Blockchain’s Potential Benefits for the Construction Industry
Last week we brought our readers some information on Blockchain technology, with an explanation of what Blockchain is and how it works. It’s predicted that Blockchain can bring benefits to the construction industry by adding transparency to all types of transactions and agreements on construction projects by acting as a type of “contract administrator” to provide “smart contracts”, enhancing workflow and increasing accountability. Moreover, real-time project updates will decrease project delays and minimise the risk of disputes.
Although the construction industry was slow to begin using new technologies, this has changed in recent years and the sector has been making up for the initial delay by adopting new technologies and software necessary for 21st century working. However, according to the Farmer Review of the UK Construction Labour Model, (a 2016 report commissioned by the government and dubbed “Modernise or Die”), lack of investment in innovation, limited collaboration and structural fragmentation are serious issues within our sector, issues that could, in part, be solved by smart contracts. Whether or not our industry is ready for Blockchain remains to be seen.
As an industry that is perceived as being “resistant to change”, adopting Blockchain in construction may not be as effective as it should be. Some industry insiders are claiming that construction is “simply not mature enough for implementing crypto-technology at its full potential”.
According to the chairman of GenieBelt (an interactive project management platform for the construction sector), construction is the least digitised sector, with 95% of produced data not being used. This needs to change in order to make the most of Blockchain and the smart contracts it will provide.
Before an extensive implementation of Blockchain technology can occur, the industry needs to invest heavily in digitisation. An ideal example would be smart contracts which could prove incredibly useful in construction when we reach a point where the generation of a building’s real-time digital “twin” is considered an integral part of the construction process. With the help of drone technology, inspection management, and real-time data connected to projects, this could become reality.
If the building process were to be restructured and move closer to the requirements of the supply chain, smart contract technology would offer an extra level of support. For instance, a smart contract could be created using data generated by real-time project management software, an inspection checklist and drone images to certify that a part of a 3D drawing stands built as designed.
Blockchain has been successfully adopted in a number of industries like accounting, gaming, energy, and taxis – even education and academia are getting in on the act. However, it may take a little longer in the construction sector as we strive to understand the advantages that will be provided by data driven decision making, real time project updates and other benefits. Some aspects of Blockchain technology (such as the Bitcoin and smart contracts) could prove useful tools within our industry, but we need to make sure first that the industry as a whole is ready to take on crypto-technologies of this kind.