The missing link: How blockchain can help construction industry leaders to monitor and manage change

As Heraclitus said around 2,500 years ago: “The only constant in life is change.”

Unfortunately, what he didn’t tell us was how to monitor and manage that change… But that’s only because Blockchain hadn’t been invented during the era of Pre-Socratic philosophy.

What is blockchain?

Blockchain is a digital technology that allows multiple parties to access the same information in a digital ledger of transactions. This digital ledger is duplicated and distributed across the entire network of computer systems that form the blockchain.

In a blockchain, information is stored in blocks that are linked together in a chain. Each block contains a unique code, called a hash, that identifies the block and its contents. Once a block is added to the chain, it cannot be altered or deleted. This makes the information stored in a blockchain tamper-proof and provides a high level of security.

This technology can significantly impact the construction industry by improving transparency, accountability and efficiency throughout project execution.

One of the main benefits of blockchain technology in construction is its ability to provide a single source of truth for all parties involved in a construction project. This can help prevent disputes and delays by ensuring everyone can access the same information in real time.

Overall, the future use of blockchain technology in the construction industry is promising. As more companies adopt the technology, we can expect to see increased transparency, efficiency and collaboration throughout the construction process.

How can blockchain improve efficiency in project delivery?

Blockchain technology has the potential to increase efficiency in the construction industry in several ways.

Improved transparency: Delivering a construction project involves multiple parties, including architects, designers, contractors and subcontractors, which can lead to a lack of transparency. Blockchain technology can provide a transparent and secure record of all transactions and activities related to a construction project. This can help reduce disputes and improve accountability – which is becoming increasingly important due to the requirement of the UK’s Building Safety Act and the need to capture the Golden Thread (see below).

Collaboration and communication: The use of blockchain can facilitate the sharing of information between project stakeholders. This can improve collaboration and communication, reduce the risk of errors, and increase productivity.

Secure data sharing: Project delivery can involve the production of sensitive data such as design plans, contracts and financial information. With managed permissions, blockchain technology can provide a secure and decentralised platform for sharing this data, which can reduce the risk of data breaches and cyberattacks.

Provenance tracking: Blockchain can also be used to track the provenance of building materials and ensure their authenticity. This can help prevent the use of counterfeit or substandard materials, which can be a major safety hazard. Additionally, tracking the movement of materials through the supply chain can help optimise logistics and reduce waste.

Smart contracts: Smart contracts are self-executing contracts that can automatically enforce the terms and conditions of an agreement. They can be used to automate payments, manage project timelines, and ensure compliance with regulations and safety standards. This can help reduce the time and costs associated with manual contract management.

How can blockchain support the Building Safety Act?

The Building Safety Act is new UK legislation that has arisen from the Hackitt Review in response to the Grenfell Tower fire in 2017. Blockchain technology can support the implementation of the Building Safety Act by providing a transparent and secure system for tracking and managing building safety data.

Tracking building safety data: The tamper-proof blockchain ledger can be used for tracking building safety data, such as inspection reports, maintenance records, and safety certifications. This can ensure that building owners and managers are held accountable for maintaining the safety of their buildings.

Streamlining communication: Blockchain can facilitate communication between different parties involved in building safety, such as building owners, tenants, regulators and inspectors. By using a decentralised system, a single source of truth can be established, communication can be streamlined and made more efficient, reducing the likelihood of miscommunication and errors.

Facilitating compliance: Blockchain can help to ensure that building owners and managers comply with building safety regulations by providing a transparent and auditable record of their activities. This can reduce the likelihood of non-compliance and improve overall building safety.

Improving data security: Blockchain uses cryptographic techniques to ensure that data is secure and tamper-proof. This can prevent unauthorised access to building safety data and reduce the risk of data breaches.

What are the challenges in the adoption of blockchain in the construction industry?

Despite the potential benefits of the application of blockchain technology construction, several challenges must be addressed before widespread adoption can occur.

Lack of awareness and understanding: Many construction professionals are still unfamiliar with blockchain technology and its potential applications. There is a need for education and training to increase awareness and understanding of blockchain’s benefits and how it can be integrated into construction workflows.

Fragmented industry: The construction industry is highly fragmented, with many different stakeholders involved in each project. This can make it difficult to establish a common blockchain platform that all parties can agree on and use.

Data standardisation: The construction industry generates a large amount of data, but there is a lack of standardisation in how it is collected, stored and shared. This can make it difficult to integrate blockchain technology into existing workflows.

Regulatory issues: The use of blockchain technology in construction may raise regulatory and legal issues, such as data privacy and ownership. This can create uncertainty and hesitation among stakeholders.

Technical challenges: The implementation of blockchain technology requires technical expertise and infrastructure, which can be a challenge for smaller companies. Additionally, blockchain technology is still evolving and there may be technical limitations that need to be addressed.

What’s next?

Blockchain has the potential to revolutionise the construction industry. The technology can increase transparency, reduce costs, improve security and enhance the supply chain. While there are challenges to its adoption, such as the need for standardisation, technical expertise and regulatory clarity, the potential benefits are significant.

So back to Heraclitus and a philosophy of change that has been passed down the centuries. In an impermanent world, an immutable digital ledger can offer a sold, singular source of truth. In an industry of fluidity and flux, like construction, blockchain is not a static solution but a dynamic digital framework that can help us move towards a more efficient, competitive and sustainable future.