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Blockchain in construction: Impactful technology or hype?

There is now a high probability that blockchain technology will disrupt the global construction sector

In the past few years, technological advancements have revolutionised the field of project management in numerous ways, from improving collaboration and communication to streamlining operations and increasing efficiency. With the emergence of new software, tools, and communication channels, project managers now have more resources at their disposal than ever before. As technology continues to evolve, new tools can have a significant impact on functions such as scheduling, budgeting, communications, performance tracking, and contracting, allowing businesses to remain agile in a competitive market.

Blockchain technology is taking centre stage amid the rising integration of advanced technologies, such as artificial intelligence and machine learning. The tool has the potential to transform and open up new opportunities for innovation in a variety of industries, including construction by providing a secure, transparent, and decentralised method of storing and transferring data. However, being a relatively new technology, there is still a lot of uncertainty and speculation surrounding its potential applications and impact. In order to evaluate whether the technology is overhyped in the construction industry, it is crucial to explore its potential uses and limitations.

In simple terms, blockchain technology is a distributed ledger that is decentralised and records transactions across a number of computers. It is practically hard to manipulate or hack the ledger because of its security and transparency. Each block in the blockchain contains a set of data, along with a cryptographic hash of the previous block in the chain, creating an unalterable record of all transactions. Due to the fact that any modifications made to one block would be immediately visible to all the other nodes in the network, it is extremely difficult for anyone to tamper with or modify the data.

There is now a high probability that blockchain technology will disrupt the global construction sector. As we can see, construction projects involve a large number of stakeholders, intricate supply chains, and a large amount of data, due to which project managers must look for tools that will improve the collaboration between these elements. Supply chain management is just one of the many areas of the industry where blockchain technology can be put to use. By tracking the movement of goods, blockchain technology can also help ensure their authenticity and prevent counterfeit materials from entering the supply chain.

Similarly, blockchain technology can be used in project management. Project management is one of the most important aspects of the construction sector, especially when it comes to large EPC projects. Project managers and project management offices (PMOs) generally use a wide range of tools to balance these tasks, timelines, and budgets, while also ensuring the flow of information between various stakeholders. With the integration of blockchain systems, the industry can increase transparency and rates of project success against traditional metrics, such as resource allocation, cost, time, and quality.

There is currently a growing trend among project managers to integrate blockchain-powered applications into operations, planning, and monitoring processes. By establishing a secure, decentralised database that all stakeholders can access, blockchain technology can improve project management by lowering communication errors and equal access to the same information. Additionally, blockchain technology is increasingly used in the sector to manage payments. Smart contracts are created that automatically execute payments based on predefined criteria, thereby reducing disputes and guaranteeing prompt payments.

Despite having the potential to significantly transform the global construction sector, the technology also possesses some challenges. Although the technology has made great advancements, it is still relatively young, with several aspects that are still not completely understood. As a result, the construction sector may require more time to completely adopt the technology. Another constraint of blockchain technology in the construction space is its cost. Since it can be expensive to operate blockchain technology as it needs a lot of infrastructure and computational power, it may prevent small enterprises from using it. This may limit the potential benefits of this technology since only an industry wide broader use of technology can truly make an impact on the sector.

In conclusion, the widespread adoption of blockchain technology has the potential to transform the construction industry’s practices by improving its transparency, efficiency, and security. As more businesses identify and embrace the potential of blockchain, we can expect to see substantial changes in the way construction projects are planned, performed, and managed, leading to increased productivity, cost savings, and overall progress in the sector.

The writer is regional director of Trimble Solutions, Middle East and India.