The Future of Collaboration in Construction is Trust, backed by Blockchain.
Collaboration is one of the most overused terms in construction. We can’t just expect that people will do it, just because they’re asked. They need to be supported, it needs to be easy, and they must be continuously incentivised.
The support could come in the form of a framework that provides transparency of who has done work associated with a construction project. That could be work completed on site or as part of the design process. This transparency acts as an incentivising stick and carrot. The stick is there’s no hiding behind ambiguity, people must be responsible for their part in the project. The carrot is the other side of the coin. If you do good work which is clearly yours, you get recognised for adding real value and get invited to more project teams. To make this framework practical, it must also be self policing by creating an immutable trust layer backing up the process.
One issue that we could begin to tackle by creating this framework is ‘Lack of Collaboration & Improvement Culture’ which is identified in the The Farmer Review. If what I’m proposing works, it could also go someway to reducing some other issues discussed in the Farmer Review, ‘Workforce Size and Demographics’ and ‘Low Productivity.’
Over the years the construction industry has been affected by aggressive procurement practices, risk aversion and insurance requirements. This has resulted in a misalignment of client and industry interests. An example relating to insurance can be witnessed if you’ve been in the room with a design team looking at a problem which requires a coordinated solution when it’s unclear who will be responsible for that final solution. The designers minds are on their company Professional Indemnity insurance, and balancing that with what is best for the project. I’d go as far to say, that the companies who the individuals work for are sometimes the biggest barrier to project collaboration — the needs of the company provide a structural disincentive to collaboration. If the industry is to embrace BIM Level 3, which requires all members to work on a shared BIM, then we need to rethink the way a project team is structured and the way a project is insured.
Combining Building Information Modeling (BIM) with blockchain and embracing a better method of delivering projects can provide the transparency and incentivised collaboration described above. By introducing blockchain to the construction process it will have further advantages beyond keeping a record of who did what on a construction project.
In my opinion, Integrated Project Insurance (IPI) creates the contractual environment that incentivises a team to work for the good of the project. IPI is an insurance product and a framework that creates a collaborative environment by agreement of key team members, called an Alliance. The key to all this is that IPI insures the entire project. There is no additional Professional Indemnity or Builder’s All Risk insurance required on an IPI project. For the purposes of the project, the Alliance team are all part of one, temporary, project-organisation and they are unable to sue one another. Members are working for a pain/gain share, which they are incentivised to protect. Pain/gain and project bank accounts are things that have been used in the past. However, the creators of IPI seems to have recognised that an uncompromised, collaborative structure is what is needed. IPI is currently being trialled. The Dudley College project has recently completed and the Derby Silk Mill project is due to start on site soon, I look forward to seeing how it develops.
The biggest potential impact blockchain will have on the construction process is digital payments. This also fits neatly with the IPI requirement for the transparency provided by a project bank account. The old adage of ‘follow the money’ is the backbone to the self policing framework I’m suggesting. By using blockchain smart contracts, that are tied to the building and sub contracts an immutable record will be created of who carried out work and who approved that work on the payment process. All the way from the tradesman that carried it out right up the approvals process from foreman, site manager, contractor’s QS, client’s QS, contract administrator and finally, payment by the client.
Introducing blockchain also opens up opportunities for verifiable Digital ID’s to increase trust between client and and their project / supply team. It can do this by verifying the correct qualifications are in place. For example; a current CSCS card, security clearance and membership to the correct certifying body, etc.
This logic of tracking physical work can also apply to the digital building in the BIM. Blockchain can support BIM Level 3 processes by tracking the provenance of design input. A company called BimSense is working on this blockchain backed BIM data idea at the moment. This will mean an immutable record of who added what to the digital asset. This may not reduce the number of disputes but it will surely clean up the process of making an adjudication of them. It also further enforces the idea of the individual as the holder of their specific project input.
This ability to track input on a project could help entice younger members to the industry by providing the platform for a project based work life. By having a clear record of experience gained from projects it opens up the possibility of having a different attitude to how we work in the industry. In order for this to work, the industry would need to rethink the way people work for companies and tap into the trend of the gig economy. No matter your opinion on the gig economy, statistics suggest it’s growing. The gig economy is described as ‘a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs.’
I’m not proposing we all become freelancers or work on day rates. I do believe we should start acting more like freelancers within our companies if the industry is to attract new members. The gig economy, as described above, is too simplified for the construction industry. Construction projects bring together a broad set of complex skills. Graduates of skilled trades, and consultant disciplines can’t be expected to immediately be useful members of a project team without guidance from a mentor. This apprentice and master or mentor relationship is best fostered in a company structure.
It goes without saying that gaining the correct experience is key to progressing a career in construction. But imagine a searchable database of individuals overlaid with the specific project experience. The blockchain would easily capture this experience gained by an individual. This is great for the individual because it means there is credit where credit is due. Also having this will give clients confidence they have the right teams on their projects.
Keepsite, is a project and portfolio management software company, who are developing a software system that can provide the framework I am talking about. The system allows for an individual to create a free user account that follows them no matter what company they work for. This allows for simple onboarding to a project team. Keepsite also allows the individual to track their specific experience on a project and to upload their qualifications. Keepsite is very keen to move aspects of their accounts to the blockchain, seeing the advantage of a blockchain Digital ID and a blockchain backed payments system.
Another interesting aspect of the Keepsite system is the way it allows for the aggregation of data within businesses. Construction is a project focused business, concentrating on getting the job done, and moving as fast as possible to the next. Construction must become a portfolio business. It needs to look at total workload, managing risk and reallocating resources across multiple projects and most importantly, learning from projects and improving for the next one. Keepsite allows for an aggregation of project data across a company and an individual portfolio, this was created to help companies better manage their work. I believe there is a larger opportunity to help the industry as a whole by offering the potential to share data across sectors and areas. This approach could create a feedback loop on a large scale to help project teams learn from big datasets, something that isn’t possible in the industry at the moment.
There are many examples of how sharing data from projects can help future projects and the industry as a whole;
- Shared durations of work on site can begin to give a better information to base programmes on.
- Main contractors and subcontractors sharing information on workload to allow for better resource planning.
- Sharing project status, giving a rough location & start date and likelihood of the project starting on site can signal the market to give an opportunity to answer the demand in a certain area.
- Risk management shared across the industry broken down by area would help create better mitigation strategies.
The list goes on but the point is more heads are better than one and by sharing information we create more opportunities to explore Lean Construction principles than we’ve ever had before. This could lead to huge improvements to the industry.
Combining blockchain with BIM, processes on site and better procurement process like IPI can create a more transparent, incentivised collaboration leading to an improvement culture. By doing this it has the potential to go some way of addressing issues of an ageing workforce, and low productivity.
1 What is the ‘gig’ economy? By Bill Wilson Business reporter, BBC News http://www.bbc.co.uk/news/business-38930048