takes an average of 4 hours to conduct a takeoffs per proposal and the average project size is $100,000, we can estimate that our program can save a construction firm about 450 hours per year. This is equivalent to 113 potential additional bids and $5,625,000 in potential new revenue.
To calculate your potential ROI when using Togal.AI for takeoffs, use our ROI calculator.
Simple and Intuitive Interface
With Togal.AI, accurate takeoffs can be done with just a few clicks. Its intuitive design and simplicity makes Togal.AI easy to integrate in a general contractor’s workflow - allowing them to quickly empower their team of estimators for optimal productivity.
Reliable and Accurate Engine
Having a dedicated team of high-skilled specialists, Togal.AI’s engine is always reliable and accurate.
Togal.AI develops everything in-house, so that users' data are always safe and protected.
Work on Takeoffs Anytime
Togal.AI is cloud-based, meaning general contractors and estimators can continue to work on their takeoffs even when they’re off the field. So long as they have access to the internet and a power source, construction firms can work on their takeoffs and complete their proposals from anywhere.
Effective Collaborations With the Team
Eliminate the stressful back and forth when confirming changes in the proposals. Our AI-powered technology enables general contractors and their team to work on the same project in real time.
Togal.AI goes far beyond automatically processing takeoffs. It’s designed to get better the more your team uses it. For example, if the team of estimators labels a certain shape as “toilet”, Togal.AI will remember it and classify similar shapes as a “toilet” in the future, saving you more and more time.
Streamline the Estimating Workflow with AI Estimating Software
General contractors and their team of seasoned estimators report that they spend around 60% of their time doing takeoffs. While the process is critical to pricing a job, there is a minimal guarantee of an ROI.
To maximize a construction firm’s potential of future revenue, it’s critical to shift the focus towards more value-generating activities. It’s also important to remove the bottlenecks that allow for more awarded projects and ensure the efficiency of the preconstruction workflow.
By allowing Togal.AI to automate and complete takeoffs in seconds with 97% accuracy, construction firms can shift their focus on other important tasks such as scoping, value-engineering, and identifying trade partners. Togal.AI’s deep-learning technology enables our software to get faster and smarter the more your estimators use it, making your team more productive and efficient. This advancement can directly impact your construction firms’ profitability.
Experience how Togal.AI can help finish takeoffs in seconds and increase profitability by booking a free demo. A dedicated product manager will help you explore how easy it is to integrate Togal.AI into your workflow.