More than half of construction businesses are using artificial intelligence more than they were a year ago as firms look to improve efficiency and cope with mounting pressures across the industry, new research has revealed.
According to the latest State of Trade Survey from the Federation of Master Builders (FMB) and the Chartered Institute of Building (CIOB), 57% of construction businesses have increased their use of AI over the past 12 months. However, more than one in five firms (22%) said they are not using the technology at all, highlighting a growing digital divide across the sector.
The findings suggest that rather than replacing skilled workers, construction firms are primarily using AI to streamline time-consuming administrative tasks and improve productivity.
Among businesses already using AI, 80% said they use the technology for administration and office-based activities, while 42% rely on it to prepare quotes, estimates and tender submissions. A further 33% use AI within site operations, health and safety procedures and quality management processes.
The growing adoption of AI comes at a challenging time for many firms.
The survey found workloads, employment levels and customer enquiries all declined during the first half of 2026, while ongoing labour shortages continue to hamper activity. More than two-thirds (68%) of businesses reported being affected by skills shortages, with nearly half (47%) experiencing delays to projects as a result.
Rising costs remain another major concern. Three-quarters of respondents (75%) reported higher material prices, while one in five firms (20%) said extreme weather events, including heatwaves and heavy rainfall, had caused disruption to project schedules.
Brian Berry, Chief Executive of the FMB, said the figures showed AI was becoming an increasingly important business tool for construction companies, but warned that technology alone would not solve the industry’s wider challenges.
“These figures show that AI is becoming a more established part of how construction firms run their businesses, particularly for administration, tender preparation and project management,” he said.
“But technology is not a silver bullet: more firms reported falls than increases in workloads, enquiries and employment, while rising costs and shortages of skilled tradespeople continue to delay jobs and hold back growth.
“The Government must ensure small firms have the practical support they need to navigate new technology and grow their businesses in the face of wider challenges.”
The survey also highlights the ongoing concerns surrounding workforce development and the need to attract more people into construction careers.
Dr Victoria Hills, Chief Executive of the CIOB, said skills shortages continue to be one of the most pressing issues facing the sector and called for greater clarity around planned education and training reforms.
“The construction sector continues to be an industry where many SMEs have to fight to survive and this has to change,” she said.
“The latest State of Trade report confirms what we hear from our members daily, in that skills shortages continue to present major challenges. Government announcements on interventions like T-levels, vocational GCSEs and more apprenticeships are welcome but we urgently need more detail on what those will look like.
“This must include how the education sector will be supported to deliver them, and how the construction sector, especially SMEs, will be supported to play its role in providing work placements and teaching expertise.”
Dr Hills also warned that climate-related disruption is becoming an increasingly significant issue for the industry, following a summer marked by prolonged periods of extreme weather.
“Emerging issues like extreme weather extending project timelines is also a big concern,” she said. “Climate resilience is a matter that desperately needs to be higher up on the industry’s agenda, particularly in light of the prolonged hot weather we experienced this summer.”
While AI adoption is accelerating, the survey suggests that technology is currently being used to complement, rather than replace, a skilled workforce. With firms continuing to battle labour shortages, rising costs and weather-related disruption, the ability to combine digital innovation with practical support for SMEs is likely to play an increasingly important role in determining the sector’s future growth.