Does the construction industry need blockchain?

06 October 2019
Can blockchain technology deliver the transformation it promises for the construction sector?
By Karthik Venkatasubramanian, vice president, data science and analytics at Oracle Construction and Engineering

As use cases for blockchain grow beyond the cryptocurrency world, the technology is beginning to find its way into a number of industries. We are already seeing solutions being developed for the construction industry, but does the industry really need blockchain?

It is understandable why some would see construction and blockchain as a natural fit. Particularly as some of blockchain technology's benefits include transparency, traceability, security and efficiency providing unalterable record keeping and data aligned to each participant.

In reality though, construction has had the opportunity to experience these benefits for a number of years. Neutrality — where each project participant controls their data and what they share via secure, private workspaces — along with security are the two main pillars of true common data environments (CDE). Building information modelling (BIM) works within the CDE to create a digital twin, essentially an audit trail or unalterable record of a project.

For blockchain to gain acceptance, it has to overcome a few challenges

Oracle Aconex brought neutrality to the construction industry and the tenets behind it we now see as core competencies of emerging technologies like blockchain along with the evolution of the CDE and BIM. However, there are still challenges within the industry in adopting a ‘distributed ledger’ approach to data management. For some, it is about controlling data in their own database. For others, it is about not wanting to share data, particularly commercial information, with others.

For blockchain to gain acceptance, it has to overcome a few challenges: the industry’s culture towards a perceived need for the technology, and securing the talent needed to make blockchain a success.


The perception that the construction industry is a slow adopter of technology does not consider some of the amazing work we see every day as general contractors and asset owners digitally transform their businesses. Some of these organisations are already looking at blockchain capabilities for smart contracts.

The real challenge will be convincing the majority of the industry that it offers something new not just an alternative option to an existing solution ie, another option for an audit trail. Also, as with all new technologies, organisations need to consider how it fits into their technology stack, how much internal change needs to happen and whether it is all worth it.

For blockchain to be accepted, let alone successful, it needs to demonstrate that it is required and that it is solving industry challenges in better ways at a cost that is not prohibitive. So, what are some of the practical uses of blockchain for the industry?

BIM has already been highlighted as a potential opportunity for blockchain. The BIM methodology working within a CDE is a destination for project information, creating an obvious opportunity for blockchain.

As previously mentioned, contracts and agreements are other potential areas of interest. Construction is a heavily regulated industry so the need for transparency and traceability is important. Smart contracts associated with blockchain could help facilitate agreements by automating contractual processes and payments between parties involved in a project. If smart contracts are also able to reduce litigations due to their transparency and automation, that in itself could be worth the investment.


A key query is about how much change the industry would need to go through to bring in the talent required to maximise the benefits of blockchain or whether it already exists. Universities are already teaching blockchain courses to power a new generation of specialists, but like any technology innovation for any industry, you would need technology architects to design the solution and business architects to define the need.

The list of likely job roles would span IT architecture, development, cryptography, product marketing through to database analysts and blockchain developers to ensure a blockchain based product or solution is relevant and what it captures is able to be utilised. Most of these roles already exist, many would need to be reskilled.

So, does the construction industry need blockchain?

As the value of data increases, the confidence in innovations such as blockchain is likely to grow but adoption is going to be reliant on wider industry acceptance and collective benefits across the value chain. Blockchain is also challenged by a lack of clear answers around scalability and while security is considered a benefit of the technology by some, others still need convincing.

There is also some ambiguity around future viability. We need the early adopters that are trialling smart contracts and blockchain enabled BIM on projects to be able to demonstrate benefits and answer some of these questions.

Technology for technology’s sake is not the answer and with blockchain it feels a little bit like it is a technology waiting to solve an industry problem. But we know from history that the technology solutions that succeed are the ones that provide disproportionate value.

It is too early to say whether blockchain based solutions will find acceptance in the industry. We are only getting started but it will be interesting to see how blockchain evolves.

Karthik Venkatasubramanian (pictured) is the vice president for data science and analytics at Oracle Construction and Engineering

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