Much has been made of the potential for blockchain to transform processes in the construction industry, with the technology potentially offering greater transparency and oversight across projects and payments. But less attention has been paid to the cultural and behavioural changes it could foster.

Blockchain is a distributed digital ledger, designed to eliminate the need for a trusted third party to audit transactions. The technology stores the details of transactions in real time within logical blocks, which are cryptographically linked together to produce a verified, chronological record of activity that is effectively impossible to tamper with once created.

Any claims or disputes about what was agreed upon by the interested stakeholders can be checked against the information held on each block in the digital chain. This single source of information provides a readily accessible chronology of timestamped data, yielding a clear record of cause, effect and ownership. This process also has the potential to offer a real time audit trail, with improved management of costs.

In the construction industry, trust between parties is often low and legal disputes are all too frequent. How can this burgeoning technology incentivise behavioural change?

Increased accountability for everyone usually leads to better supply chain performance

The use of smart contracts in construction projects is one of the most exciting growth areas in the industry, with the potential to foster positive changes in the client-contractor relationship. Smart contracts can provide automation for the entire breadth of the contracting process from planning and tendering, through creation and negotiation, and in use from commencement to completion.

Taking a simple example outside of the construction sector, consider a smart contract between a YouTube influencer and an advertising agency. The YouTube user might be automatically paid one cent for every view of a video in which a particular product is featured.

The smart contract works by overseeing the contractual mechanism for the agreement between the two parties where code within the contract automatically validates the video. From the moment a new video is uploaded to YouTube, there is no human supervision of the process.

The construction industry is built on personal relationships that resonate throughout the supply chain. But imagine if clients and contractors applied the use of blockchain-based smart contracts to their own operations. This could enhance existing relationships by ensuring that trust commits each signatory to their word.

Beyond payment transparency, the technology can drive greater clarity about roles and responsibilities during the construction process and push project partners from materials suppliers to surveyors to perform better. In my experience, increased accountability for everyone usually leads to better supply chain performance, which has the knock-on effect of boosting project productivity.

In addition, crucial updates about the project such as delivery of materials on-site could be automatically sent to everyone in real time. This would decrease project delays and the need for rework.

Blockchain is not the solution to all of the construction industrys challenges. It cannot, for example, solve inherent issues that might be the cause of a contractors financial instability.But blockchain can drive cultural and behavioural shifts in the sector, from the boardroom to the site, if it is readily adopted by contractors and clients alike. The only barrier is our appetite for change.

Tim Thomas is senior cost manager for infrastructure at Turner & Townsend

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Blockchain can be the missing link in the supply chain - Construction News