October 6, 2026

Construction contracts and AI: why human oversight still matters

Baucom

From high-rise development in downtown Seattle to large-scale infrastructure projects across the Puget Sound region, construction contracts have become increasingly complex. With so many stakeholders — owners, contractors and subcontractors alike — each team relies on these agreements to allocate risk responsibly and protect them from perils.

As a global leader in technology and innovation, Seattle-area employees and business owners are also leading the charge toward using artificial intelligence (AI) to help with many tasks. Yet when it comes to contract review, AI should only be used in limited ways, strengthening but not replacing a formal contract review process led by experienced professionals.

HOW TO REVIEW PROJECT CONTRACTS

Many construction professionals read only the contracts they must sign. In a large-scale construction project, however, that kind of narrow focus can be dangerous, as contracts defining terms both upstream and downstream can heavily impact each other.

A structured contract review process creates the foundation for sound decision-making — and that process should be formalized so organizational decisions makers know what's required.

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Firms that use AI to support their contract review process can do so successfully, but only if they have the human expertise to provide the right skills and judgment to back it up.

For construction firms looking to create a formal review process, be sure to include these important steps:

• Review the whole contract. In large-scale projects, there will be several layers of contracts, possibly including one overarching contract and several smaller contracts defining specific pieces. It's important to understand how the different contracts connect to each other, so read all of them — both upstream and downstream — to protect the firm and its reputation.

• Consult with the risk experts. Larger contracts can come with larger gaps, and the owner or leader may not be well versed in these gaps. Reach out to risk experts — such as the legal team, the risk manager or the insurance broker — for help identifying those kinds of issues.

• Identify high-risk provisions. Think about gaps in protection that could leave the firm vulnerable. Be sure you understand any clauses that shift liability or responsibility to another party, including indemnification, flow down and deductible clauses. In some cases, these risks may be acceptable, but it's important to understand the risks before making that decision.

• Push back on unacceptable clauses. The initial contract may demand coverage that is unobtainable or financially beyond reach. Don't just accept these terms — push back until they work for the organization and the specific project.

• Secure appropriate insurance protections. Every project will come with risk, but effective insurance policies should provide backup. Make sure the insurance policies for the project fill the gaps that are necessary to protect the organization as a whole.

HOW TO USE AI TO SUPPORT CONTRACT REVIEW

Whether a formal AI policy exists or not, most employees are using AI in their work lives — and they are likely using AI to help them with contract review. They may think that AI can do a good job with this review on its own.

Yet AI is more like a trusted executive assistant than an expert construction project manager. AI cannot manage client relationships or make judgment calls. It doesn't know how to negotiate better terms, and it can't take responsibility for important decisions. In short, it needs to be overseen by an expert to be successful.

AI does do a good job with repetitive review tasks and consistency checks across various related contracts. It can recognize large-scale patterns and pick up anomalies, and it is a useful tool for processing documents and flagging risks. All of this is useful in construction review.

Firms and business leaders will need to put together guidelines for AI use inside their organizations, specifying approved activities for specific tasks. Firms that use AI to support their contract review process can do so successfully, but only if they have the human expertise to provide the right skills and judgment to back it up.

In short, the human touch is still an integral part of business today.

Brandon Baucom is vice president of commercial lines for global insurance brokerage Hub International in Washington.