Blockchain for Construction

The purpose of this volume is to inform the reader on the state of affairs of a new subset of construction informatics, Blockchain (B) and Decentralized Ledger Technologies (DLT)s. The initial motivation for writing and editing this volume was that we noticed the emergence of a range of ideas as a loose “body of work”, produced from a variety of lenses and research stances in the informatics of construction.

This chapter outlines the promise of blockchain for the construction industry. Blockchain is an opportunity to create novel forms of economic coordination toward better collaboration within and across the built asset life cycle phases. Ongoing research tends to focus on blockchain to increase trust in existing processes. Instead, we argue blockchain’s disruptive potential is the creation of novel economic coordination. Therefore, we intend to advance the thinking around the promise of blockchain as an institutional innovation in the construction industry. First, we explain how the underlying cryptoeconomic governance mechanisms of blockchain can facilitate new decentralized coordination mechanisms between both humans and machines. Next, we provide an alternative vision for the governance of construction 4.0 to explain how cryptoeconomic coordination can address long-standing problems in the construction industry. Finally, we propose an adoption framework that can guide researchers and practitioners to explore the promise of blockchain and cryptoeconomics for the construction industry.

The chapter presents the concept of Decentralised Autonomous Organisation (DAO) and discusses what the current and possible applications are in relation to the AEC, design and design-linked industries. The chapter first introduces theoretical aspects of traditional organisations and then develops the ones behind the creation of automated, computer-based ones. Consensus mechanisms and smart-contracts integration are also presented in conjunction with diffused systems of DAOs’ regulation. Scenarios are presented where DAOs are applied as a coordination tool for competitive and collaborative use within the design field. A comparison table of Ethereum-based DAOs as well as reflections on the pros and cons of DAOs applications are provided to better frame what the current boundaries are of a technology that is also expanding its range of utilisation thanks to the interest of town councils and institutions.

The research aims at streamlining the execution of the design phase by combining the automatic BIM validation and smart contracts. The construction industry is generally reluctant in accommodating new technologies, but with the promise of transforming information management, Building Information Modelling (BIM) is currently leading its digitalisation. Despite that, its adoption showed issues of information integrity and reliability. Misunderstanding about information requirements can cause delays, unforeseen costs and need for reworks. For these reasons, the chapter suggests the integration of information management based on BIM and blockchain, highlighting their prospective bond. The chapter illustrates the framework of the research that applies the automatic BIM validation and smart contracts in the design phase, pointing out their potential impact on the automation of information review, reduction of late deliveries and overdue payments. The architecture of the potential technological tools is presented and discussed. The research proposes a data-driven process, where all the essential information related to the design verification is recorded and where, at the automatic validation of each BIM model, the approval of payment release is issued automatically. The system intends to ensure full compliance with project information requirements and protect the contracting parties against potential late payment. The framework is still theoretical, however, the expected outcomes from its future test through a proof of concept are finally discussed.

This chapter presents a conceptual framework for the application of blockchain technology with Building Information Modeling (BIM) in the design phase, with a further use case exploration of Smart Contracts implementation. One of the main challenges in BIM workflows is the traceability of changes within a BIM model and closely coupled with it, the accountability for clearances and the sharing of model information. We argue that the different value chain activities, actors, and digital assets in the design phase could be linked on the basis of Blockchain (BC) and Smart Contracts (SC). Our BIMd.sign framework shows mainly three factors why BC and SC can be considered to deliver benefits to a BIM-based process if implemented: documentation, traceability, and transparency. We argue that the gained information from this analysis will give enough insight to evaluate the needed “level of detail” of repeating acts or sequences, in which traceability through SC can deliver a sufficient supplement respectively optimization for planning processes in the design phase. Furthermore, based on our research, we suggest that possible applications of SC in the design phase require a transformation of existing workflows for the implementation of digital technologies.

Reducing toxicity in construction materials is paramount to improving the sustainability of the construction industry. This necessitates better knowledge of the content of these materials or products. However, there is no central register nor mandated ledger of component materials. Furthermore, from a global supply chain management perspective, it is very difficult to have access to full value chain information even from the manufacturer of the final product. This chapter explores ways to establish a supply chain ledger to track components of construction materials by using blockchain technology; to provide reliable and fully disclosed information on their chemical content and providence. It focuses on the example of PVC, but its findings are relevant to the manufacture of any other products from different component parts or materials. The findings depend on what are the most desirable features in supply chain networks. But, in general, the most suitable solution appears to be a permissioned blockchain using a proof of authority consensus mechanism. Such a system can be a closed, private network, with a set of verified and trustworthy stakeholders as participants that provide public verification via a device such as a QR code. Such a system is fast and can accommodate a large number of transactions per second, so can thus scale up in the future even if a network starts small. Given the concern with tracing materials for the purposes of sustainability, the chapter also highlights the issue of energy consumption, which is necessary for maintaining the blockchain itself, and suggests that this should be a relevant feature in the design of any supply chain system. The framework of analysis emphasises the complexities in choosing the various technical and non-technical aspects of any such supply chain systems. Nevertheless, it is achievable with existing, bespoke blockchain-based solutions, as is illustrated with the PVC supply chain network.

The economic, information and material flows in construction logistics are usually disintegrated—but blockchain could integrate them into a shared digital ledger supported by smart contracts, thus creating value for the relevant actors (e.g. contractors, suppliers). Therefore, we explore such a solution’s potential by conceptualizing, developing, implementing, and testing a relevant pilot in the Swedish context. Theoretically, we adopt sociomateriality, thus understanding blockchain as a digital facilitator of transactions, flow integration, social interactions, and trust development. Methodologically, we review the literature on blockchain for construction logistics, and report from our empirical studies in Sweden. The literature review showed that core blockchain properties can generate value for construction logistics (e.g. reduction of accounting rework)—however, there currently exist no use cases beyond concepts and pilots. Moreover, implementation can be challenging due to practical and security constraints—also reflected in our own empirical material. Regardless, the solution was conceptualized as a permissioned private proof-of-authority blockchain named BlogCHAIN, and developed into an online application based on Hyperledger Besu. Testing BLogCHAIN revealed that the practitioners’ resistance and powerplay required a simplification of our initial concept. Indeed, the flows were integrated, more decentralization and transparency were achieved, and previously time-consuming processes were facilitated—but the main contractor retained control over critical logistics segments. Our lessons-learned showed that several issues can jeopardize the adoption of blockchain, like existing power balances and unrealistic hopes of transparency and accountability beyond established business practices. The solution could be integrated with the IoT and machine learning in the future.

The UK (United Kingdom) government published a guidance document in 2012 stipulating the use of project bank accounts (PBA) to promote fair and prompt payment practices in the construction industry. This article provides a high-level conceptual model utilising blockchain to automate project bank account payments. In PBA, project funds are partitioned in a separate bank account, like an escrow. Traditionally, before PBA, the main contractor would use the client’s project payments to reinvest in new work, or strategically withhold supply chain payments to sustain positive cash flow. PBA revokes the main contractor as the sole recipient of the project budget and provides the client with transparency over project expenditures. The proposed conceptual model allows project participants to approve and execute automated payments through user dashboards. Part of the security of smart contracts is their unchangeable properties once deployed; however, this is problematic, as construction projects regularly undergo change orders and programme alterations. Furthermore, Ethereum-based smart contracts in the current environment are limited due to the costs associated with auditing and on-chain hosting fees. To mitigate this, transactions in the PBA blockchain model are instantiated through an off-chain application, which stores pre-executed transactions in the form of signed messages. These messages are pushed to the blockchain and converted to transactions once they are approved by validating authorities. The result is a strategy to achieve payment automation at a more economical cost. The proposed model illustrates a high-level amalgamation of PBA, blockchain, off-chain, and asset tokenization. A limitation of this article is that it does not include any programming and the ideas are presented in the form of a flowchart. Future work includes programming the solution.

This chapter critically evaluates the way in which the existing United Kingdom (UK) construction payment regime will function with—and assist—payment mechanisms which utilise smart contracts. Blockchain is one of several new developments in the increasingly technologically developing UK construction industry. Whilst the law translates real-world actions into legal obligations to pay and then assists in turning those obligations into payment, the blockchain with smart contract mechanisms will automate that process, providing security and removing any intermediation which could stop or slow the process down illegitimately. Coupled with the use of smart contracts, therefore, blockchain technology has the potential to facilitate a solution to the payment and cash flow issues in the UK construction industry. To achieve the added functionality described and thereby make it a useful tool for payment in construction, however, these developments would need to coexist with the existing legal framework. There are important points in the detail that should be more fully understood by users of the blockchain/smart contract systems, and which are explored in this chapter.

Visualization of annotation recording using a digital indoor model (e.g., point clouds, 3D models, 2D floorplans) allows stakeholders to see exactly how, e.g., furniture items or machinery have been moved from one location in a building to another. The recording of such actions is vital for record keeping and future decision-making within the realm of facility management (FM), and especially concerning operations and maintenance (O &M) procedures. The use of a digital ledger enables immutable recording of attributes associated with a given indoor representation, e.g., recording of stakeholder annotations onto a point cloud representation. We present a conceptual approach based on blockchain technology (BT) for annotation of indoor scenes, with a focus on point cloud representations of such scenes. We present a case study describing the design and implementation of a private distributed ledger (PDL) as a service-oriented software (SOS) component—where any user annotations are recorded and verified, for proof of immutability for enhancing decision-making among FM stakeholders. We implement the visualization component using a Web3D-based client-side viewer and interface. Our approach sets the foundation for a development of a PDL-based system for indoor scene annotation, with potential to be further integrated into digital twin (DT) platforms.

The chapter describes conceptually how a blockchain (BC), through smart contracts (SC) and tokenisation, can act as a stigmergic information layer for the creation of collective digital factories in construction. The chapter focuses on the orchestration of a series of design agents and tools in the design of buildings; however, the presented framework can be extended to the whole lifecycle of the AEC industry. Furthermore, a cryptoeconomics-like strategy for the AEC industry is explored, based on smart contracts, having the potential to operationalise the stigmergic coordination via token incentive mechanisms. We expect that stigmergic coordination through cryptoeconomic incentives on the blockchain is a better fit for the fragmented nature of the construction industry, compared to current modes of organisation; consequently, the scope for presenting this strategy is threefold: the incentives mechanism can lead to an increase in productivity, a reduction in both whole-lifecycle carbon and waste, and a decentralised governance through smart contracts. While blockchain and decentralised ledger technologies have proven to have the potential to be embedded deeply as an information governance layer in many industries, the scope within the paper is limited to the digital aspects of the AEC industry, forming what we call “collective digital factories”. An engagement strategy of the manufacturing sector of the AEC industry is presented with arising open questions discussed at the end.