What is Blockchain Technology and What Problems Can it Solve for The Construction Industry?
What is Blockchain?
Blockchain technology is becoming increasingly popular and being used in several industries including agriculture and banking sectors. It is basically a digital ledger that allows reliable integration and use of the data related to processes or transactions. Blockchain database stores all the important data and other information and secures it by cryptographic technology.
Moreover, it lets the approved stakeholders access the stored information in the ledger with complete transparency and trust, via a secure and verified chain or records. The stakeholders can easily access and add to the quality assurance processes, multiple layers of design review, payment records, and project management transactions. Blockchain technology can help the company save a lot of time and resources by eliminating the need for intermediate steps and intermediary parties in a process
What Problems Can Blockchain solve for Construction Industry?
- Payment Processing
One of the major challenges in construction is to make sure that payments have been timely sent to the stakeholders. Several regulatory requirements and frameworks such as defect bonds, security of the payment structure, project bank accounts, and retention trust are required to ensure that secure payments are made to subcontractors and workers. Blockchain technology has the ability to improve integrity and transparency of the payment processes by allowing traceable and secure payments.
- Workplace Safety Management Systems
Another challenge that construction industry is facing is the safety of its workers on construction sites. Every other day unpleasant incidents are reported on sites most of which involve workers. It has become extremely important for the industry to improve its workplace safety management systems. Currently, site events like failure of materials, safety incidents, weather conditions, and site conditions are logged manually via IoT tools and sensors. Blockchain technology can serve as a more secure source of Workplace Health and Safety (WHS), and other site information, with a high degree of accountability.
- Supply Chain Management
One of the many advantages of Blockchain technology is that it can be applied to every stage of supply chain management, including design, and material procurement, assimilation, and construction. Blockchain identifies the origin of construction materials, their suitability with the required specifications and quality standards, and secures the packing/delivery notes form the manufacturers. It also helps the firms in tracking the materials from shipping, customs, to the delivery site.
No other technology or method offers this level of accountability for supply chain management. By incorporating Blockchain technology, firms can encourage trust and right behavior among their workers and stakeholders, and improve the efficiency of supply chain ecosystem.
- Smart Contracts
Blockchain technology lets the firms create self-executing digital contracts known as “smart contracts” that automatically transfer money or an asset once it is verified by the underlying code that the predefined conditions have been fulfilled. Smart contracts can be used to track intellectual property rights, systemize payments, and transfer ownership of equipment and materials. This technology also reduces the need for intermediary parties and saves a lot of resources and time.
- Building Information Modelling (BIM)
The combination of Building Information Modelling (BIM) and Blockchain is a highly beneficial one. It enables the collection of high volumes of data from different design packages and presents it to the stakeholders in a dashboard format. In this way the information is securely shared between team members and stakeholders. This combination also allows the project managers to monitor and update the progress of the projects, and register and compare the work hours of both the workers and machines. BIM helps firms identify IP ownership, any problems in approved design and the quality of construction, and proposed improvisations or modifications and their impact on construction, and in this way improves the efficiency of design review and approval processes.