Getting Beyond The A.I. Hype: Tips From A Long-Trusted Advisor

Homebuilders and hype don't go together.

That's because time and time again hype almost every time costs more, takes longer, or breaks more than it fixes in the real world.

That's proven to be the case with scores of new building technologies, hundreds of revolutionary new materials, installation methods, products, etc., and virtually countless promises to improve homebuilding's build cycle.

The question now for homebuilders, with the emergence and surge of large-language generative A.I. capabilities taking the Wall Street investment community, academia, science, business, and the Internet by storm, is "What's typical B.S.-detector fodder?" and "What's worth looking at, learning about, and trying out right now?"

For instance, a jaundiced-eyed homebuilding operator might look at the following.

Generative AI’s role in learning and development is in a nascent stage but is poised to have a significant impact due to the convergence of technological advancements and entrepreneurial innovation." – Chrysanthos Dellarocas, Harvard Business Review

Hype, right?

As in, "what's this mean to me, when all I can focus on is how to make things cost less and take less time?"

Anyone, everyone who responds this way ought to make plans to catch up with Home Builders Network president Al Trellis at the NAHB International Builders Show, on Wednesday, Feb 28, at 10:15 am, local time in Las Vegas. Trellis and Higharc co-founder and director of Architecture Michael Bergin will spend the hour session in an example-filled discussion of 10 specific reasons homebuilders "can and should" put A.I. to work for them.

In other words, cutting through the hype.

Give me two 'eff words,' Trellis tells The Builder's Daily in a far-ranging conversation on what's gotten under his skin when it comes to A.I., and why – at age 76, and after 50 years working with builders – he's one of generative A.I.'s staunchest believers in its end-of-the-world-as-we-know-it impact in homebuilding strategy, operations, and resiliency as a business sector. "Effective efficiency. It's all about increased productivity through more efficiency. I've got about 80 hours with ChatGPT. Some of the things that I've done for my clients and for myself I think are pretty interesting. It's an unbelievable training tool. Its ability to help you train is amazing. And one of the things I'm going to talk about at the IBS is what makes these large-language models so intriguing to me."

According to Trellis, it boils down to two things – neither of them hype.

One," says Trellis, "is the power for the price. There's no limit on how much information you can get out of it. And the second is its ability to iterate in the hands of the proper user. If you think about it, most processes are iterative. The best thinking is iterative, right? Start big and get smaller, and down the rabbit hole we go. ChatGPT is amazing for that. I asked Chat, ‘give me an outline.’ And then I say, ‘now give me five examples of number two.’ And I love one of those examples. I say, ‘now take that example and write a couple of paragraphs by why … ‘ It just you can go on and on and on deeper and deeper. And basically, you can do it instantaneously for free. That's unbelievable to me. That power is it's beyond anything I've ever seen before."

For small- and mid-sized homebuilding operators, any direction or dimension of their business they turn, opportunity areas for practical applications beg for exploration and use. As generative AI evolves and integrates more domain-specific, real-time transactional, and behavioral knowledge into its knowledge base, its impact on the world of homebuilding, residential real estate, development, investment, and building products and materials is expected to grow significantly in the following ways:

1. Enhanced Predictive Analytics: With access to real-time transactional data, A.I. can offer more accurate and timely predictions for market trends, investment opportunities, and pricing dynamics. This allows developers, investors, and builders to make more informed decisions, leading to better returns on investment and more efficient use of resources.
2. Customized Design Solutions: By understanding specific client behaviors and preferences, A.I. can generate highly personalized and optimized building designs. This leads to homes and developments that better meet the needs and desires of the end-users, enhancing customer satisfaction and marketability.
3. Optimized Supply Chain Management: As A.I. gains deeper insights into real-time material costs, availability, and delivery logistics, it can optimize supply chain processes. This includes selecting the best materials for a project based on cost, quality, and sustainability, and ensuring timely delivery to avoid construction delays.
4. Improved Risk Assessment and Management: With a richer knowledge base, A.I. can more accurately identify and assess potential risks in development projects, from financial risks to construction delays. This allows for better risk mitigation strategies, reducing the likelihood of costly overruns and project failures.
5. Dynamic Investment Strategies: For real estate investors, A.I. with advanced knowledge can provide dynamic investment strategies by analyzing market conditions, property values, and potential returns. This can lead to more profitable investments and the ability to quickly adapt to changing market conditions.
6. Advanced Building Materials Research and Development: A.I. can accelerate the research and development of new building materials by analyzing vast amounts of data on material properties, environmental impact, and cost-effectiveness. This could lead to the creation of more sustainable, durable, and cost-effective building materials.
7. Automated Compliance and Regulatory Adherence: As A.I. systems become more adept at understanding complex legal and regulatory frameworks, they can assist in ensuring that projects comply with all relevant codes and regulations, significantly reducing legal risks and project delays.
8. Smart Home and Community Development: With behavioral insights, A.I. can contribute to the development of smarter, more connected homes and communities. This includes integrating technologies for energy efficiency, security, and comfort that adapt to the behaviors and preferences of residents.
9. Enhanced Market Analysis and Consumer Insights: A.I. can provide deeper insights into consumer behavior and preferences, helping developers and marketers tailor their projects and campaigns to the specific needs and desires of their target audience.
10. Robotic Process Automation in Construction: A.I., combined with robotics, can automate various construction processes, increasing efficiency, reducing labor costs, and improving safety on construction sites.

Picture this," says Trellis. "I can now write a response to the 50 most common customer service requests I get. Now I feed every letter I feed it into ChatGPT, and I also tell it, ‘By the way, if there's anything a customer brings up that’s not one of the 50 things, list his issues at the bottom so I can address those personally.’ But 90% of what I would ordinarily have to do to respond to the letter is now automated. That's an example of where I think you're going to see more and more AI in the Customer Service arena."

What Trellis wants most is for operators to get past their reflexive B.S. detector and take the time, add the resources, and explore today the ways that generative A.I. can already make a difference in their businesses.

Operations Improvement

Project Management: Implement A.I.-driven project management tools to optimize construction schedules, track progress in real-time, and predict potential delays or cost overruns.

Design and Planning: Use A.I. tools for creating efficient and innovative designs. These can quickly adapt designs based on zoning laws, environmental considerations, and customer preferences.

Supply Chain Optimization: Apply A.I. to analyze supply chain data, predict material shortages, and optimize procurement strategies to reduce costs and improve efficiency.

Supplier Relationships

Predictive Analytics for Inventory Management: Use A.I. to predict inventory needs, helping to streamline orders and reduce storage costs.

Automated Communication Systems: Implement A.I.-powered communication tools to maintain regular and efficient communication with suppliers, including automated updates and order processing.

Performance Analysis: Use A.I. to track and analyze supplier performance, which can help in negotiating better terms and identifying areas for improvement in the supply chain.

Lender Interactions

Risk Assessment Tools: Utilize A.I. for more accurate risk assessments when seeking financing. This can provide lenders with more confidence and potentially result in better loan terms.

Financial Modeling: Use A.I.-driven financial models to present well-informed projections and scenarios to lenders, showcasing the viability and potential of projects.

Customer Relationships with Homebuyers

Personalized Marketing: Employ A.I. for targeted marketing campaigns, using customer data to personalize messaging and offerings.

Virtual Tours and Customization: Offer A.I.-powered virtual home tours and customization tools, allowing potential buyers to visualize and personalize homes before they are built.

Customer Feedback Analysis: Use A.I. to analyze customer feedback and preferences, which can inform future designs and customer service improvements.

General Strategies for All Firms

Start Small: Begin with a specific, manageable aspect of the business where AI can make a noticeable impact. This allows firms to gain experience and confidence with the technology.

Partner with AI Vendors: Collaborate with A.I. technology providers who have expertise in the real estate sector. This can provide access to advanced tools without needing in-house A.I. expertise.

Invest in Training: Encourage employees to undergo training in A.I. and data literacy, ensuring that the team can effectively utilize AI tools.

Monitor Industry Trends: Stay informed about the latest developments in A.I. in the homebuilding and real estate sector to identify new opportunities and solutions.

The answer is relatively simple," Trellis adds. “It's the 80-20 rule. What will happen is, the people who accept change, like change, are willing to change – they'll grasp it quickly. Other people will not grasp it until they have to, or because they're forced to, or it becomes the norm. They won’t be the leaders or the most successful. I've become a crusader here. When I show this to my clients, most of them are blown away. They're like, 'I get it, Al. We need to do this.' It's all about demonstrating specific things that are beneficial to them, and save them time, energy, and money. I've had way less resistance than I kind of thought I might from people."

Then again, he's Al Trellis. They know he's about as opposite of "hype" as it gets.