How Blockchain Can Revolutionize The Construction Industry?
Blockchain technology has proven to be one of the widely disruptive forces. Its power to record, enable and secure a huge number of transactions does raise one question in our minds: can the same technology that powers bitcoin also allow us for the better execution of strategic projects in sectors like construction, involving a bigger number of contractors and subcontractors?
David Bowcott, the global director of growth, innovation, and insight in Aon’s global construction and infrastructure group said that “Increasingly, we are thinking more carefully about when and where we need to compete and what can we share and collaborate on.”Using blockchain for contractual processes and paperwork could save a lot of money, save valuable resources, and speed up project delivery.
Blockchain-enabled real-estate development projects
Amsterdam-based Herenbouwis uses blockchain for the large-scale development project in Amsterdam harbor. Per the Propulsion Consulting founder, Marc Minnee, HerenBouw’s main goal was to develop a blockchain-based project management system to make the construction development sector more efficient. His blockchain application for Heren Buow aims at recording transactions on legal platforms, where accuracy is not compromised.
“Blockchain provides a platform for clearly cascading work products down the chain and holding everyone accountable for completing key tasks,” Minneesaid.
This technology provides advantages like information being updated quickly, secure communication, and fewer mistakes. “Stakeholders have a clear and evenly distributed incentive to register these facts on-chain: either you won’t get what you ordered or you won’t get paid, Stakeholders spend more time discussing creative design and building method options,” Minnee added.
Blockchain pilots in construction achieve liftoff
The global risk advisor to the construction industry, Aon, has reported that 95% of the data gets lost on handing over to the first owner. Briq, a blockchain firm in California, demonstrates the potential to operate and secure a construction project’s information in a ledger that involved parties can view and deliver to the owner. “When a product or specification needs to be found in a building, there is finally a place to go to simply search for what is actually in that building,” said Bassam Hamdy, the CEO of Briq. The blockchain-based information is coarse –paint colors, ceiling fixtures, LED bulbs, door hardware, etc.
“Any improvements and refurbishments to the building can be documented, and the whole repository can be transferred to new owners if the asset is put up sale for,” said Ellis Talton, Briq’s director of growth marketing. In simple words, building owners get an actual ledger that includes everything that has happened regarding the building.
Overcoming cultural obstacles
Hardwired practices in the construction industry are likely to postpone the widespread adoption of blockchain. “The construction industry is technologically advanced in many aspects of what it does,” said Talton. “But the industry is very relationship-based. There are many family-owned firms and private companies. The selection of contractors and subcontractors can be based on relationships that have existed for decades.”
He also pointed out that very less money (less than one percent of revenues) is invested in contracting and technology infrastructure for operating elaborate construction projects.
Scott Nelson, CEO of Sweetbridge, believes that blockchain-based management is suitable for the construction sector: “Projects are well-structured and contract-based. Objectives are clear—be on-time, on-spec, and avoid rework. Classic project management techniques still work, but projects can benefit from a more decentralized and agile approach where transparency is high and parties can be compensated for outcomes as well as work performed.”
Identifying applications of blockchain in project management
Within a few years, blockchain will become the ultimate application for construction project operations.
We believe that organizations need to explore their potential of it:
- Looking at use cases for blockchain adoption- identify where success lies based on putting enterprise boundaries; where contracts, payments, and identities are to be protected; and where the details should be tracked. A few ideas are as follows—
- A ledger that tracks subcontractors’ deliverables could prove beneficial to identify trusted subcontractors for a project.
- Smart contracts that recognized accountabilities and triggered milestone-based payments could process agreements.
- Blockchain-enabled applications that recorded data into a connected project management dashboard could improve workflow.
- A distributed ledger that described the process of construction could record all construction information, including warranties and maintenance details.
- Blockchain-enabled apps that store details related to materials, testing, and results against building codes and standards could enable smooth inspections
Developing prototypes and initiating projects-Do precursory analysis: examine the currently used systems, analyze the users and decide who would need to be involved in identifying feasible alternatives, choosing the prototype, designing the initiative, and participating in the testing.
Make a business case for investing in blockchain. Identifyingwaysthatblockchain can splurge project success, like improvising processes and organizational capacity to identify and share large amounts of data with specific people.
“Collectively, we are all better off if we encourage data collaboration and use blockchain and machine learning to help us establish longer-term industry roadmaps for investments, and technologies that can boost productivity and efficiency and lessen the risk,” said Bowcottfrom Aon.
Even though the key factors regarding the management of projects will remain crucial, blockchain allows managers to use their talents in problem-solving and achieving greater outcomes.