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The construction industry is one of the most fragmented and high impact sectors in the globe right now. For example, the international space station project is created by 15 countries and about five space agencies. The eventual cost of its construction could exceed $1 trillion by the time of its completion. The development of big projects, especially where many stakeholders are involved, needs trust, and high transparency.
Nevertheless, what has the capacity of giving full transparency to transactions worth billions? Blockchains, the hubs of cryptos, are the best, most open, and secure platforms for holding such transactions. Blockchains will transform the construction industry by solving the problems that affect the industry today.
5 Problems Blockchain Will Solve in Construction Industry
Payment in Construction
One of the world’s biggest challenges to date is to ensure timely payments to the involved parties. The problem is even more significant in the construction world, with delayed payments to suppliers and employees being the order of the day.
There are different regulations set for the construction industry. The purpose of those regulations is to boost the security of payment structures, project bank accounts and protect stakeholders. Blockchain technology has security and transparency features that will ease things in the construction industry. Payments done through blockchain are entirely safe and free from any form of internal or external graft.
Government bodies will also do regular project audits since the information about projects is in a public ledger. Fiat involves long processes and lots of document filling; this is not the case in blockchains. Blockchains have prompt payments that come immediately after completion of a contract. Blockchain will, therefore, completely change the payment system for construction projects.
Management of Procurement Process/Supply chain
Project constructions typically have very long supply chains from the design, material procurement to development. Big construction projects spend significant periods in the verification of compliance with regulations.
There is no obvious way for tracking building materials throughout the lifecycle of a building. This, therefore, causes lots of material wastage and other material related data.
Blockchains, however, can make the supply chain management fast and easy and with no wastages. Suppliers of materials after delivery will be able to track the shipping process up to the site. Furthermore, suppliers can easily follow up on payments for the supplied materials.
Quality, accountability, and transparency will define the procurement processes to stakeholders. An adequate supply chain will reduce redundancy since fewer inventories will be needed as a contingency.
Site Safety Management
Accidents and injuries are quite frequent on construction sites. Moreover, inferior materials and weather conditions are part of workplace hazards. These hazards that occur in the construction sites are today recorded manually in books or IoT tools. Blockchain, however, can bring an end to the manual recording era.
Work health and safety information will be recorded in the blockchains timely and with greater accountability. All stakeholders will receive updates on the site status and thus enhanced transparency and trust.
Revolutionizing Of Construction Contracts
Project constructions typically involve several contracts. From contracts for architectural plans to supply contracts, project managers have to complete several contracts.
What if companies could digitize and automate all these contracts? Well, the right blockchain has the capability of creating smart contracts. These contracts are self-executing, meaning they will automatically transfer an asset once the work is complete.
Smart contracts can automate payments, help track intellectual property rights, and transfer ownership of construction materials. Smart contracts have the P2P capability and facilitate the immediate response between parties since there are no middlemen.
Certification of Identity
Digital identity is necessary for strangers who want to do business. These identities can be recorded in the blockchain. Users can create an excellent reputation for themselves over time and record in the blockchain.
This kind of identity will build trust among people who have never met but want to do business. In construction, this reputation will store details of proof of membership to professional bodies. That will make it easy for the ID holder to work in government contracts.
Blockchain technology’s adoption is vital to address the challenges that face construction companies in their projects. Transaction, payment, and material procurement transparency are necessary for any construction project’s successful completion.
Transparency, traceability, and collaboration are some of the innovative technologies that blockchains will bring to the construction industry. Now it is upon every construction company to decide how they will use blockchain in their company. One thing remains a fact; if the construction industry adopts blockchain, then the world is in for the fastest, cost-effective constructions ever.