Is there a blockchain in our future?

The digital transformation of construction rolls onwards, adding yet more ideas. After BIM, GIS, IoT and 3D Printing comes Blockchain. This financial technology (fintech) concept is the power behind Bitcoin, the shadowy cryptocurrency that currently oils the wheels of nefarious businesses across the world. So, why would this be a relevant idea for our industry? I’m not going to attempt to explain how blockchain works, but it essentially allows all parties to a trade to access an incorruptible record of transactions. It allows trust in a business that lacks it. All business done in a blockchain environment is recorded many times in the servers of all those given access, so nobody can break into the record and alter it without it being obvious. The term ‘distributed ledger’ is sometimes used to describe it, with each block of data solidly linked to all others in a chain of blocks.

The other useful ability of blockchain is that it can be used to make automatic payments when instructed by a computer program that is satisfied that a transaction has been completed as required. The idea of so-called ‘Smart Contracts’ is that as tasks are completed the agreed payment is made, all without human bureaucracy or manipulation. The algorithm which guides the process uses computer code to replace the legal code of a contract. Both forms of code seek to describe what should occur if a circumstance happens: ‘If this, then that’. The enthusiasts for smart contracts sometimes say that ‘code is law, as law is code’. Trusted intermediaries are not needed to administer smart contracts and blockchain can be used to record everything and to make payments right down the supply chain.

The availability of an undisputable record of actions and facts supports dispute avoidance and resolution. Even without blockchain, online services are available to manage disputes through algorithmic methods looking at an audit trail. Blockchain would make the record even more trustworthy than, say, that in a project common data environment. The fact that all actions are recorded should also make team members admit to errors sooner, as they will be found out. Hugh Thomas of Foster and Partners believes that ‘Blockchain is going to change everything’.

There is considerable interest in the potential of smart contracts and blockchain, in academia, in government and in some digitally-aware businesses. There is also scepticism, with many of the functions required, like online payment systems, being available already without using blockchain. The question of how actions are verified in construction presumes human judgement, though some could be automatically validated, such as a delivery of goods to site or of data to a client. Also, blockchain is currently an expensive technology, using a lot of computing power and energy. It may pay off in financial services transactions, but in construction?

Work going on in this area includes that by DotBuiltEnvironment, the former BIM 2050 group. They are looking at rewarding data provision as delivered, and at automatic payment for work. University College London (UCL) has formed a Construction Blockchain Consortium to bring together the university’s fintech experts with digital construction experts. Visit and log in as CBC123 to see what is going on. The University of the West of England (UWE) plans a seminar in September on Smart Contracts at which I shall be speaking.

It could be that blockchain enables our adversarial industry to collaborate properly. BIM thrives on collaboration but most contract forms drive players into transactional behaviour rather than lasting relationships. If criminals can trust each other via Blockchain, surely our hardened practitioners could benefit?

Blog author: Richard Saxon CBE, JCT Chairman

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