Blockchain in Construction? Building blocks or too many chains?


By Tris Tucker

The use of blockchain technology has increased significantly over the past few years providing a new and secure way to store and record transactions; but will it make an impact in the construction sector?

Smart construction contracts based upon a blockchain model could in theory provide efficiencies, particularly in relation to payment. On an 'if/then' model, prescribed works are recorded on the blockchain, formally validated as complete by a pre-determined independent surveyor and then payment for works are executed automatically. The TraderTransferTrust smart contract app (a blockchain based app using the currency Constructcoin), being developed by DotBuiltEnvironment, would be a simple and innovative example of automatic tested payments. Such a payment system, which provides more certainty and clarity, could save time and costs.

Blockchain can also improve security within the construction industry. Every transaction and data record within the blockchain is visible - it is a permanent record and chronologically ordered.

But, and it’s a big but, this has not yet been properly tested. Detailing an independent criteria to check completed works on a smart contract can often be difficult to define on a simple pass/fail basis when many complex construction requirements are taken into account. Also, whilst it could add more transparency to every type of agreement and transaction in a construction project, it would only be as good the data inputted. Would that role be undertaken by a project manager / contract administrator? Where would they start?

The biggest issue for me is the frequency of contested payment applications in construction projects. The industry needs to become more collaborative before technology like this can realistically be employed on a wide scale. When it comes to payment, ultimately that may require some changes to the current legislative payment machinery, which encourages un-collaborative behaviour.

Construction is “the land of disputes” the majority of which are inextricably connected with payments. The Blockchain technology could function as a trustworthy contract administrator by introducing an error-free process based on which the contracts would be both built and monitored.
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