Blockchain in the construction industry: applications for the digitalization of the sector

Like other sectors, the construction sector is dealing with the digitalization process, with an ever increasing number of construction companies seizing the significant and tangible advantages of using the new digital technologies. We are not simply talking about document management or cloud computing systems, which are common to many other sectors, but also and especially Building Information Modeling, or BIM. Within this context of rapid processing, the possible applications of blockchain for building multiply: indeed, as we know, blockchain technology now boasts a degree of maturity such that it can be taken into consideration for any secure digital transaction without the need for a third party to provide guarantees. But to get down to details, what are the actual applications in the construction sector that companies will be able to implement in the next few years?

Blockchain: what is it and how does it work?

In recent years, almost everyone will have read one or more definitions of a blockchain. Yet there are still many people who do not yet understood how this technology works. So in order to explain the possible applications of blockchain in construction in a comprehensible way, we need to begin by providing a clear explanation of the term.

Blockchain literally means “chain of blocks”, and quite simply it refers to a system based on a distributed ledger that offers a very high level of reliability without resorting to a central entity.

More specifically, it involves a set of different technologies that form a ledger, that can be modified by different nodes in a network; in order for an alteration to be implemented, it must be approved by these nodes. And it is the fact that this consent is required from the different nodes that makes the validation process so secure.

As we know, the first and most famous blockchain applications were developed in the world of cryptocurrencies. But there are many possible applications, each one different from the next, but always featuring certain shared elements: they always involve decentralized ledgers that allow transactions and secure deals without the need for an intermediary, with full traceability of each alteration. And that’s not all: the platforms based on blockchain allow a high level of transparency and verifiability by all the interested parties.


Advantages and disadvantages of blockchains

Having considered what blockchain is, before moving on to its concrete applications in the construction sector, we will identify the main pros and cons of this technology. As we stated above, we are dealing with very secure systems that, as a result of their characteristic decentralization, guarantee a high level of reliability. The security is guaranteed on one hand by the fact that there is little risk from possible malfunctions, since each node possesses all the information required to recover the data, and on the other hand by the extremely low – almost non-existent – risk of manipulation. Moreover, these systems allow the updating in real time of all the stored data, with an immediate distribution of the data to all users.

There are also some disadvantages, however. The one most commonly cited by experts is expandability: at the moment, blockchain technology still has limitations in this area. Another issue is that it is a technology that by its very nature requires substantial powers of calculation, such that it may pose not insignificant problems for a company’s IT system. Also, we cannot ignore the fact that the various users’ access to the data depends on having a private key, with no real possibilities for recovering it: if the key happens to be lost, access becomes impossible.

Focusing more specifically on the construction sector, there are some other small but undeniable obstacles to blockchain applications: in fact, there are few companies in the sector today that would be ready to make this technological leap. Something that is likely to put a brake on the use of blockchain, even more than the lack of the appropriate technology, is the shortage of technical expertise; having a good command of this tool requires a knowledge of cryptography, development, network architecture and so on.

That said, let’s take a look at the principal applications of blockchain in construction.


The principal applications of blockchain in the construction sector

Blockchain technology is currently used in a range of sectors to carry out transactions in a way that is smart, secure and fast, to create smart contracts remotely, to complete registration processes and so on. Starting from these bases, the most interesting applications for blockchain in the construction industry may be:

– Complete tracing of supplies: the transparency of the supply chain is an essential feature in the construction industry. With these distributed ledgers of blocks, it is possible to trace every resource and every object in order to reconstruct its route up to the point that it is used on the construction site.

– Complete ledger of the life cycle of a building: with blockchain it becomes possible to maintain a complete, up-to-date and reliable ledger of the life cycle of a building, starting from its design. All the relevant data connected with a project are entered in permanent blocks that can be consulted in the years to come, thus facilitating the processes of inspection, maintenance, repair and renovation.

– Management of subcontractors: managing the activities of subcontractors is never simple, especially in the case of large projects. That is why the question has been raised from various quarters as to whether blockchains could be used in a similar way as currently happens with smart contracts, but with the focus on feedback on subcontractors. The contractor would then be able to depend on important and reliable data for managing the projects that are underway, as well as managing subsequent work in the best possible way.

– Waste assessment: blockchain technology offers the possibility to optimize the management of the many waste products in the construction industry, monitoring the entire life cycle of the materials with the relevant ledger; thus it will be possible to keep waste to a minimum and to increase the recycling rate.


Blockchain and BIM

As we have seen, the introduction of blockchain in construction could permit huge improvements in tracing activities. It is this premise that makes the contact between BIM and blockchain appear natural, in order to testify automatically that all the necessary stages have been correctly carried out as required and to the necessary standards. The use of these ledgers makes it possible to implement control points at the most delicate stages of the process, also taking into consideration the large quantity of data coming in from the IoT systems used to monitor the infrastructure.