The technology of ‘distributed ledgers’, more commonly known as Blockchain, from the finance industry, has the potential to dramatically improve the industry, contends Tim Rook
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” - Warren Buffett
Construction is suffering from a massive productivity slump when compared to almost all other industries, a significant cause of this is the very poor nature of data handling across the sector. Construction is one of the most complex data exchanges on earth, the variety of information, diversity of sources and uses as well as the global span are easy to see. However, concern about data security and commercial advantage are not conducive to solving this data problem. This, combined with a lack of leadership and a vested interest in the status quo have led to construction lagging the rest of the economy and in a $10 trillion global sector the opportunity for improvement is immense, in fact in its recent report on construction productivity consultant McKinsey estimated it to be a global opportunity worth $1.63 trillion.
Now is the time to begin to change. Right now there is a massive growth in connected devices - both people and things can now access networks from almost anywhere on earth. These internet of things (IOT) objects and smart phone enabled people are both generating and consuming vast amounts of data. Additionally, artificial intelligence and machine learning are providing new ways to leverage that data to drive improvement.
One of the most powerful new technologies is blockchain, or distributed ledger technology. Yes, this is the technology behind the much talked about bitcoin but there are many more versions and many more uses than digital currency. Incorporated under the blockchain banner are lots of different technologies which makes it difficult to define easily. However, there are a few key concepts that underpin the whole thing; immutable records which cannot be altered and are kept forever, a shared view of a single truth so no arguments about who paid who and when etc.
Blockchain can be described as a distributed database, which is networked so identical copies of information exist in multiple locations. Similarly to all other digital technologies, the capacity and capability of the technology is increasing at exponential speed to millions of transactions per second.
Blockchain can provide secure information exchange which can be permissioned and channeled for multiple participants. This brings the advantages of a shared view of a single truth, dynamically created without reconciliation between ledgers, yet different classes of participants are able to see selected information only. For example, a client may see that a boiler has been purchased by a tier 3 supplier but not how much was paid.
Imagine a construction sector where materials buying is dynamically linking the market with the projects. Concrete, with its limited useful life, can be placed on an open market in a city with price reflecting availability by the second. This reduces waste and encourages transport resource efficiency.
Imagine payments for labour and materials being triggered automatically throughout the supply chain as progress is made with zero financial reconciliation required. Thus a client knows the material originator will receive payment for a specific project, ensuring both fairness and completeness of warranty.
Imagine the regulators, insurers and owners of built assets being able to see what materials are being used, by who, using which methods and when. Not only during construction but during the design phase, checking against the digital model during construction and then at any time in the future.
How about socially important projects being paid for by secured crowd funding from anywhere on the planet, then the investments being able to be traded on an open market without fees? This has the benefit of disintermediation and separation of the funding from the project, both lowering costs and reducing the negative influences that investors have on the construction process.
The use cases are numerous and many are yet to be discovered. What is clear is that we are on the cusp of a revolution driven by blockchain technology. In much the same way that the Windows operating system revolutionised computers, a global construction data system could become the construction operating system.
YesBlockchain is a specialist construction industry blockchain software development company that is working at the cutting edge of blockchain technology. We are working with construction sector partners and leading global technology partners to develop a decision support and compliance platform.
In engineering and construction there are many situations where careful control of activities is vital to safe and efficient completion. On many occasions decisions have to be made that carry great responsibility. A good example of this is “safe systems of work” used in construction, engineering and facilities maintenance. Teams have to carry out work in which one wrong action or fault can lead to death, severe injury or property damage. The planning and authorising of these activities is a complex time-consuming decision-making process.
The role of the decision maker is key and is not an easy one. The people who make the decisions to allow the work to go ahead have great experience, training and knowledge. Yet they are still people and what is more they are usually under duress. The quantity of tasks requiring their attention, the time and cost pressures as well as human heuristics of poor decision-making work against them. The industry places a very high degree of reliance on the individuals who make the decisions, the nature of these jobs is making it harder to recruit people of sufficient technical skill to roles such as Authorised Engineer.
The death and injury rates in construction and engineering are still too high and mental health issues are rising. Many of these accidents and incidents occur in routine tasks, the results of lack of supervision and control typically these are falls from low heights and vehicle incidents. The YesBlockchain decision and compliance tool will be so cost effective that it could be used not only on high risk tasks but on routine tasks, delivering even greater efficiency and safety.
Current practice is not that robust and there is a lack of trust between stakeholders. In reality there is a lot of corner cutting and bending of rules - sometimes this is justified by the need to get things done. Other times it is not, the avoidance of governance is simply easier and the incompetent and negligent manipulate the system for their own good. There is a dislocation between corporate governance and the reality on the ground, which results in poor levels of corporate assurance. In addition, current processes are characterised by high waste, rework and aborted work all of which adds significant cost to a project or contract.
The above characteristics of this sector are well understood and have been highlighted in multiple sector reports such as the Farmer Report. There is a clear need to use digital technology in innovative ways to improve lives and commercial gain. The sector is likely to experience 3 drivers to take up digital technology more widely; an expectation from young people joining the sector, a commercial imperative to improve margins and the regulatory response to persistent failings such as Grenfell.
At YesBlockchain we believe that the market is on the cusp of digital transformation, the technology is now available and is cost effective. We believe the best products are made through collaboration and would interested in speaking with potential partners.
To bring this back to the quote at the beginning of this article, it is time to change vessel rather than continue to patch up the old one.