How blockchain can impact on the construction industry
Use cases § 5/22/2023 Reading time: ~4 minutes
Blockchain has the potential to be a game-changer for the building and construction industry, helping to increase trust in the sector as well as bringing other features to help reduce costs and inefficiencies in the business. In this article, we'll discuss how blockchain can impact the industry and what relevant problems in this area it can solve. How blockchain can transform the construction Let’s explore several possible ways on how blockchain can transform the construction industry: Agreements could be automated through smart contracts that identify responsibilities and trigger milestone-based payments. Blockchain applications that aggregate data into shared project management dashboards could help manage workflows. All building inputs and assets, including warranties and maintenance checkpoints, could be recorded in a distributed ledger that maintains an end-to-end chronicle of the construction process. Inspections could be streamlined through blockchain applications that track materials, tests, and results against building codes and standards. Current problems in the construction business that blockchain can solve Data management Aon, the global risk advisor to the construction industry, estimates that 95% of construction data is lost when a building is handed over to the first owner. Blockchain can be used to create smart contracts that automatically enforce themselves. This would eliminate the need for paper contracts and reduce the risk of critical data loss and fraud. Lack of transparency over supply chain Transparency is always lacking in the construction industry. Blockchain can help ensure that only certified products are used on construction sites, by keeping track of materials and equipment throughout the supply chain. The result would be improvements in safety and quality control. Ineffective payment system that vulnerable to fraud Slow, opaque, and prone to fraud, the current system of invoicing and payments is a mess. By creating a transparent and immutable record of all transactions, blockchain technology could help streamline this process. This could lead to faster payments, less fraud, and better coordination between different suppliers. Complex project management Construction projects are often complex and require the coordination of a large number of different parties. By providing a secure and transparent record of all project data, a blockchain-based project management platform could help streamline this process. This would reduce the opportunity for fraud and mismanagement, and allow for better coordination between different teams. Administrative and bureaucratic tasks In the construction industry, contracts are critical. Any breach can result in huge losses. With blockchain, important contracts can be protected from destruction, tampering or alteration because data can be digitally encrypted and stored in transparent, shared databases. A tamper-proof digital signature can be applied to each event (contract or payment). This eliminates the need for multiple intermediaries such as lawyers, brokers, and so on. We appreciate the values of blockchain such as security, immutability, transparency and traceability. That’s why we develop blockchain projects keeping in mind these gains. Check out our portfolio to learn more about Crypton Studio solutions. Real-life examples of blockchain application in the construction sector Some construction companies started to adapt blockchain solutions to their business operations. Bimchain is a company that combines blockchain solutions with the BIM (Building Information Model), method used in construction. The aim is to connect data projects and help create a comprehensive workflow and project infrastructure. Bimchain solutions provide customers with decentralized storage, smart contracts, and public blockchain. Another example is the Bau app. It is a startup that addresses the challenges currently facing the construction sector. It helps stakeholders and construction companies improve their payments and data management through blockchain-based smart contracts. Customers can also tokenize the credentials of companies and individuals involved in projects. Adaptation of blockchain into the construction industry is the subject of academic research. For example, Construction Blockchain Consortium is an academic research community that explores opportunities of blockchain implementation for the construction industry. They published a series of white papers and case studies to examine the potential impact and effectiveness of blockchain in alleviating major challenges in the construction industry. Conclusion Blockchain technology can provide a lot of benefits for construction and building companies. It helps to solve project management issues, increases transparency and traceability over supply chains, and creates secure and immutable payment system for stable transactions. As a result construction business benefits by reducing its operational costs and ensuring efficiency. Today, the application of blockchain in this industry is not very common, but some visionary companies are exploring its possibilities. This means we can expect to see more innovative blockchain solutions in this industry in the coming years. At Crypton Studio, we understand the transformative power of blockchain in the construction industry. Whether it's building secure and scalable platforms, creating robust smart contracts for management and agreements, Crypton Studio can deliver tailored blockchain solutions to meet your specific needs. Contact us and learn how we can help your business to adopt cutting-edge web3 solutions. Find out more about our projects.