How Blockchain is Disrupting the Construction Industry
- January 4, 2024
- Posted by: MainInstructor
- Category: Go
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Video Title: How Blockchain is Disrupting the Construction Industry
This video is brought to you by Squarespace. From websites and online stores to marketing tools and analytics, Squarespace is the all-in-one platform to build your online presence. The construction sector is one of the largest in the world economy with around $10 trillion spent
On goods and services every year. However, it is one of the most highly fragmented and unproductive sectors. Construction productivity has been flat for decades, while that of manufacturing has nearly doubled over the same period and continues to improve. The industry needs to improve its efficiency, productivity and embrace new, emerging technologies.
Digitization is part of this improvement. The first digitization revolution saw us switch from hand drawings on paper to computer modeling software. Projects were constructed faster, communication improved, and trades became more specialized. Drones, smart sensors, tracking software and the Internet of things are changing the landscape of the industry.
For example, the use of BIM or Building Information Modeling made the design process more integrated. Virtual Reality and Augmented Reality are being used in pitch meetings to explain projects to clients. Sensors monitor site conditions and workplace safety.
We are now seeing the emergence of a second digitization revolution that could be centered around the new blockchain technology. In this video, we’re going to understand how it works. We’re also going to look at potential applications of blockchain in the architecture, engineering and construction world and all the problems with it.
Blockchain is a digital ledger that stores information in records called blocks. Each block has three main components: data like timestamped transactions or agreements, a hash which is a digital fingerprint or unique identifier and the hash of a previous block. These
Blocks are linked together chronologically, like a chain of blocks. You cannot make a change to the information in a block, instead you create a new block, chained to the last block. Cryptography makes the blockchain ledger secure. Each transaction is recorded using encrypted data.
If someone tries to tamper with data, the change will result in a new hash. By comparing the two root hashes, users can see that the data is compromised. Another key advantage of the blockchain technology is trust. In order for business transactions to
Be executed, trust must exist between management and the employees of an organization and between an organization and its partners or customers. Trust isn’t built into the current version of the internet and we don’t trust each other. Currently, we trust third-parties like notaries, banks and
Lawyers to act as an intermediary. However, they add considerable time and money to transactions. Blockchain allows us to cut out intermediaries, keep data secure and speed up decision making. It generates trust without the need for a third party because no single person or group has control,
All users collectively retain control. The current media attention and hype around blockchain is mainly due to cryptocurrencies like bitcoin. But that is just one way of using blockchain technology. Let’s look at some other practical applications in architecture and construction. SMART CONTRACTS
Construction projects usually involve a large number of companies. You typically have to wait to get contracts, change orders and addendums from all the parties. You have to pay all the companies involved and wait for their status reports. Blockchain allows us to set up smart,
Digital contracts with a centralized tracking system. The companies involved define the rules, deadlines, and penalties before the project starts. The blockchain automatically enforces these rules during the project. Before we move on, I’d like to share a little project I’ve been working on.
Many people have asked me to share my scripts so they can refer to them in essays and projects. So, I’m building a website called carrbuilds.com to post all my building science content. I decided to use Squarespace because of its easily customizable templates. They can support pages,
Galleries, blogs, commerce and more. I can easily add and manage text, photos, videos and comments. Check out Squarespace.com for a free trial and when you’re ready to launch, go to squarespace.com/belindacarr to save 10% off your first purchase of a website or domain. Another advantage of blockchain is identifying SKILLED LABOR
Through blockchain, vendors and suppliers can use unique identifiers to record their performance and grow their reputation. LinkedIn listings and resumes are self-reported and unchecked but the blockchain is the “source of truth”. It can be easier to verify a company’s credentials
And check their past roles before hiring them. You can vet candidates and identify recruits more easily. PAYMENTS Late payments and cash flow issues are continuing problems in the construction industry. Transactions between parties usually include invoice errors, payment errors, bank holidays,
Currency conversion fees, etc. The average payment time for small and medium sized companies is over 80 days. This can put the whole supply chain at risk. Blockchain applications can be linked to bank accounts or cryptocurrency accounts to send faster payments. Builderchain and Builder Pay
Is a blockchain-based construction marketplace that uses commitment tokens to distribute funds from the construction loan to the project owner, subcontractors and manufacturers. SUPPLY CHAIN MANAGEMENT The fragility of our global supply chain has been exposed over the last two years. Blockchain systems can improve their robustness because
Materials are logged and traced, delivery time is easier, quicker and less bureaucratic. Dispute resolution is faster. You have better control of inventory and you can order and receive goods as needed which reduces waste. This can lead to lower costs and faster schedules. Maersk and IBM
Launched a blockchain-based system in 2017 called the TradeLens Platform. It is an interconnected ecosystem of supply chain partners – cargo owners, ocean and inland carriers, freight forwarders, customs authorities, and more. It offers a holistic view of shipment data and documents.
BIM & SMART ASSET MANAGEMENT Building Information Models can act as a single source and dashboard of all information. All the parties would be working to match the physical construction to the BIM model. Any deviation from the model would result in penalties.
BIM models can contain supply chain information, source of materials, payment details, revisions, etc. By combining BIM and blockchain in smart contracts, you can make payments, send out material orders, hold subs accountable and improve transparency, communication and workmanship on a project. A French company called BIMCHAIN has developed a blockchain application
To validate the origin, ownership and integrity of the data in the process of transferring the BIM models. “The BIMChain solution allows you to notarize and verify any type of data and BIM file in the Blockchain” Let’s be realistic, there’s a long road
Ahead before blockchain becomes the norm in construction. Many companies are still hesitant to adopt 3D modeling software, they still plan all their projects in 2D. Accepting blockchain requires a huge cultural and organizational shift and the development of new business models.
Building codes and regulations will be one of the last to adapt to blockchain documents. We will be juggling 3 mediums for a while: a paper trail, email trail and a blockchain trail. Designers and engineers are already stretched to their limits under tight schedules.
Blockchain applications have to work independently and seamlessly without manual monitoring. The cost of the system is another concern. The construction industry already runs on narrow profit margins. It is unrealistic to expect small and medium sized companies to shell out money on new technology and hire the necessary people right now.
Another problem is that BIM models are not the source of truth. I haven’t worked on a single project that is completely flawless. It seems like blockchain technologies are being developed under the assumption that engineers and designers get it right and that people out on job sites do
It wrong, which is very unfair. Contractors and subcontractors make drawings work. I believe that blockchain will be a part of construction in the near future, but it cannot operate on the same principles as the shipping industry or automobile industry. We
Don’t have that level of precision and everything isn’t automated. Any manual intervention brings in a certain margin of error which adds up. There are also many aspects to construction that simply cannot be automated; responding to RFIs or requests for Information.
Blockchain will definitely help large, complex projects, but small to medium sized companies that are still modeling in 2D may not see the benefit right now. The construction industry is usually late to adopt new technologies, so seeing people discuss the idea of blockchain is very exciting.
Let me know what you think about this technology in the comments below. How do you think it can benefit us and what drawbacks do you anticipate? I’ll link my Patreon page in the description. If you can support me, I’d really appreciate it. A big thank you to everyone already supporting me.
Don’t forget to hit the like button and subscribe to my channel. Thanks for watching. See ya.
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I've spent the last 4 years being very skeptical about blockchain and crypto. Since then, it has become a self-fulfilling prophecy as the "future of work". What do you think about it?
Informative
Excellent presentation on blockchain. Since my company is integrating Lightning Network services into routing/distributed processing there is a addition help. We’re globally deploying this AI routing and services along increased fiber optic capacity.
This could provide what is needed to accommodate both large and small companies or individuals. The supervision of contracts through templates will allow people all over the world to do business and delivery purchased items releasing funds automatically as its fulfilled.
5:55 👍🏾👏🏽
To reach your potentials, you need to start working towards it Investing remains the smartest way to prepare for the unexpected. Been in the space for 6yrs and extremely pleased with the decision I made. The good news is – it's not too late
Very nice job for me, i was looking for some arguments on favour on tech in construction industry, everyone talks about parametric design and superficial code for pluggins in Revit or others, and i think that, most problems of our industry are in the old construction proccess and management. It will be interesting compare the benefits between databases (i think is super neccesary) and blockchain.
I see all these comments in here about how blockchain will not fit the construction industry. And I laugh! It will! By itself and in its current evolutionary state, of course not. But the merge of AI with blockchain, the need for human input will be greatly diminished. Just remember what was said about email when it first arrived! Industries will bend or break and be reborn. I think you did a great job on covering blockchain technology and its possible use cases. Keep up the great 👍 work!
I'm going to make a wildly blanket statement here that so far has turned out to be true. Blockchain is never an answer to anything. There is always a simpler solution that already exists. Blockchain is a neat thought experiment looking for a problem it can be a solution to. Unfortunately neat thought experiments never really work in the real world.
Still waiting on that sike.
https://www.youtube.com/watch?v=P-D3adT1MVY
I can't see how any of this needs the blockchain. Not that I disagree that the areas you named will change and are about to change, but I think it is a little naive to think blockchain will be the solution. It is in the end nothing more then a very convoluted way of encrypting things. Let’s ue the contract example. Essentially the attempt is to replace Lawyers as the trusted party with the blockchain. While tempting it seems short sighted and also ignorant of the fact you still need lawyers to draw up the contract. So instead of reducing the cost you now increased it to use a new tech instead of using a “normal” contract that your lawyer encrypted with one of the many other encryption that are far less redundancy based. What I see for the future is that lawyers will start having “trusted” servers where contracts can be encrypted and stored. You know like they do right now just digitally. This also removes the biggest weaknesses of block chain(like with paper and mail) the people using it being dumb.
Also let’s also not forget there is other systems to do what blockchain does just not linked that are far less energy intensive. Hashes aren’t new, encryption is not new, the idea to store both to be save is not new. The fact that linking them in a way that is mathematical complex is new and well it is just that a showy way for do the same thing. A XTS-AES 128 encryption will also hold, not as long as blockchain? Dunno?´Both are currently out of the realm of our computing by a long while.
So not to sound rude, but we won't juggle a block chain trail. The points above combined with the amount of energy and money wasted every time a project needs adjustment make that idea dead on arrival. Imagine a mega project needing to spend energy and cash that could be used on the project just to set up a new contract for new lights and add them to the chain. It is extremely inflexible and in direct opposition to the idea people try to sell with block chain. We got good encryption, we don't need this stupid gimmick for that. What will change is the adoption of digital infrastructure and services. Some are already in places and others need building. Non of them will use the blockchain as the market has shown time and again it is not aiming for the most secure, but the most effective and blockchain is many things but most effective it is not in many many cases.
How will this work for the common BIM Modeler
Of course! Nothing is always good or bad.
Everything can be used for both good or bad!
Blockchain is currently being used mainly for bad IMO, but can be used for good if employed correctly
I think in the end, it ( blockchain) will make us weaker. Everytime we digitise something, we loose a realife actual skill or knowledge. Its a very easily collapsable thing, and we wont be able to , or at leats will strugle to go back, when needed.
What problems do I see – Human GREED
Thank You Belinda. As usual, you have helped simplify an overly complex idea, for future implementation! Wonderful.
Can this tech be used for political parties or local government?
You said it. Building in 3D. So antiquated to be building in 2D
As someone who has witnessed the Cad revolution in the architectural field, i can tell you that it did not lead to efficiency. The budget for the planning stage remained the same, it is just that we invented a lot of information that should be communicated. When you consider a hand drown plan from 30 years ago with a comparable plan today, you will see a lot more black ink now. Most of this information is only there to please project management proces control surveyers and other people of that sort. Burocracy has grown exponentialy, partly due to the more complex technology, but also because jobs could be created.
Hi.I’m into oil&gas construction.I’m pursuing MBA and looking for project work for implementing blockchain in construction.
All to often blockchain is a solution in need of a problem. It's only real benefit is that changes are logged…but at the expense of seems of data, and processing power. It is getting more efficient, but right now it is a huge energy sinkhole, and there are cheaper ways to accomplish the same task.
A bit doubtful. Perhaps some value in construction, but so know there are vulnerabilities. Watch this vid on Blockchain to understand: https://www.youtube.com/watch?v=YQ_xWvX1n9g
I bet 10 years from now that blockchain has nothing to do with construction
Always trusted this channel. But this makes no sense.
Love this line: "Trust isn't built into the current version of the internet, and we don't trust each other."