IN Brief:
- The CIOB/FMB survey received 416 responses, with 57% reporting increased AI use and 22% not using it at all.
- Among respondents already using AI, 80% apply it to administration, 42% to estimating and tenders, and 33% to site operations, safety, and quality management.
- Skills shortages affected 68% of businesses, while 75% reported higher material costs during the first half of 2026.
A survey by the Federation of Master Builders (FMB) and the Chartered Institute of Building (CIOB) has found increasing adoption of artificial intelligence among smaller construction businesses, with 57% of respondents reporting greater use than a year earlier. The research also shows that 22% were not using AI at all, while shortages of skilled labour, rising costs, and declining enquiries continued to affect building activity.
The findings come from the organisations’ State of Trade survey for the first half of 2026, conducted by Barbour ABI and based on 416 responses. The study focuses on micro, small, and medium-sized construction businesses and examines workloads, enquiries, employment, recruitment, costs, and business confidence. Its technology findings describe reported adoption among participating businesses, rather than independently measured changes in productivity.
Among respondents already using AI, 80% reported applications involving administration and office tasks. A further 42% used the technology for quotations, estimates, and tenders, while 33% identified applications involving site operations, health and safety, or quality management. The figures indicate that the most common uses remain associated with information handling and commercial administration, although some businesses have extended the technology into operational processes.
Administrative activities provide opportunities to use AI for drafting routine documents, organising correspondence, processing information, and supporting record management. These functions can involve substantial repetitive work, particularly within smaller businesses where the same personnel may be responsible for administration, procurement, estimating, and project coordination. Automation or software assistance may reduce the effort required for particular tasks, although the survey does not quantify time savings attributable to AI.
Estimating and tender preparation involve more demanding technical and commercial decisions. Prices depend on the quantities and specifications of the work, labour requirements, plant, material costs, subcontractor quotations, construction methods, and programme assumptions. AI systems can assist with organising or extracting relevant information, but the resulting figures must be checked against project requirements and reliable cost data before being incorporated into a tender.
Errors in tender preparation can have consequences extending beyond the initial bid. Missing quantities, misunderstood specifications, or incorrect assumptions about site access can affect a contractor’s costs once work begins. Responsibility for checking the accuracy of the estimate remains with the business, regardless of the software used to prepare or review supporting information.
Site operations introduce different risks because information may be used to support decisions affecting physical construction activities. Digital tools can assist with recording inspections, organising observations, and identifying outstanding actions. However, assessing structural work, verifying compliance with a specification, or determining whether an operation can proceed safely requires competent personnel and appropriate evidence. The survey does not establish that respondents are using AI to make autonomous engineering or safety decisions.
Recent developments in AI-assisted construction scheduling illustrate how software capabilities are extending into project delivery. The practical value of these systems depends on the accuracy of programme information, the way construction activities are represented, and the checks applied before suggested changes are implemented. Adoption of such technology should not be confused with the removal of professional responsibility for construction decisions.
The increase in AI use comes during a difficult period for smaller building businesses. The survey recorded a net workload balance of minus 4% during January to June 2026, while enquiries stood at minus 10% and employment at minus 4%. These measures represent the difference between the proportions of respondents reporting increases and decreases, not percentage reductions in total construction output or employment.
All three indicators had been positive during the preceding six-month period, when the corresponding net balances were 22% for workloads, 18% for enquiries, and 17% for employment. Their movement into negative territory during the first half of 2026 indicates that more respondents were reporting deterioration than improvement across each measure.
Regional performance differed substantially. Scotland recorded a positive net workload balance of 31%, followed by Wales at 14%, while England registered minus 9%. These figures demonstrate that the conditions experienced by participating businesses varied geographically. Activity within particular regions can be influenced by local demand for extensions, refurbishment, residential construction, and other building work.
Recruitment remained a significant operating constraint. Some 68% of businesses reported being affected by shortages of skilled tradespeople, with 47% identifying delayed jobs as a consequence. A further 29% restricted recruitment, 21% reported cancelling jobs, and 18% said shortages had prevented business growth or expansion.
The findings distinguish between the administrative work that software may help streamline and the skilled labour needed to undertake physical construction. A contractor may improve the speed of preparing quotations or managing documentation without increasing the number of qualified personnel available to complete site operations. Where particular trades are unavailable, the timing and sequence of construction activities may still need to be adjusted.
Specialist knowledge was also difficult to obtain. Among businesses attempting to recruit, 45% reported difficulties finding workers familiar with modern sustainable building practices, while 37% struggled to recruit people with knowledge of the building safety regime. These requirements involve understanding current construction standards, appropriate methods, and compliance responsibilities, alongside the practical skills required to complete the work.
Material and operating costs added further pressure. Three-quarters of respondents reported increases in material costs, while 66% experienced higher transport and fuel costs and 62% faced increases in energy and utility expenditure. Subcontractor costs rose for 57%, and 45% identified higher wage costs. Such increases can reduce the commercial margin available on construction work where agreed prices cannot be adjusted to reflect changes in expenditure.
Among businesses reporting higher costs, 48% had increased their prices, while 47% experienced lower-than-expected profits or a loss. Some 29% restricted recruitment and 14% reported an effect on business viability. A further 16% identified redundancies or terminated contracts among the consequences of the cost pressures. These findings relate to respondents’ reported experiences rather than independently verified financial results.
Weather disruption also featured in the assessment. One in five respondents reported delays to projects or jobs associated with extreme conditions, including heatwaves and rainfall. Construction programmes involving external work can be affected by unsuitable ground conditions, restricted access, or weather that prevents particular activities from being undertaken safely. The nature and duration of these effects vary according to the work and site conditions.
Brian Berry, Chief Executive of the FMB, cautioned that “technology is not a silver bullet”, noting that adoption was increasing while workloads, enquiries, employment, and access to skilled labour remained under pressure. His comments reflected the limitations of software-led improvements when contractors continue to experience constraints affecting the physical delivery of work.
Dr Victoria Hills, Chief Executive of the CIOB, highlighted the continuing difficulties facing smaller construction businesses and called for greater detail on proposed vocational qualifications, apprenticeships, and the support required by education providers and employers. She also raised concerns about weather disruption and the need to strengthen the industry’s response to changing environmental conditions.
Despite weaker trading indicators, 39% of respondents expressed a positive outlook for the second half of 2026, compared with 23% who were negative and 32% who were neutral. This produced a positive net outlook balance of 16%, although the survey did not establish that increased AI use would translate into improved business confidence or future profitability.
The findings establish that more respondents are using AI than a year earlier, particularly for administration and estimating, while a substantial minority have not adopted the technology. Further surveys will show whether the pattern continues as smaller construction businesses manage recruitment difficulties, cost increases, and changing workloads through the remainder of 2026.
