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If the market cools, AI itself will certainly remain, but previous tech bubbles have taught us that often startup vendors disappear. Local governments are wise to keep pace with AI adoption, but choosing proven partners that offer stability, public-sector industry expertise and depth of workflow knowledge will safeguard their investment for years to come.
AI ADOPTION IS RISING, BUT IMPACT ISN’T KEEPING UP
For all its hype, the practical outcomes of AI are not yet delivering on its vision. Recent Massachusetts Institute of Technology (MIT) research shows a stark gap between interest in AI and measurable results; despite $30–40 billion in enterprise AI investment, 95 percent of organizations report no measurable return on their initiatives.
A consideration for local governments is that most startups do not reach the production stage; current figures show that only 5 percent of task-specific AI tools reach successful deployment.
However, this should not put off local governments from investing in AI. Rather, considerations need to be made as to where, how and who with, so your investment matches the outcome. In the permitting and plan review space, the market is still maturing. We are at the start of this exciting AI journey but exploring with a proven guide is always the safest.
WHY VENDOR INSTABILITY CREATES REAL RISK FOR LOCAL GOVERNMENT
AI tools learn from your processes, documents and code interpretations. When a vendor disappears, along with loss of financial investment and software access, you lose that accumulated context, face workflow disruptions and even hinder citizen service delivery.
Abandoned pilots result in service delays.
Public-sector technology implementations take time. If a vendor exits the market, agencies may have to restart procurement, retrain staff or transition mid-project — significantly slowing permit issuance and increasing administrative burden.
Higher switching costs compound over time.
After investing time and money to train AI tools on local workflows, it becomes much harder and more expensive to replace them. Switching costs compound, so choosing the right vendor matters from the outset.
Fragmentation as vendors consolidate.
Proven solutions ensure that AI is encased in a protected, stable business with a strong delivery track record. Agencies that select unproven vendors risk being left with unsupported tools after acquisitions or strategic pivots. Procurement leaders often ignore pitches from AI startups due to uncertainty around vendor longevity.
FOR STABLE, EFFECTIVE AI ADOPTION, KEEP TOP OF MIND THAT:
1. Vendors that integrate directly into existing workflows are most beneficial.
Look for systems that streamline workflows without creating new data silos. Vendors should demonstrate:
- Existing, trusted, proven government partnerships
- Strong understanding of operational workflows
- Minimal disruption to current systems
- Clear data boundaries and APIs for integration
- A robust AI road map
2. External partnerships outperform internal builds.
Across 52 organizations, MIT found that AI projects built with external partners were twice as likely to reach deployment (~67 percent vs. ~33 percent). These tools also saw higher employee adoption.
For local governments, this reinforces the value of selecting vendors with public-sector experience and the resources, partnerships, and expertise needed to maintain and support long-term product development.
3. For the strongest ROI, look for AI that streamlines both front- and back-office workflows.
While AI budgets often focus on front-office use cases to ease citizen services, significant savings and ROI can be found in operations and administrative tasks.
Plan review is well-positioned to support both front and back office. AI can act as a “front gate” check to improve submission quality, as well as complete back-office submission administration checks to minimize resubmittals and accelerate approvals.
A PRACTICAL FRAMEWORK FOR BUBBLE-RESILIENT AI INVESTMENT
Local governments can confidently adopt AI by applying a workflow-focused evaluation framework.
1. Select vendors with demonstrated public-sector stability.
Choose vendors that have proven long-term durability:
- Broad, active government customer base
- High year-over-year retention
- Multiyear live deployments
2. Choose use case-specific AI.
General document AI tools may perform well in demos but often fail in production. Highly specific use case AI performs better; 95 percent of embedded task-specific AI tools fail due to workflow misalignment.
3. Insist on system integration and data continuity.
To ensure meaningful adoption and avoid costly switching, plan review AI should include:
- Integration with permitting and plan review systems
- GIS alignment
- Strong authentication and security
- Clear data ownership and exportability
4. Maintain human oversight with transparent governance.
For high-stakes work, users prefer humans by a 9-to-1 margin. AI should support — not replace — expert judgment.
Look for systems offering:
- Auditable logs
- Reviewer-controlled actions
- Clear guardrails
- Transparent explanations
5. Align investment with measurable operational outcomes.
Define KPIs prior to implementing AI to ensure value and compare vendor performance. Relevant plan review metrics include:
- First-time submission acceptance
- Average submission cycles
- Reduced permit backlog
MOVING FORWARD WITH CONFIDENCE
AI will continue transforming plan review and community development. The question is not whether to adopt AI, but which vendors can support agencies long after the current surge of market activity subsides.
Agencies that prioritize public-sector experience, workflow alignment, system integration and transparent governance will modernize safely, sustainably and confidently.
