How Blockchain Will Change Construction
Blockchain technology is among the most disruptive forces of the past decade. Its power to record, enable, and secure huge numbers and varieties of transactions raises an intriguing question: Can the same distributed ledger technology that powers bitcoin also enable better execution of strategic projects in a conservative sector like construction, involving large teams of contractors and subcontractors and an abundance of building codes, safety regulations, and standards?
“Increasingly, we are thinking more carefully about when and where we need to compete and what can we share and collaborate on,” said David Bowcott, global director of growth, innovation, and insight in Aon’s global construction and infrastructure group. Using Blockchain to automate the contractual processes and paperwork underpinning these complex projects could save money, free up valuable resources, and speed up project delivery. (Unless otherwise noted, quotes are from interviews we conducted as part of our research.)
Blockchain-Enabled Real Estate Development Projects
In commercial real estate, Amsterdam-based HerenBouw is applying Blockchain to a large-scale development project in the city’s harbor. According to Propulsion Consulting founder Marc Minnee, HerenBouw’s objective was to set up a Blockchain-enabled project management system to make the building development life cycle more efficient. Minnee’s Blockchain application for HerenBouw focused on registering transactions at legally binding moments, where accuracy and an audit trail are essential. “Blockchain provides a platform for clearly cascading work products down the chain and holding everyone accountable for completing key tasks,” said Minnee.
The system’s benefits include timely information, unambiguous 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,” said Minnee. They also develop trust, which reduces friction in their mutual business processes. “Stakeholders spend more time discussing creative design and building method options.”
Blockchain Pilots in Construction Achieve Liftoff
Aon, the global risk adviser to the construction industry, estimates that 95% of building construction data gets lost on handover to the first owner. Briq, a California-based bloc