How is AI Transforming Construction Contract Reviews?

Managing construction documents can often seem tricky due to the sheer number of details involved in different projects. Missed deadlines, unclear payment terms, and vague scope definitions can lead to costly disputes. That’s why careful drafting and reviewing are necessary to prevent conflicts regarding terms such as deadlines, payment conditions, and scope of work down the line.

It can be challenging for lawyers to keep track of all of this information, especially when dealing with many construction contracts. AI tools like Spellbook may be the solution for those looking to improve their legal contract workflows. Read on to learn more about how Spellbook can make reviewing construction contracts faster and more time-efficient.

Top Benefits of AI for Construction Contract Review

Automation can improve accuracy while speeding up the construction contract review process by completing routine tasks and proactively identifying risks. Here are the top benefits of using automated software to review your construction contracts. 

Improved Contract Review & Management

AI can also scrutinize a construction project’s supplier and subcontractor contracts, quickly identifying potential issues humans might miss. Spellbook automatically flags issues that could lead to disputes, such as vague payment terms, missing liability clauses, and non-standard language. By identifying these risks early, legal teams can strengthen contracts before signing. 

However, AI does not autonomously finalize contracts. Legal professionals still oversee the process to ensure accuracy and contextual relevance.

To see a practical illustration of AI's assistance in this process, you can explore this guide on how to review vendor contracts using AI.

Enhanced Decision Making

With the help of data-driven insights, legal teams gain a more thorough understanding of the risks associated with construction contracts. AI tools like Spellbook identify clauses that require closer examination and offer benchmark comparisons to similar contracts to help you decide on the best course of action. Spellbook also evaluates obligations and analyzes terms, proposing alternative language and data-supported recommendations.

Contract Automation

AI tools like Spellbook make contract drafting considerably less tedious. It offers targeted clause suggestions, spots inconsistencies you might miss after a long day, and provides alternative language recommendations as you work in Microsoft Word. You spend less time on repetitive drafting and review while maintaining the quality and compliance your clients expect.

Consider a typical in-house legal team or construction firm that manages multiple project-based contracts. Instead of manually adjusting every new construction contract, Spellbook ensures that key provisions—such as payment terms, change order procedures, and liability clauses—remain consistent across all agreements. 

When discrepancies inevitably occur (like conflicting indemnification terms between subcontractor agreements and general contractor contracts), Spellbook catches these variations immediately. This means you can address potential issues before they delay a project or lead to costly disputes rather than discovering them during litigation months later.

Cost and Time Savings

AI technology allows lawyers to review more construction contracts faster, freeing more time for more strategic legal work. This makes daily operations more time and cost-efficient, enabling lawyers to handle more contracts without sacrificing high-quality service.

Construction Contract Review Priorities

Construction contracts can be lengthy and intricate, making it tempting to skim over sections. With AI-powered contract tools like Spellbook, you can automate key tasks such as risk identification, pattern recognition, and data extraction. Here are a few factors to consider that improve construction contract reviews:

Playbook Support

Construction firms often work with numerous subcontractors across multiple projects, creating a patchwork of inconsistent agreements. Contract playbooks provide a roadmap that helps lawyers ensure their clients’ contracts meet legal requirements. 

Spellbook can follow built-in and custom-made playbooks to apply preset guidelines for consistency across all contracts. For example, when reviewing a subcontractor agreement, Spellbook can instantly flag non-standard payment terms that deviate from pre-approved templates, ensuring your client's interests remain protected across all project documentation.

Contract Analysis and Risk Identification

In the construction industry, where profit margins are often thin, unidentified contractual risks can quickly impact profitability. Risk and liability are essential considerations in construction contracts, as even the slightest issue can bring up a costly lawsuit. 

Rather than relying solely on manual review to catch these issues, AI tools like Spellbook can help with risk identification and management by scanning contracts for ambiguous terms, inappropriate language, and omissions that may cause disputes. 

For example, if an indemnity clause lacks clear scope or a liability waiver is too broad, Spellbook automatically flags these sections, allowing lawyers to make informed decisions before finalizing agreements.

Pattern Recognition

Construction disputes often follow predictable patterns, and experienced construction attorneys develop an instinct for problematic language. However, these insights typically remain siloed with individual attorneys rather than benefiting the entire firm. 

Custom templates and playbooks in Spellbook capture individual attorney expertise and make it available firm-wide, ensuring consistency and efficiency across all contracts. Spellbook suggests amendments for key contract sections that contain potential faults it recognizes after comparing clauses to those in similar agreements. It detects common errors, missing provisions, and inconsistent phrasing, ensuring the final contract version is clear, enforceable, and aligned with industry standards.

Data Extraction & Summarization

Construction contracts can be taxing to read, and crucial details can get lost in a sea of legal jargon. Contracts typically contain critical deadlines, notice provisions, and milestone dates buried in hundreds of pages of text and exhibits. Missing a contractually mandated notice period for a change order or delay claim can harm your client's position.

Rather than lawyers manually tracking these elements, Spellbook can extract key details from contracts, such as project timelines, payment details, and deadlines, and offer a concise summary for fast, easy review, helping lawyers to quickly ensure legal compliance.

Workflow Automation

The sheer volume of documentation in construction projects, from master agreements to change orders and submittals, can overwhelm even the most efficient lawyers. 

Establishing efficient and effective contract review procedures takes time, which Spellbook can reduce to just a few minutes. From approvals to reminders, Spellbook completes repetitive tasks through contract automation. What previously took days of back-and-forth communication can now be completed in minutes, allowing legal professionals to focus on more complex legal negotiations rather than administrative processes.

For instance, when reviewing a series of subcontractor agreements, Spellbook can automatically verify that insurance requirements remain consistent across all documents, flagging any deviations for attorney review.

Integrations

Construction attorneys already juggle multiple software platforms for document management, project tracking, and communication. Learning yet another complex system isn't practical.

Spellbook integrates with popular platforms such as Word to avoid disruptive workflows. You can draft, review, and edit contracts in the familiar Microsoft environment.

Key Takeaways

• AI can streamline contract reviews, but choosing a legal-specific tool matters. While generic tools can assist with document analysis, Spellbook is specifically designed for lawyers. It is trained to ensure accuracy in drafting and reviewing construction contracts.
• Legal AI tools like Spellook go beyond basic automation by offering legal-focused insights. Spellbook suggests clauses, flags inconsistencies, and ensures compliance with construction industry standards – tasks that general tools and humans may overlook.
• Combining AI tools with your legal expertise leads to better contract outcomes. AI speeds up the review process, but human oversight ensures strategic decision-making. Together, lawyers and AI finalize contracts with confidence to strengthen client relationships.

Frequently Asked Questions

How Accurate is AI in Reviewing Contracts?

AI processes large volumes of data and identifies patterns and risks people often overlook during manual review, making it a highly accurate solution for your contract review. AI is best used in combination with human expertise for contextual considerations and nuanced legal interpretations. 

How Much Time Can AI Save on Contract Reviews?

Depending on how elaborate a contract is, AI can cut review times in half while reducing errors in your draft. 

Can AI Read Building Plans?

Most AI tools’ capabilities focus on processing and analyzing textual data like contracts and legal documents. While some AI applications can review visual data, analysis for building plans remains in its infancy. 

Can AI Write Construction Contracts?

Yes, AI can assist in drafting construction contracts. A tool like Spellbook can draft an initial contract version, which can then be reviewed to verify information and make necessary adjustments. Spellbook can also generate contract clauses and entire contract sections, though it remains essential for legal professionals to review and customize these drafts.