The recent government announcement of a national blockchain roadmap and funding for Australian businesses to attend an international blockchain event in New York shows just how far the technology has come since it was used to create Bitcoin and other crypto-currencies.
Governments around the world are now using blockchain for everything from identity management and drivers’ licences, to service delivery and data storage. But there are clear benefits for the building sector, too.
The number of parties involved, the complexity of standards and legislation, and the need for trust and verification across the supply chain make blockchain an ideal tool to manage construction projects.
What is blockchain?
A blockchain is a database of information, such as transactions or records, that are stored securely across a network of computers. This information is stored chronologically and can be viewed by users with the right permissions. However, blockchain is decentralised, which means there is no single owner of the information such as a bank or government.
Once published, the information on the blockchain cannot be changed or removed. Every transaction has a digital fingerprint related to the transaction before and after it, making it completely secure and trustworthy. It becomes a single source of truth, which can be accessed by anyone with the right permissions, in real time.
How can blockchain be used?
Blockchain is not only a technological innovation, but a business tool that has the potential to transform the building and construction sector.
Smart contracts in blockchain work on an if/then principle. For example, if the Development Application is approved then a Construction Certificate is issued. If the developer confirms the construction is complete, then the Accredited Certifier can commence site inspections for an Occupation Certificate.
This makes it clear to all parties when tasks are performed and when payments need to be made. There is no middle man, lost paperwork, or questions about compliance. There is full visibility of the project, as well as a record of any works performed over the life-cycle of the building.
Smart contracts create trust and transparency among all parties involved. For example, instead of documentation held by Council, government, clients, Principal Certifying Authorities, developers and sub-contractors, all parties could access the relevant blockchain and perform their role according to their contract.
Blockchain provides users with secure and verified Digital IDs, which could help companies build a reputation in the industry and ensure they can be trusted by new clients. Checking qualifications, memberships to industry bodies and evidence in tenders would not be required, streamlining the procurement process at every level of the project.
Supply chain management
Tracking building products through the supply chain could reduce the risk the use of non-conforming building products in Australian developments. As manufacturers must provide a legitimate certificate to the client, blockchain may be useful in verifying the accuracy and trustworthiness of lab accreditation.
It could also provide access to a transparent record of products used in a development, reducing the risk of doing business with new suppliers and providing more accurate forecasting on projects. In the case of mismanagement or faulty materials, products could be quickly and accurately tracked back to the manufacturer.
While blockchain may seem like a pipe dream, organisations in Australia are already looking to implement the technology. Probuild, one of Australia’s largest building firms, has partnered with a US company to manage its global supply chain. Meanwhile, CSIRO has partnered with a law firm and IBM to help Australian businesses use blockchain to create smart contracts.
According to the International Data Corporation, spending in the blockchain technology market globally is expected to grow to $11.7 billion by 2022. With the Australian Government proactively advancing the blockchain industry, it’s only a matter of time until we start seeing more companies in the building sector use blockchain to benefit their development.