Blockchain Technology Transforming Construction
The construction sector has seen many changes over the years as new innovative technologies have made their way into the sector, including 3-D printing, modular building, robots, smart homes and devices, drones, augmented reality (AR), wearables like smart helmets and proximity sensors, artificial intelligence (AI) and many others. To this growing list, we can add blockchain technology.
Blockchain technology is an innovative tool that can record information like transactions in a secure way that makes it near impossible to altar, hack, or cheat the system. The transactions are linked together in a “chain” called a distributed ledger and there is no need for a central clearing authority. Businesses can use this technology for stock control, supply chains, and contracts in ways not conceivable a decade ago.
No doubt that the reason why more construction companies are starting to adopt this technology is because they can help manage the whole process. Large construction projects such as Southside Residencies in Birmingham, especially, will benefit from blockchain technology as it will help these complex and dynamic systems be managed better and more securely.
It is called blockchain because it consists of a series of “blocks” of data that comprise a distributed ledger, a collection of accounts with each link a separate transaction in the project. As each contractual obligation is fulfilled, this is finalised and added as a new block/link in the chain. A significant benefit of this system is that it creates a natural order which is simple to follow when searching for information.
Secure, decentralised, and scalable
The three pillars of blockchain technology are: secure, decentralised, and scalable.
The principle of security refers to multilayer encryption, which hides data in code that is virtually impossible to uncover. The decentralised aspect of blockchain technology refers to “nodes,” a series of connections that automatically check transactions, resulting in a digital paper trail of records. Finally, blockchain is considered scalable because it isn’t confined to one central server; it can be scaled to accommodate any size project, including very large ones. A further benefit of this decentralised technology is that it reduces the likelihood of a system failure because it does not get stuck in a central server.
Efficiency in construction
Blockchain technology can help streamline the construction industry to a high degree, as well as other industries, by making project management more efficient. Construction projects often encounter obstacles along the way, and the larger the project, the more likely that they will pop up. Time consuming communication between various personnel, such as builders and contractors, can cause delays and impede reaching completion targets.
Blockchain technology will help with at least six specific areas in streamlining the construction process: predictive asset maintenance, smart contracts, independent oversight, payment processing, collaboration, and supply chains.
Predictive asset maintenance
Predictive asset maintenance is referring to a detailed ledger of the building’s assets which will simplify repair and maintenance. This is very useful because most of the information about the construction project is not handed over to the first owner. The blockchain distributed ledger ensures that this important information is stored for later easy retrieval, such as warranties and certifications.
Smart contracts are basically conventional contracts that have incorporated blockchain technology to keep ahead. Anyone in the network of transactions can access data because there is no centralised system, and so there’s no need for duplicating any documentation. All contacts and thus relevant information are easily accessible by all.
The linear and sequential aspect of this technology means contractors and other workers are held accountable by specific targets and requirements, or they are considered as not fulfilling their contractual obligations.
Independent oversight helps keep a check on the numerous contractors and subcontractors to ensure that they are adhering to the requisite standards and regulations, and this additional level of oversight is especially necessary for large and complex construction projects. Blockchain technology allows for these independent third parties to be effortlessly integrated into the project oversight system.
The payment processing is speeded up and often free because there is no authorisation or processing fee required. The efficiency and restrictions of the smart contracts make sure that the payments received are due to work having been carried out in strict accordance with the project framework. And as each step in the smart contract is fulfilled, payments are automatically processed, making for a streamlined payment process that reduces overheads and cost overrun.
Blockchain collaboration is instantaneous and greatly enhances transparency. Collaboration is encouraged with blockchain technology as project workers can all access the same data and are free to make recommendations and suggestions to improve work on the project. The collaboration is free to take place at any time or day and doesn’t have to wait until a pre-arranged meeting to take place to go over the details.
Finally, supply chains can be streamlined, which is important for large and complex construction projects like airports and universities. Blockchain participation from a variety of suppliers makes it much easier for project managers to keep track of materials, and even make sure that those materials are being used efficiently and appropriately. Hire equipment can also be effectively controlled with the blockchain network, reducing cost and wastage on rental timelines and utilisation.
At present, blockchain technology makes for an expensive investment for any construction company, reaching as high as 4 to 5 times the usual cost. But as more large-scale construction projects take up using this technology, such as seen in Australia with their National Blockchain Roadmap scheme, the technology is sure to catch on as the numerous benefits become widely understood and appreciated.