New Delhi

Artificial intelligence (AI) and other automation technologies could unlock around USD 228 billion in annual value for the US architecture, engineering and construction (AEC) sector by 2030, while AI's impact on the European construction sector alone could reach approximately USD 126 billion, according to a McKinsey report.

The report noted, AEC is one of the world's largest industries, with global construction output estimated at around USD 15 trillion in 2025 and projected demand expected to reach USD 22 trillion by 2040.

However, the sector continues to face stagnant labour productivity, which rose by just 10 per cent, or 0.4 per cent annually, between 2000 and 2022, compared with a 90 per cent, or 3 per cent annual increase, in manufacturing.

"On its current trajectory, construction output could fall short of demand by up to USD 40 trillion cumulatively by 2040," it noted.

The report further noted that if deployed effectively, AI could automate a significant amount of nonphysical work in the AEC industry.

"AI has the potential to automate 50 percent of nonphysical work in the architecture and engineering sectors and 39 percent of nonphysical work in the construction sector," the report noted.

As AI agents become increasingly integrated across business functions, the greatest value and profitability are likely to accrue to companies that control proprietary project data, the workflows where key decisions are made, and the ability to charge for outcomes rather than time spent.

Additionally, McKinsey noted that a significant share of AI's value could come from functions where time, costs and margins are currently lost, with AI expected to deliver rapid efficiency gains. Processes such as invoicing, data entry and equipment inspections are likely to see the most significant transformation by 2030.

The report said AI's impact on the AEC sector is likely to develop across three phases. In noted, "In the near term, leaders can use agents to streamline knowledge work and coordination workflows. In the medium term, companies can gain an advantage by turning project data into reusable institutional assets."

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In the longer term, AI is expected to increasingly integrate design, planning, logistics, equipment and on-site execution into a more automated operating system.