On Monday, The home depot has announced that it is introducing software for builders, renovators and renovators that uses AI to generate project lists in just minutes. The technology, Material List Builder AI, is one of dozens of AI-driven software solutions aimed at increasing operational efficiency – measured in construction cycle time and money – in the residential construction industry.
Such innovations – should they reach critical mass among contractors and renovators – could be a boost in a time of tight margins and barriers to operational efficiency.
Strategically, Home Depot and its smaller rival Lowe’s have become more aggressive towards positioning that encroaches on established residential players in the ‘pro’ segment of residential construction. In 2022, The Builder’s Daily reported:
“It is no news that for years the two giants have placed varying degrees of strategic focus on the new home construction market from builders – large and small. Those investments and strategic commitments, especially with respect to the higher volume builder market, have fluctuated largely because those production home construction accounts presented a specific set of business challenges around distribution logistics, scale, profit margin and cadence.
“According to an executive with close ties to both the homebuilding industry and the distribution channel, he believes that now is the time for Lowe’s and Home Depot to consider encroaching on the areas currently held by Builders FirstSource, US LBM and ABC Supply, not only to capture market share, but to position themselves as beacons of strategic capability as the channel takes shape in the coming years.”
Material List Builder AI uses domain-specific models in major languages to understand the intent of a construction job and produce a materials list in minutes, automating a process that can typically take hours. The tool saves Pros time and can also protect margins by ensuring the generated list of product specifications is as error-free as possible.
“Pros often tell us that time is their most valuable resource on any job, so we focus on delivering solutions that enable professionals to work smarter and faster,” said Mike Rowe, executive vice president of Pro for The Home Depot, in a statement.
Users can generate a bill of materials by writing down project details, using a voice-to-text tool, pasting an existing list or using a starter template, according to Home Depot’s press statement. Once the tool has generated the bill of materials, it is editable and includes the project phases, stock availability, preferred pricing and the ability to order the necessary materials. The release included an example of a written prompt.
“We are in the middle of a renovation of the primary bathroom, replacing the double vanity with a more modern one, adding new recessed lighting, two new mirrors, and a new toilet. The client wants black 12″ by 18″ tile for the floor, and gray hexagonal tile for the shower,” the release said.
Operational efficiency is critical in times of shrinking margins
Home Depot’s Material List Builder AI is part of a larger AI-driven trend in the construction industry. There are other similar tools, such as Sitewire‘s BudgetIQ feature, which automatically generates a budget or materials list for contractors, builders and remodelers.
Operational efficiency has taken on an increasingly crucial role as shrinking margins, high construction and financing costs, and shaky consumer confidence have become existential challenges. Many contractors and tradesmen who work with homebuilders now operate in an environment where they have to accept less favorable contracts, i.e. contracts with lower margins. This reality requires greater accuracy and efficiency.
A December report of the Associated Builders and Contractors found that only a third of contractors expect profit margins to grow in early 2026, the lowest percentage in more than a year. Smaller contractors with annual revenues of less than $30 million are hardest hit by the current market, experiencing the lowest backlog levels in more than four years.
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