How to Use AI for Construction Businesses with Martin Preece | Pt.2

Hey, Construction Legends. So this is episode 2 of an interview I had with Martin Prienz of the Building Talks podcast. And in it, we talk about how the latest developments in technology are going to impact construction, why AI is going to specifically impact the white-collar side of construction, and how you can use the tricks that we talk about in the episode to increase productivity by using AI in your construction business. So enjoy and I'll chat to you soon.

So tell us a bit. So you formed Quantum Contract Solutions before COVID wasn't it? So 2019. We'd obviously touched upon the reasons, I guess, that triggered you into setting that up. So tell us a bit about the business and what it does. And you mentioned there that you, or earlier, that you operate in the States as well, in the United States as well as here. So yeah, tell us about the business that you've set up and and what you provide and where you can add a bit of value to different subcontractors or head contractors or within the construction space?

Yeah, so I mean, we've talked about the problems that they face. And so the, I guess the key linchpin here is if you want to solve these problems yourself, you're going to have to hire contracts people, contracts administrators, contracts managers, maybe a lawyer, whatever it happens to be, into your business. Now, even with that considering, depending on the size of your company, that might be worthwhile. Now, every large construction company, right, will, you know, if you just start rattling off costs here, you probably know better than I do, for almost every project, well, the in-house, they'll have, they might have an in-house lawyer or two or a team of in-house lawyers, right? So I don't know what we're talking about, we're talking about couple of hundred grand, if not more, right, per annum in salary. Then you've got your contracts administrator, quantity surveyor, or contracts manager, which is another 200-odd, right? Now, let's just step back for a second and think to ourselves, the biggest and best construction companies are willing to spend money of that amount on those people on projects for a reason. Okay. And essentially, you know, that's, that's your game, Martin, right? And so, and, uh, and by all accounts, you, uh, you're very good at it, but they're willing to spend, do that for a reason. And the reason they're willing to do that is because there is a return on investment on that by having those people. So by you not having that, those people in your business, you're losing money. Why is that? You're because you're signing a crappy contract. Your cash flow is probably terrible because you're not getting your change orders, variations, EOTs across the line. You're probably not getting paid what you should get paid. And you, and you could be finding yourselves in disputes, right? That's kind of the stuff that can happen. Now, where we fit in is kind of that level of company is probably smaller than the guys that you deal with, that they cannot afford to hire those people in-house. And so they use our service to be able to perform those functions. So we will do their contract reviews for them. We'll negotiate their, their contracts to make sure that they are they sign a low-risk contract. We'll do all of their paperwork in the post-award phase to make sure that they're getting their EOTs, change orders, variations approved. We'll give them advice. They can just bang on a call with someone on our team if they're getting in a dispute, if they have any contractual issues, and we can have a chat and we can strategize about how to play it out. You get yourself into a dispute, it's a race to see who loses the least amount of money. That's the bottom line. So you can get all of our services using our company. We're fully online. And, you know, sometimes people think, oh, well, if they're online, they're not going to be able to see what's happening. Well, most companies that have these people back in their head office anyway, so you got to jump on Zoom to chat to them anyway. So it doesn't make a difference. We can jump on with you. We're like available all of the time. We basically work 24/7 across 7 days a week. So it makes achieving that contractual success much easier. And so construction is about is about really two things. It is constructing things, supplying things, building things, but also about getting paid for it. And we are the getting paid for it side of it.

Yeah, um, you said any firm, okay, and it might sound a little bit like we, we make sure you get paid, so, uh, come and see us and we'll go and visit them. So do you— how does that work then? So you, you're the front of, uh, you sort of face your clients' clients on their behalf, or you kind of guide them, support them, and coach them to present themselves as the focal point in the business for these contractual matters, getting paid, EOTs, whatever it might be?

Yeah, it's the second. So we want our clients to— we want, you know, their clients to look at our clients and say, yeah, these guys are super professional. They know what they're talking about. They're switched on. And so We, you know, there's certain times where we're asked to join meetings on if it's a really tricky negotiation and there's like, they're just, oh, we just, we just got this guy, he's going to come in and help us with this negotiation. We do that from time to time, but more often than not, it's giving them all of the information they need to have the meeting themselves and the strategy that they need to get a good outcome.

Yeah. And so, so the business is based in Perth, but what countries are you operational in as a business?

We're in Australia, New Zealand, US.

Yeah. And are you, are you seeing— I mean, I often get advised by different employers that everything's different from one state to the next in Australia or one country to the next. But with your position and being able to see sort of New Zealand, Australia, US, are they the same issues in every country and across most contracts and most markets, or are certain, uh, is there unique issues in each country or in each geographical region or anything like that?

It, it's nuanced. So in Australia, each state has a different, different set of laws. In the US, each, each state has different laws, 50 different laws essentially. New Zealand as well. And so, but you got to think about it is the contract itself right, is, is secondary to the law, right? So the law is above the contract and the contract falls as part of that. What we're talking about is in the confines of that contract. So it's within the contract. Outside of the contract, you're going to need, you're going to need lawyers. If you're out, if something is outside of the contract, you're in trouble, you're in big trouble, right? So let's— our job is to make sure that that doesn't happen. You don't get to that big trouble. So we're in the confines of a contract. And so that is commercial principles. That is understanding what the contract says. Now, there are some nuances, like in some states in the US, paid when paid is legal, right? And in Australia, paid when paid is illegal. So, you know, what I mean by that is, in some states in the US, they can say to you, hey, we haven't been paid and therefore we can't pay you.

Yeah, okay.

Okay, which is brutal, right? So there's a few little instances like that, but the contract will still say that. And so everything is within the confines of the contract and it's set based on commercial principles. So there's different terminology, things are called different things. Like, so in the US there's a retain, a retention, retainer. In here it's retention, right? In, in Australia. So, but expertise-wise, it doesn't, it doesn't really matter, provided you have the expertise to understand what is in the contracts themselves.

Yeah. Yeah. And then I guess within your business sense, so you, you have what, contract specialists in the US, in New Zealand, in Australia, or? People from the US in Australia?

Yes.

Um, interesting. And how, how are they with New Zealand and then US laws and interstate laws? Do you have to be— because I'm guessing you probably have to— yeah, it must be quite— before you can answer any question technically, you have to think, right, well, what law are we referring to and in what country? Is that, is that quite tricky to get your head across the world?

Well, no, no, again, it's not.

It's—

we're talking about the, the contract itself. Okay, we're not trying to, we're not trying to talk about the laws based on, on those contracts. It's like, what is in the contract itself and how does that impact the, your risk profile and how does that impact your cost, right? It's not necessarily the legalities of, of, of what's happening at the legal level, right? All we're concerned about is reducing your risk and reducing your cost. It's not about the, the legal side of things. It's— we got to be clear on that. It's, it's, it's cash flow, it's risk, it's cost. That's what we're concerned about, okay? At the end of the day, that, that's it. And so again, within each state, there are things that matter, and we have experts that, that, that deal with it. But it really— we're talking about what is in your contract. What are you signing in the contract, and what's it asking you to do?

And that's where you support the, the clients that you have. And if we focus exclusively into Australia, there's already— there's been some pretty big— I mean, in the last, say, well, I can't remember, I saw an article the other week, maybe 2 or 3 weeks ago, I forget in which newspaper, but it was referring to the, the number of businesses going into administration, uh, nationally, but also specifically in construction. And construction, forget what the figures are, but it's significantly higher volume of construction organizations going into administration than traditional businesses. So how do you see 2023 playing out for this ongoing risk? Do you think we're gonna have a lot more, um, well, we probably will, but what, how are you seeing the market and what do you expect to happen as regards administrations and companies going into stress and what have you? Is it gonna be a tricky year, gonna be a tricky few years, or how do you measure it or review it?

So my, my general thesis on these things is you can only control what you can control in your own business. And so you need to control your own, your own set of risks, what you can control. The market's going to do what the market's going to do. You don't know what the market's going to do, right? We don't know. Ultimately, you can, you can have a guess. And it, you know, I think Warren Buffett's always talking about if you're trying to time the markets, you know, you're just, you're at nothing, right? So, um, so we can try and time it, we can think it's going to go down, we, but we don't know. So I, I I, I will state that that is my, my general belief. Just control what you can control. But in general, if we're looking forward to, to it, we can see that construction companies are going out of business. Now, what, what, why is that happening? It ultimately is because the, the inflation is, is increasing the cost of materials. And I don't know where the people are, but there's no people. You can't get people to do stuff, and which is also increasing the cost of the people that you're They've disappeared, right? I don't know where they're hiding. I genuinely— they've disappeared everywhere in the world where no one can get anybody. So they must be somewhere chilling out, right? Relaxing in every industry, right? So there's some— somewhere in the world where there has to be an excess of people. I don't know where they are. So you can't get people. So the cost of the people that you can get are— is much higher. Okay. And I think everyone's experienced it, or you've got to get worse people for more money as well, which is, is the thing that's happening too. And so they're kind of things that are happening in the industry itself. The cost of financing, the cost of debt is going up dramatically, obviously. So costs in general are all increasing. Now, if you sign the— oh, the other part of it is during COVID as part of stimulus, the government stimulated the construction industry, which in itself is better than handing out money to go spend money like they did a few years ago. Just go spend money. 'Cause you end up spending on electronics. Electronics typically come from China. Money goes to China eventually at the end of the day, right? Whereas if you spend money in construction, at least you end up with an asset at the end of the day. So if you're stimulating, you're ending up with projects, you're ending up with schools, you're ending up with hospitals. So it's a better way to stimulate the economy in my opinion. Even houses, even, I'll, you know, I think we'll all agree that what happened in Australia during COVID basically the grants, they got, you can get $70 grand worth of grants, but then everything costs $70 grand more. Basically, right? We can see that that happens. Obviously that's also happened, but it's still a better solution than other, other things in my opinion. And so all of these projects kicked off. There's loads and loads of projects kicked off. And so what we're seeing now is people can't deliver on the projects. So they won a project based on a particular price that might've been lump sum. And then now that lump sum is no, it's no longer profitable. They can't get the materials. They couldn't get the people. The cost of debt is increasing and then bang. That's what's happening. And so while that is kind of playing itself out, I think that will continue to play it out over the next, over the next year. But I'm pretty generally in the construction industry, I'm positive. I'm pretty positive. So there might be a contraction, a reduction in, in the amount of projects that are happening, but I think the government always does lean on construction to stimulate things. And so resting on that, I think that's it as a construction, it's good. But if you are a smart business and you've looked after your own basket of goods and you're keeping your risk down, I think genuinely, if while other people might be going out of business, if you're one of those companies, you're going to clean up and fortunes are made in downturns. And if you're a good construction company, that's a good operator, you will do very, very well.

Yeah, yeah, I'd agree with that. I think I said in my business during, uh, the COVID lockdowns, and whilst it was nerve-wracking at the time, it was a good opportunity. And I think that's true of a lot of businesses that either start off when markets are tough or make it through tough markets. They become leaner, more efficient, better at what they do. They've saved costs, they've improved opportunities on margin. So, um, it's just a matter of trying to, as you say, get your own house in order sort of thing. Um, One of the other things I'm interested in, and some of our listeners may or may not know, but you obviously— and you touched upon it at the start— you enjoy business as well. So you enjoy and obviously you read a lot of business-related sort of books. And one of the things you also do is you run your own podcast as well, like myself, which is how we sort of came across one another. We sort of operate in our jobs in a similar sort of space. And you talked about marketing and things like that. What for you is so important in the modern world with marketing? And you've touched upon AI again. How do you sort of revolve that into your sphere of knowledge or understanding? And how do you talk to our listeners that own businesses, be they head contractors, subcontractors, or wherever they might be? How do you intertwine your understanding of marketing and podcasts and all these other items that are sort of slightly unique to businesses in construction? How do you weave that into your sort of your daily work and your interaction with clients?

Well, the landscape of businesses is different now. Okay, so I tell you, like, when I started up the business in Perth, I used to spend my days going— St. George's Terrace is like the main strip of all the CBD. And all I would do, right, I was in a state of constant caffeination, right, where I would walk up and down trying to meet people for coffees. Yeah, this is like amateur, amateur hour. And so what I learned through help and, and lots of, lots and lots of money spent on mentors and masterminds and, uh, business help is that media is leverage. And so it used to be social media where you would follow me and you'd see my stuff, but that's not the case anymore. It's more interest-based now. And so basically, if you look at podcasts, if you look at all the different media channels like LinkedIn or whatever, that is essentially how TV and radio used to be. That's it. And so if you can leverage media for your business, it's something that is, you can reach more people. If you can have a business that is, you can serve more people, it obviously you can help more people. And so it's about using leverage. Like, so, you know, there's, there's a guy, uh, there's, there's a really book, a really good book called The Alimac of, of Naval. So Naval, Navi, Ravikant, I can't remember exactly, is really good Silicon Valley entrepreneur. He invested in Uber and all of these guys. And he talks about, um, leverage. And there's different kinds of leverage. There's leverage in people, so you employ people, then you can have more leverage in your business, obviously, because you can do more stuff and you can help more people. Another type of leverage is finance. You can, if you can get other people's money, you can obviously do things quicker because you can hire more people and you can get more sales in your business quicker by using other people's money. There's software, AI, and then by doing, by writing software, by using AI, you can deliver things quicker. And again, you can help more people. And the other one is media, which is podcasts, YouTube videos, YouTube Shorts. And so while so many people look at people like MrBeast, right, who's the biggest YouTuber out there, you know, and they look at views and stuff and they get really disheartened. And believe me, I've been disheartened so many times by the amount of people, the views or the limited number of views But it, it's all relative in that, you know, my audience is construction subcontractors. And so if only 200 people watch a video or 50 people watch a video, that's 50 CEOs and general managers watching a video that, that we've put, that we've put together. And so originally that was disheartening. It was, oh, I don't have the views of like these Logan Paul guys or whatever. But all of a sudden, you start getting sales from these things, and people trust you and like you. And because of you putting that out to the market, you are using leverage to your advantage. And over time, leverage compounds. Your audience compounds. The amount of people that are watching yourself compounds. The amount of people that you can help compounds. And so while the biggest thing about these social media things is people go, oh, they do something for a month They do something for 6 months even, and they get no results and they go, oh, that's good. I'm not going to try it anymore. You've got to do it. You got to do it for years. And when you do it for years, only then does it start to compound and matter and work and just needs to be built in. This is business now. And even for construction companies, I would suggest that construction companies having podcasts or cornerstone content is like, it's almost mandatory now if you want to continue to grow or if you want to grow Bigger. If you're happy with where you are, that's fine. But if you want to grow as a company, it's something you should be doing.

And for our listeners out there that may or may not know what Cornerstone Content is, if subcontractor that does, I don't know, Rio or a carpentry firm or a glazing organization or whatever they might be, what type, what is Cornerstone Content? And as I'm sat here talking, my chair, I've got some issue. I've got a, it keeps dropping. So before long you're going to be looking at the top of my head and the tip of my knees. So yeah, what kind of cornerstone content would you, for listeners in subcontracting space, could they think about adding to their marketing?

Okay, so I'll give you my best. I think this is a great idea. So I'll give you the concept. So the concept originally, I saw this back in Ireland. There was a company called Bruce Shaw. They're actually called Linesight. They've grown, right? They've grown from Ireland. They're all over the world. They're in Australia now as well. They're in the US, they're in Singapore. Huge company. They were called Bruce Shaw when I was working for them years and years and years ago. And what they used to do back then was they would produce a handbook that was cost per whatever, cost per linear meter of X, cost per linear meter of how to build a house, to dig a hole, whatever it was. They just produced this document twice a year or once a quarter. I don't know. I don't know the exact timeframe. And they would give it to all of their clients and people could use that to estimate costs. And it was pretty, it was the most accurate thing that was out there because it was the most up-to-date costs based on whatever. And they still do this to this day. And that was their cornerstone content. And they might even sell it for a small amount of money or they give it away for free. But so now these guys, they did cost management. And so if you're looking for someone for an estimate, who better to go to than the guy that, the guys that produces this document. And they're all of a sudden looked at as you are the best guys in the industry because you produce this cornerstone piece of content. Um, so that is one of the ways to do it. A very smart way, I think, to do it from— if you're a scaffolder, or if you're— what was your example, Martin, that you asked me about?

Oh, carpentry firm or a concrete, uh, a carpentry firm, right?

So if you, if you were able to produce a course or a certification or a training that trained, like, to train the supervisor how to supervise carpentry work for whatever, right? And so you ran this course that was for supervisors on how to whatever it is, like, you know, a certification. Okay, and so you did that, and this particular business that you are running on the side of your business, kind of like a front-end product, you don't— doesn't necessarily have to make huge amount of money. If it breaks even, that's— that it can just work away and break even, and, and that can be okay. So a couple of things that are going to happen from doing that. One is They're the guys that do the certification for carpentry, right? So first of all, they, they are, you know, they obviously are going to be great at what they do because they're the guys that do the certification. Okay. So that's the first thing. Second thing is people that are coming into the certification, you're going to get leads from those guys to become a client to do the jobs that you do, that you need to do.

Okay.

So if, if, if a CEO of a company is, oh, I want my supervisors to do that thing. Oh yeah, okay, right. So they've done the supervising and you've built in a system to go, okay, you reach out to that CEO, hey, XYZ has now been trained, you know, can we, could we potentially get on your books to be, you know, a preferred supplier, blah, blah, blah. You create an agreement with them. Now you've gotten this stream of income that is not tendering, or maybe it is tendering, but you're getting invited, you're invited directly by the client. And so those gives you opportunities to do those things. You can offer things, you could now say you could, So for example, you got me onto this podcast, right? Or we're on this podcast together. There's benefit to both of us for being on this podcast, right? You get a podcast and then I obviously can get out there as well. When you've got a training course like that, you can go to a client and go, hey, you can use it as leverage. Hey, we can do this, but we can also train your guys up and certify them to be better at supervisors. Oh, value, right? Or you can, and you could sell it for a 20% discount or whatever it is. So you've gone to them to give them value. Right. You've not reaching out to them for work. You're reaching out to them to, hey, I can give you value. I can get all your guys trained up. Uh, happy to give you guys a bit of a discount if we can become a bit of a, uh, you know, we can create a relationship. Okay. Bang. You train them all up. Now you've got this relationship with a new client. Okay.

Yeah.

That's what Cornerstone content does. That's what it gives you. And then that little thing, if you can get that business to pay for itself, you're essentially getting relationships and leads for free.

Yeah. Yeah. Definitely not something that many builders or construction organizations are aware of, but I think that they're kind of learning it. And you mentioned AI as well, which is in my industry, that's something that's— there's a bit of chitchat around AI and different things within the recruitment sector, but within construction, what kind of AI, be it platforms or ideas, have you got that can support construction companies?

So I think right now where we are is I don't know how AI can help your company. I don't know how AI can help a scaffolding company. That's essentially, that's for you to figure out, right? Just candidly. But the thing about it is if you were a truck driver on a mining site, you know, a couple of years ago, well, whatever amount of time, and you heard about self-driving trucks coming in, right? That's, that's where we are now. Now you as a company can make a decision to do nothing and be made redundant, or you can make a decision to be upskilled And then you can be the guy that is driving 5 trucks from joysticks, right? Wherever it is.

Yeah.

And so that's it. So what we are doing in our team is we're constantly challenging people. How can we use AI to increase our output? Because, you know, if we are the company that can do all this contractual stuff using AI, well, that's great. We're still gonna be in business. Right. But if not, then we're probably gonna go outta business. And so we need to be, and you need to be, probably it's up to you, of course. Uh, and the subcontractors need to be an AI-enabled company. How can we use AI to get better at what we do? Because even let's just say you can do all this contract stuff, let AI can do all of this contract stuff, or you could use a platform. You're still like, you still couldn't be bothered to do it if you are, if you're a, if you're a scaffolding company. And there's an AI platform that you could potentially use to do your contracts, you still wouldn't know the prompts, you still wouldn't know how to do it properly. You still don't even know the right questions to ask it to, or like you don't understand, you don't have the knowledge, right?

Mm-hmm.

And so you'd still outsource to a company to do that for you because they know how to do all that stuff quicker for you.

Yeah.

Does that make sense? And so that's kind of where we're going and that's what you want to be. And so I guess the only way to get there is just to continually upskill your own company to use AI. So I mean, using ChatGPT is a simple way to start. Let's start playing with ChatGPT. How can you use ChatGPT to, uh, GPT, how can to do things quicker in your business? How can you get the, the people in your business to start using ChatGPT to do stuff quicker?

Yeah. Yeah. And have you— have you— I mean, I only came across— I heard about ChatGPT multiple times. I didn't really know what it was. I thought it was like, um, I thought it was like Google basically. And I was speaking to actually the people that do my website, and they were talking about how other people had mentioned to them. Um, and then I had a, had a bit of a go at using it for some information. But what I found was it was great at sort of typing it all up and putting it together, and I assume the grammar was quite good. Because my grammar's shocking and I assume a computer's grammar is better than mine because I think my 6-year-old is probably better than mine. But, um, I then had to go through it and alter it anyway. So, um, so whilst in that instance it's obviously good and it's somewhere, it's something that as a business owner you, you need to have somebody check it anyway, as you say, or you need to have somebody make sure that the— if it's contracts, because I, I read somewhere that HR managers can write employment contracts, um, but you've still— even if it could, you've still got to check it and make sure it's valid and it's relevant and it does what you need to do. But, but it will come a point, like digital cameras eventually replaced, um, I don't even know what it's called, the, the— what do we call it— film that we had to put in cameras. It might have taken a while, but eventually it replaced it completely. So I'm sure, uh, yeah, there are, there are certainly things that people can do within their businesses to use, um, well, any form of, uh, form of AI. And for that matter as well, and you must have seen this as well, I've had previous guests on the show that have spoken about the advancements of construction technology, be that pay apps or different financial software or things like that. Is that something that you encourage subcontractors to sort of buy into and become a part of and get better at?

Yeah, you have to, you have to, you have to. You've got, you've got to be— if you can be quicker and faster than the other company, it's going to be a benefit. To you.

Yeah, yeah. Um, all right, well, thank you for your time, Cian. So before we finish up, do you want to, uh, give the listeners an idea of how they can reach out to you or the business, or if they've got any questions or queries, how they get in touch, or how they, um, hopefully try and, um, take some, some of your guidance and opportunities to learn from you or get in touch with you? How would they do that?

Yeah, sure. So just that if you're looking to learn how to negotiate your Construction Contract. There's a playlist on YouTube. You go to Construction Secrets, there's our channel, there's a playlist there. It'll, that'll walk you through everything. So that's a good way, that's a good place to learn. Uh, Construction Secrets, the podcast itself is, is just search it and you'll, you'll find it, um, wherever you listen to it. And that is essentially all of the war stories, all of the contractual little things that if you listen to that over time, you will become essentially contractually savvy. You'll understand all of these things. So that's you learning how to do it yourself. If you want us to do all of the legwork for you, just go to quantumcontractsolutions.com. You can get us that way. Yeah.

And that's anywhere in Australia. Most of our listeners are in Australia. So be it Victoria, be it New South Wales, Queensland, wherever it might be.

You operate nationally 7 days a week. Yep. Australia, New Zealand, and US.

US. All right. Well, thanks for your time, Cian Dillon Brennan. I appreciate that. And enjoy the rest of your day, mate. Hopefully our listeners take plenty of information from that.

Thank you, Martin. Hey, Construction Legends, I hope you enjoyed that. If you want more of the same, please click here to have another cool video. And we've also got a full contract negotiation training course. It's 6 weeks, everything you need to do to negotiate your own contract. It's a playlist, click on it, go through all the training, and it'll make you way, way better and allow you to sign way less riskier contracts and set yourselves up for success. Okay, so choose one of them and go for it and conquer.