Transforming Construction and Design: The Rise of AI and Digital Innovation in 2026
Key Takeaways
- Most construction and engineering companies are planning to adopt new ERP systems within the next two years to support AI integration.
- AI enhances data analysis speed, enabling faster, more accurate reporting on project performance metrics like profitability, safety, and delays.
- By 2026, modernization efforts and AI adoption will lead to a smarter, more connected, and resilient construction industry capable of redefining project management and delivery.
While most industries are undergoing more rapid transformation — driven by the accelerating adoption of technologies like industrial AI, automation, and connected data — the construction and engineering industry is often characterized by a resistant approach to technological change.
But the tipping point has been reached, especially as asset-intensive sectors are opening their eyes to the potential of AI to make operations smarter, more efficient, and more effective. The sector is standing on the brink of a once-in-a-generation innovation shift.
Construction and engineering (C&E) as a whole has been through a fundamental reshaping of how companies address long-standing challenges around profitability, productivity, and sustainability — how they respond to global economic pressures, redefine their value propositions, and deliver increasingly complex projects.
As a result, the shift from experimentation to enterprise-wide integration is now well underway, with 2026 guaranteed to mark a critical inflection point in AI adoption. But it’s essential for any business leader who is looking to leverage these technologies as essential components of larger digital transformation projects to understand the fundamental building blocks that must be in place before any type of scalable deployment is possible.
Getting the data foundation in place
One of the biggest trends we saw throughout this past year was the rapid adoption of modern enterprise resource planning (ERP) platforms that serve as digital backbones across organizations. In fact, our censuswide industry research study found that 63% of C&E companies planned to adopt a new ERP system in the next one to two years — a foundational move meant to enable the scaling of AI across their enterprises.
In terms of how many companies are embarking on digital transformation projects, this modernization statistic has proven to be underestimated. Nearly a year after making these predictions, we realize that the optimism around the role of AI being able to reshape workflows, project management, and intelligent decision-making is fueling a greater desire to adopt a future-proof ERP platform as the springboard for scalable, trusted AI deployments.
AI is set to take pole position
The latest IFS research study, “The Invisible Revolution,” which surveyed more than 300 senior executives from leading C&E firms in May and June of 2025, found that the sector is expected to become one of the most AI-first industries. Momentum is clearly building, with 91% of firms expecting to increase AI investment in 2026.
Giving time back to a resource-strapped industry
One of the greatest benefits of AI that we discuss with construction and engineering organizations is its ability to analyze and collate data in a much faster way. This gives all their employees — from workers on the construction site to senior management in the back office — more accurate, predictable, and reliable information.
The most practical example of how this enhanced and automated information gathering and analysis can benefit construction industry organizations is related to the enormous amount of time it takes to prepare their regular board presentations on project performance. Most companies host interdepartmental meetings monthly with all the senior leaders from each of their divisions. Typically, each team of people takes days, if not weeks, to prepare their data by gathering information across multiple software solutions.
Industrial AI gives C&E organizations more trusted control of their business by removing the unreliability and inconsistency of human guesswork, making it faster and easier to gather, analyze, and report on every dimension of project performance, including profitability, timeline delays, budget overruns, cost forecasting, safety incidents, quality, and more. Ultimately, leveraging industrial AI to enhance reporting and data sharing across the organization reduces business risk and delivers greater control over project results.
The AI advantages are plain to see
These benefits are clearly resonating across the industry. The latest IFS research study found that the biggest applications of current AI deployments across construction & engineering firms were project delivery (62%) and business intelligence (59%). Out of these early adopters who are currently deploying AI, companies are already seeing these benefits: 89% report profitability gains, and 44% outperform the cross-sector average in operational efficiency, 42% in supply cost reduction, and 36% in lowering project expenditures.
With the growing economic uncertainty across the globe, the most impactful benefit of industrial AI for this industry is giving companies greater control over project management. Out of all other industries, the project-centric nature of C&E businesses makes them most at risk of diminishing and/or unpredictable profit margins in volatile and disruptive markets.
Perhaps this is why the latest AI research shows that construction and engineering firms anticipate AI’s greatest benefits in project delivery (41%) and increased profitability (36%).
Planning a blueprint for success in 2026
As we prepare to craft our 2026 predictions for a rapidly evolving industry, we take a moment to reflect on the trajectory of AI adoption and overall digital transformation that exceeded our expectations in 2025. It’s clear that in a very short period, most construction and engineering organizations will modernize legacy ERP systems to pave the way for industrial AI and all the potential it offers to deliver greater project control.
The result will be a smarter, more connected, and more resilient industry — ready to redefine how the world designs, constructs, and builds.
About the Author
Kenny Ingram
Global Industry Director for Engineering, Construction, and Infrastructure
Kenny Ingram is the Vice President of Construction & Engineering Industry at IFS with specialization in the following industries: construction, contracting, engineering, infrastructure and shipbuilding. In addition, he is heavily involved in other project and asset lifecycle industries, including oil and gas, energy, utilities, and defense. His main responsibilities are to promote the IFS solution to the external marketplace and to educate the IFS workforce on the business issues and challenges these industries face. He is also a key member of the IFS product management team who are responsible for making decisions on the IFS product strategy. Kenny has been with IFS for 20 years and has worked in the business systems marketplace for more than 25 years. He is now regarded as one of the top specialists in project-based business systems and has been heavily involved in driving the IFS strategy in this area for the last 20 years. Prior to this, Kenny worked in industry in various positions covering management & project accounting, supply chain, and logistics.
Chris Knight
Chris Knight is the global industry director of construction & engineering at IFS. As part of the wider Industries team at IFS, Chris is responsible for connecting with customers and prospects, empathizing with their business pain points, providing advice and guidance inside and outside of the company to ensure IFS Construction and Engineering industry solution continues to deliver value. Internally, as an industry expert, Chris actively supports many parts of the business including marketing, business development, sales and partner enablement channels. Outwardly, he advocates for the need for flexibility and proactivity within the industry and as part of this, represents IFS by engaging with industry analysts including Gartner, IDC and ARC. An important part of Chris’ role is to align product strategy with industry expectations and projections, including hosting customer advisory councils in conjunction with research and development (R&D). He can be reached at https://www.linkedin.com/in/christknight/.