Construction industry use cases typically involve an owner, the architect, engineers, a general contractor, subcontractors, and suppliers. The owner holds contracts with some of the participants, but not all. Businesses like the subcontractors and suppliers will hold contracts with the general contractor rather than with the owner.
One issue holding back change is that Construction is a highly regulated industry, for obvious reasons. Think about the built environments we inhabit and all we expect from them. Primarily they provide shelter so need to be structurally sound, built from materials that won’t make us sick or burn easily. If they do catch fire then minimum requirements for fire door widths, escape route signage and distances are needed. We expect the lights will work and not to be electrocuted by a power socket.
Construction brings together large teams to design and shape the built environment. With technology and in particular Building Information Modeling (BIM) becoming more widespread, openness to collaboration and new ideas is increasing across the industry. This momentum could be leveraged to bring the use of Blockchain technology to the fore.
Integration of Blockchain and the Building Maintenance System (BMS) could lead to a building’s DAO (Distributed Autonomous Organisation) placing an order for a new light fitting, accepting delivery and liability for it, calling out someone to install it and paying both the supplier and installer. Payment would be made from the DOA’s wallet (bank account) which is connected to wallets of those that live in the building. It’s not a far jump to see that rents could be collected, body corporate fees, and insurance payments all managed autonomously by a building’s DAO.
For the construction phase it’s no different, it just takes more human input to clarify requirements and make decisions to meet those requirements; which light fitting, paint colour, temperature range in rooms.
Despite the increasing awareness towards tech in construction, advances have predominantly supported the current approach to building. By embracing Blockchain the industry may see the fundamental disruption underway in other industries.
What might a fundamental disruption of our current construction approach look like? One way to imagine this shift is to examine the procurement process for most buildings.
Currently, the number of direct contracts with a client is limited to consultants and a main contractor. The main contractor engages subcontractors to carry out the specialised work.
12 Initial Coin Offering (ICO) related to the construction industry:
CONDA launched its crowdinvesting platform in 2013. The blockchain infrastructure presented the logical step for bringing crowdfinancing to the next level by utilising the most efficient technology, supported by their experienced team and partners.
Their mission is to create the financial market of the future. They are building a decentralized network protocol for issuing and managing tokenized equity offerings of SMEs, Start-ups and Real Estate Projects.
BUILDcoin is freely tradable digital money, developed to – as stated on their website – to revolutionise the construction industry through real-time, peer-to-peer payments within the BUILD1x Mobile Platform. BUILD1x serves homebuilders, commercial builders, building supply and product manufacturers, contractors, sub-contractors, construction workers, architects, engineers, and companies that support the construction industry.
If there is an industry bound to benefit in a big way from blockchain technology, it is the real estate sector. Since the beginning of real estate sales, the industry has been ripe for fraudulent activities, some even leading to global recessions.
Given the amount of wealth that circulates in this industry, the traditional trust-based real estate management models have always been inefficient and insecure. Blockchain technology is all about transparency, efficiency, and security, and is, therefore, a good fit for the sector.
From settling disputes between landlords and tenants to streamlining the mortgage process and opening up the global real estate industry to ordinary investors, new blockchain-powered technologies are emerging daily. Here are the top 9 ICOs we believe will revolutionize the real estate sector.
RxEAL is an Ethereum-based platform providing escrow services and decentralized dispute resolution for the real estate sector. The project specifically focuses on the rental market, where disputes regularly arise between landlords and tenants with regard to security deposits. Through smart contracts, RxEAL not only guarantees the tenant that the deposit will be returned, but also ensures that it is returned within the agreed time.
TokenLend is a blockchain platform allowing anyone, anywhere in the world to invest in secured real estate loans using cryptocurrencies and fiat currencies. The TokenLend project aims to enable small investors to participate in the global real estate markets without fear by helping them build a secured loan-based investment portfolio that delivers competitive, predictable and consistent returns.
Rentberry is a decentralized rental platform that brings together landlords and tenants and uses smart contracts to ensure that the rights of both parties are safeguarded. The Rentberry platform brings about transparency which is vital to both sides.
For the renter, transparency in rental fees translates to savings while for the landlord, knowing the credit scores and the rental history of their clients is vital in making decisions. The platform also helps the landlord in payment collections and dispute settlements, therefore saving costs.
Propify is a blockchain and smart contracts-based social media marketing platform for the real estate sector. The platform goal is to be the best alternative to centralized property portals such as Realtor.com, Zillow, Zoopla and others by offering solutions to the critical issues attached to their use. These issues include inefficiency, complexity, lack of transparency, and client data insecurity.
BitRent is a blockchain and smart contracts-based platform that enables individuals anywhere in the world to invest in the global construction industry. The project uses sensors and RFID chips installed on the properties under construction to allow users to track every step of the process in addition to smart contract technology which ensures each party adheres to the set terms.
Investors looking to invest in the BitRent project are required to buy the BitRent RNT tokens. The type of investment allowed for a given individual will depend on the number of tokens they hold.
The Caviar token combines investments in the crypto-assets space and income generating short term loans backed by real estate. The goal is to provide diversification, which is usually difficult in most real estate products given that they are highly correlated.
The tokenization of real estate assets will not only open investors to the lucrative crypto-assets space but will also provide an easy way of raising financing for developers.
Evareium is the world’s first blockchain-based private equity real estate fund. The platform provides investors with an opportunity to invest in a tokenized private equity real estate fund and own part of the management company.
The Evareium token value is bonded on the performance of the various Evareium investments, which are attached to an online digital interface founded on the blockchain.
Atlant is a decentralized Ethereum-based platform that allows transparent and liquid trading of residential and commercial real estate. The project aims to open up the global real estate market to the masses through the tokenization of ownership. Atlant provides a tamper-proof system through which users can trade parcels of property and bypass intermediaries in rental deals.
SmartRE is a decentralized real estate tokenization platform that enables investors across the globe to invest in the US real estate sector. The project also helps homeowners to unlock capital from their homes without accruing debt.
Blockchain and BIM
By using Blockchain and BIM in tandem, along with other quickly advancing technology , there is an opportunity to create a leaner procurement method which better engages the individuals who make up a project team. This will result in reducing costs by removing intermediaries, where a client has more control and transparency of cost, time and scope on their project.
With block-chaining, the owner would have a project wallet. The project funds can be stored in this wallet which is used to pay everyone who works on the project. Payments can be tied to steps, so when one step of the project is completed and inspected the payment would automatically transfer to the appropriate person. It would streamline all payments and processing into the product delivery. And with payments tied directly to work, it would be hard to deny payment.
How Blockchain can bring fresh air into the Construction Industry
The process of blockchain and the construction industry would boil down to roughly four steps: project modelling, smart contracts, inspection, and delivery. The first step in creating a project is modelling. Project modelling would show what the final project will look like, and it sets forth a clear path of what needs to be accomplished. Once this is complete, the smart contracts could be drawn up.
Once contractors complete the steps required, they have to submit for evaluation. An inspector would inspect the work, as they do currently, and approve or deny the work. If the work has been approved funding would be released, and people would be paid. In a way, it helps carefully draw up any and all responsibilities. Since payments to contractors would be dependent upon the step, it would help establish liability and prove who needs to be paid.
Subcontractors or contractors would draw up a similar process for materials, slowly releasing funds. The first instalment would be for the receipt and agreement on supplies. Another payment could be made when the supplies are loaded into shipping. With final payment when the supplies make it to the site in working order.
Blockchain and the construction industry is a natural pairing since there are clear deliverables. By spreading the data out to several companies and computers, it makes all payments clear and helps hold different parties accountable. It also can create saved ids (identifications) which would help many subcontractors win more work. While block-chaining is new, it’s showing real progress, and newer iterations require less energy and are less intensive while keeping the same level of safety. It won’t be long until it’s used not just in construction, but healthcare, all finance, and more.
However the biggest disruption could be that large platforms evolve which cut out middlemen like brokers, banks and could lead to make the construction industry a small player. The transparency between land owner and people in need of living space or willing to buy flats could lead to the disruption of the construction sector.