The construction industry is a 10 trillion dollar industry globally and accounts for ~13% of the world’s GDP. However, recent reports show that it suffers from the smallest growth in productivity (and in some countries, even a sharp decrease) of any other industry in years.
How is it possible that an entire industry fails to capitalize on the technological benefits of recent years and hasn't been able to increase its productivity?
Possible explanations are the strong fragmentation (high number of small companies, rather than a low number of large companies), thin profit margins, highly cyclical operation and dependence on a continuous financial, regulatory, and logistical coordination. On top of this, construction industry often lacks national and international standardized building codes.
These circumstances heavily disincentivize investments in new equipment and emerging technologies.
What can be done? The answer might be found in the blockchain.
A blockchain is a decentralized and by its very nature fully tamper-resistant system, that stores information in pieces called blocks. These blocks are then chained together, using timestamps and internal references to previous blocks.
This system allows a decentralized network of nodes to securely create and store information in consensus, thus eliminating the need for trusting a central entity or other nodes in the network.
The first known application of blockchain technology (also known as Distributed Ledger Technology) was released by the mysterious software developer Satoshi Nakamoto, whose true identity remains unknown, in January 2009 as the foundation of the cryptocurrency Bitcoin.
Only in recent years has the innovation and potential behind the technology started driving the use (as well as the misuse) of blockchain technology in other sectors and industries than cryptocurrencies and traditional financial institutions.
The inherent advantages of a blockchain, namely: transparency and collectively verified information storage architecture, raise many compelling ideas for potential uses in the construction and real estate sectors.
A Blockchain can serve as a backbone infrastructure for all parties involved in a construction project from regulatory and financial activity to logistics and supply chain tracking. It can store and provide access to immutable digitally signed permits, applications, and contracts. It can validate delivery manifests, material origin, quality, and amounts, as well as the identity of the receiver.
A blockchain can even make funding and investment in commercial real estate projects accessible and straightforward.
In short, a blockchain can make any construction project faster, cheaper, safer, and with greater transparency than was ever possible in the past.
Thus blockchain is one of the best hopes for the construction industry to let go of its inefficient past and start moving towards a more efficient and thriving future.
