Productivity in the $10tn global construction industry is lower now than in the 1950s.
Factors contributing to this decline include inadequate communication along the supply chain, contractual misunderstandings and poor short-term planning.
While tackling the industry’s many challenges may seem complicated, the main issue is the clear lack of trust between stakeholders in the industry.
One potential solution could be blockchain, and firms and even governments are exploring the technology to solve critical challenges. You can think of blockchain or distributed ledger technologies (DLT) as a network of ledgers where entries – which can be transactions or contracts – are replicated across many agents. To alter an entry in the network, you need to simultaneously hack the agents storing the data, making hacking DLT technologies impossible.
By design, DLT maintains trust in transactions and agreements, with all entries becoming immutable. We should keep in mind the technology is simply a programme that runs over a network. Thus, it can also execute instructions such as payments and contract actions autonomously.
The introduction of blockchain or DLT in construction can bring enormous benefits to an industry where the cost of trust is so expensive. For example, typical contracts can be digitised to run in the technology’s trust-keeping environment to automate its stipulated clauses. This programme is called a smart contract.
DLT technologies can help us perform expensive tasks such as automating payments upon project milestones and computerising contract administration. Changes to documents are also immutably stored and tied to an end-user’s digital identity for validity.
Based in Australia, BuildSort believes its DLT software can improve operational efficiency, cut project completion times, protect payments and reduce material manufacturing operating costs by 30-40 per cent. This article has only touched the surface of what we know is possible. More applications include digitising title deeds and proving the provenance of materials.
About the author
Aaron D’cruz is chief marketing officer and co-founder of BuildSort