Blockchain, the decentralized database technology that chains together blocks of information to give project participants a permanent record of transactions, is not for every firm in the construction sector, says an expert.
But if the system is a good fit, those who remain hesitant about adopting it while their competitors roar ahead risk being left in their dust. That was the message delivered by Jon Trask and Nabil Irfan of the Canadian firm Blockchain Guru during a Dec. 5 presentation at The Buildings Show in Toronto. The firm offers blockchain solutions, development, consulting and training to firms around the world.
Calgary-based Trask, the firm’s “chief guru” who has consulted on blockchain with such engineering and construction firms as Fluor and Jacobs, said adoption of the technology by the construction sector is still in the early stages but it’s coming on fast.
“It is accelerating incredibly rapidly,” said Trask following his team’s presentation at the show.
“I believe that technology enhances process, people and the success of projects. The challenge for the sector, as a whole, is that the benefits we are getting from other sectors are so huge and the biggest companies in the world are adopting it at an unprecedented pace, can we recreate that in the construction sector? If one person comes in and does it while the others don’t, that gives them a huge advantage.”
Blockchain allows multiple partners to contribute and access data with “consensus” activities validating transactions and an “immutable” permanent record created. Participants use secure keys to collaborate and share data, enhancing efficiency, traceability, transparency, collaboration, auditability and security. It’s been around about 10 years, starting with Bitcoin, with the development of such applications as Ethereum and Hyperledger about four years ago viewed as important milestones.
A lot of the big firms are doing a lot with blockchain right now,
— Jon Trask
Blockchain Guru
Trask said construction companies should consider using blockchain if they answer yes to four or more of these questions: Do multiple parties share the data? Do multiple parties update the data? Are there requirements for verification? Do intermediaries add complexity? Are interactions time sensitive? Are transactions dependent on one another?
“There are a lot of things that are manual in the construction sector,” Trask said. “For artisans and woodworkers building a home, blockchain is not going to help that. But it might help him get his products faster. You have to figure out its place in the industry and you have to start an exploration process.”
Construction sector processes that could benefit from blockchain include supply chain management, smart contracts, smart procurement, asset management, digital document signing, time stamping, advanced analytics, payroll reconciliation, supplier management, quality control, fraud detection and global logistics, Trask outlined.
Working with large engineering firms, he said, “The first challenge we had was drawing management, the latest version of the drawing, what has been approved for building, what has been approved to go and procure the materials, and with some of the big EPCs, they have a difficult time managing hundreds or even thousands of pieces of data so that they have communicated effectively.
“It becomes the place to say, here is the communications process, do we have a record that it has been communicated out there.”
Efficiencies may be enhanced if firms also use the Internet of Things (IoT), machine learning and artificial intelligence, Trask said.
“A lot of the big firms are doing a lot with blockchain right now,” he said of the construction sector. “If you walk around you will see a lot of IoT sensors being used by companies out there. PCL is using IoT sensors.”
Blockchain is especially valuable to some firms when processes need legal protection or will be audited, Trask said. Ninety-five per cent of building construction data currently gets lost on project handover to the first owner, the Blockchain presentation noted, quoting from a report by Aon Risk Solutions.
“You have to look at every project on its own merits,” he said. “In reality, when you have multiple stakeholders and multiple contributors, blockchain becomes very, very strong, very, very powerful. And in construction you always have multiple people involved in projects.”
But simply having a large database does not necessarily mean a construction firm needs blockchain, Trask said. Blockchain Guru spends three to five days workshopping with firms to determine if they should move to blockchain.
“If you have information you use for internal purposes, and that could be historical purchasing data, that is fairly stable with little change and you are not sharing it with the vendor or with your customers, you probably just want to keep that on a database,” he said.
“If you want to enhance the amount you are sharing it with a customer or a vendor, and it becomes auditable, you probably want to put it on a blockchain.
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