Blockchain technology is an extensive tool used to record transactions and link them together to form a “chain” that’s known as a distributed ledger. Companies are using blockchain to take control of supply chains and contracts in ways that weren’t possible just ten years ago—but how realistic is the widespread adoption of blockchain in construction?
As more construction companies adopt blockchain, even very large construction projects will become easier to manage. Read on to learn more about blockchain and the changes it proposes for the construction industry, or jump to our animated infographic and get the visual scoop.
What Is Blockchain?
Blockchain is a linked series of “blocks” of data that form a distributed ledger, a fancy name for a collection of accounts—like a checkbook that automatically balances itself. This ledger is home to transactions or contracts that define a project.
It can be thought of like a literal chain, each link a separate transaction in a project. If one supplier completes a delivery and fulfills their contract, the completed contract is finalized and added as a new “block,” or link in the chain. This gives blockchains a natural order that’s easy to follow when looking for information.
How Blockchain could transform the construction industry
The most significant benefit of the blockchain is in trust, transparency and ease of access to important documents such as invoices.
Often, a construction project may have a large number of stakeholders, such as construction workers and companies, architectural firms, and materials suppliers. Coordinating business operations and administration among these stakeholders is often a major undertaking.
Safety management consultants, for example, can provide essential safety advice for construction companies, but they may not have easy access to documents that show which practices or materials a given participant is using or supplying. As a result, they may not have all of the information they need to properly advise the client on potential safety risks and best practices.
Typically, there are no universally available records of payments made, materials shipped or work hours logged. Because of this, records may vary or conflict, potentially leading to a breakdown of trust and communication, especially in the case of a cost or time overrun where it’s not entirely clear who is to blame.
A distributed digital ledger can help solve this problem. No matter what each stakeholder’s individual documents say, everyone has access to a log with the same information.
Blockchain Will Transform Future Construction Projects
Blockchain’s possible benefits to the construction industry as a whole are exciting. Australia is home to many of the world’s leading blockchain construction projects, thanks to a National Blockchain Roadmap implemented in February 2020 that highlights present blockchain success and opportunities for implementation within different sectors.
Australia’s National Blockchain Roadmap Steering Committee, responsible for oversight of the implementation plan, estimates that the global market for blockchain construction projects will near USD$200 billion by 2025. However, blockchain’s impending takeover raises some important challenges that will slow implementation.
As you can see, blockchain has some great potential to be an extremely positive force of change in the construction industry. And while the industry may not be ready yet for a full-court blockchain press, know that adoption of such is closer to reality than it is far away. Looking towards the future, blockchain is just going to be something that you’ll be hearing a lot more of—and it’s only a matter of time before it’s a necessity in any construction business.
