Francis Ho, partner, construction and infrastructure at Penningtons Manches, asks whether the industry is too paper focused for late payment to be solved by constuction’s answer to Bitcoin.
A concept such as ConstructCoin, the app being developed as an adaptation of Bitcoin technology for the construction industry, would help purchasers and suppliers better understand the impact of new technologies and techniques and to identify trends. For instance, how long should it take or cost to build a new home or to refurbish a 30,000 sq ft office? The more data we can get, the more we can predict what to expect and where improvements can be made.
Those unfamiliar with BIM often ask what savings clients can expect from its implementation. BIM is still relatively new and, simply, we don’t have sufficiently broad datasets on this. Pooling data is an obvious solution.
Historically, there’s been little information sharing in construction, outside of alliancing or similar arrangements between parties. It’s an industry with few barriers to entry so large or specialist players often regard know-how as a valuable competitive advantage.
Another potential obstacle is that larger construction participants often consider certain data to be commercially-sensitive. Their confidentiality requirements then flow through their supply chain.
Whether information can be sufficiently anonymised to avoid being traced back would depend on the number of sources and the quantity of data they contribute. Clients will need to be convinced that they will benefit from a wider pooling of data on their projects. If they can access that anonymised collated data, they could be more interested.
As with Facebook or Google, whose business models depend on mining user data, industry contractual terms and conditions may need to evolve. We can perhaps learn from the US where there are already businesses organisations which ask clients to donate entire BIM models rich in data in return for assessments and insights into that data.
A more immediate area where user data can be collected and applied towards long-term improvement is the Internet of Things. Google’s Nest sources data from the usage of its smart thermostats to improving its services and products. Customers can also see their own heating usage but not those of others.
In future, Nest may decide to repackage and sell this data on, but what it currently isn’t doing is sharing this information with Honeywell or Centrica, which make competing devices. That’s the cultural change that ConstructCoin may need to encourage.
dotBuiltEnvironment mentions Blockchain being used on a pay-as-you-deliver basis. In construction, the question of satisfactory performance can be complex and dependent on professional judgement. Where people are concerned that they may not be paid undisputed amounts due, then escrow agreements or project bank accounts can be used to provide them with comfort.
There may be scope for Blockchain to automate their processes so that if, say, an electronic pay less notice has not been submitted as required under the Construction Act, then the software provides that the amount demanded in the electronic invoice is automatically released in full.
This, of course, is dependent on electronic inputs for the software to recognise. Much of industry is still working with paper.
But, as with ConstructCoin, there may be areas where Blockchain can work effectively until digitisation catches up. For certain activities, performance is more easily adjudged on an objective basis. An example may be if there are key performance indicators tied into incentive payments post-completion.
Smart meters, for instance, could record whether utilities consumption in a completed building is within the tolerances agreed with the contractor and, if so, payment is then automatically released from an incentive fund controlled by Blockchain.
The same could be done to see that a company supplying bricks is paid upon delivery and inspection which can be confirmed by a tap on a tablet device.
These are interesting concepts and it’s wonderful to see exciting ideas being developed for long-standing issues in the industry. There’s real scope for these ideas to be explored and fine-tuned, perhaps starting with the SME market, where participants can clearly benefit from having access to more information.
Image: Achmad Fahmi Rosyad/Dreamstime.com
Historically, there’s been little information sharing in construction. It’s an industry with few barriers to entry so large or specialist players often regard know-how as a valuable competitive advantage.– Francis Ho, Penningtons Manches
