Built on the Blockchain—Procuring Built Assets in a Digital World

March 2018 

by James L. Salmon, Esq., Benjamin, Yocum & Heather, LLC

Blockchain, a.k.a. distributed ledgers, promise to revolutionize business. Some say change associated with blockchain technologies rival the changes the internet prompted in business models. Others argue blockchain heralds a brave new internet all together. Regardless, trade contractors and suppliers need to understand its profound impact on the built environment.

Blockchain technologies utilize distributed immutable ledgers to cryptographically secure a transparent record of transactions. The most famous use case to date, Bitcoin, tracks ownership of the cryptocurrency Bitcoin. But the underlying computer protocols apply to virtually any computational transaction. The promise for the built environment is a secure immutable and transparent ledger that the industry can use to track the flow of information critical to the creation and operation of built assets.

This article explores three advances in this technology that promise improvement in construction. First, we address full integration of information related to the built environment through graph databases that tap into blockchains as a service. Second, we consider the use of smart contracts deployed on blockchains to procure intelligent built assets. Third, we consider mechanisms for achieving secure cost-effective operation and maintenance of smart built assets in a blockchain environment. While the ideas set forth in this article are futuristic, in the emerging knowledge economy the future is now!

A Better Database

Graph-oriented databases operate more like neural networks in the brain than as traditional sequential databases. The design and creation of traditional databases took two critical constraints into account, processing power and storage capacity. In the early days of computing a mainframe used to process computer code might fill a room and the ensuing data was likely stored on a reel-to-reel tape. Those two constraints dictated the architecture of the hardware and software used to create databases. Vendors of those databases, as well as their clients, adopted and deployed software, hardware and business models that overcame those two constraints. Today, though, such legacy software, hardware and business models shackle enterprises to that original architecture.

Graph databases ignore those two constraints and free designers of hardware, software and business models to operate in an environment where processing power and storage space cost a fraction of what they did in 1970. Enter FlureeDB, a graph-oriented database technology stack built for deployment in a blockchain enabled environment. FlureeDB separates the query engine from blockchain transactions to simultaneously support multiple database types, including graph-oriented databases, SQL databases and others. This enables horizontally scaling of queries and low latency. Utilizing sharding, flaking and even time travel within the database, FlurreDB seeks to cast off the shackles of legacy software and hardware designs and inspire a new generation of business models capable of excelling in the emerging knowledge economy.

Running a series of databases in the built environment on the FlureeDB platform might provide a secure, flexible but immutable and transparent record of information, data and transactions related to the creation of a built asset. Creating a common data environment—an agreed truth—provides certainty. If building information modeling and similar construction management software tools leveraged that common data environment from the supply chain through planning design construction operations and maintenance, the elimination of dozens of complex wasteful processes looms as a real possibility.

Smart Contracts on the Blockchain

New and improved computer programs empower users of blockchains to create so-called smart contracts. Simple online agreements and processes, like existing digital banking tools, EBay and PayPal all leverage Bitcoin to facilitate quicker payments today. But the Bitcoin blockchain, Ethereum’s network, Iota’s tangle, RChain’s cooperative, and Swirld’s promised worlds all represent advances in the use of smart contracts on blockchains. Bitcoin introduced us all to crypto currency. Ethereum brought Turing capacity to the world of blockchain and enabled forking and logic loops. Iota, RChain and Swirld each provide interesting twists on so-called virtual machines that process computer code on a blockchain on the Web. While the math proofs, software protocols and business models underpinning these new tools vary they each purport to enable the creation of distributed autonomous organizations (DAOs) that have the potential to increase efficiency and productivity in numerous sectors of the economy.

For now, suffice it to say the built environment, and those who provide services and materials in that environment, are poised to make a giant leap forward in terms of efficiency and productivity by leveraging this new generation of tools and processes to deploy and execute smart contracts.

Bidding, design, construction planning, supply chain logistics, scheduling, requests for information, change orders and pay applications are among the processes likely to be disrupted by blockchain technologies applied to construction. For more insights regarding the use of blockchain technologies to increase the efficiency with which pay applications are processed see the article “Pay Me on the Blockchain” in the July 2017 edition of The Contractor’s Compass. In future issues of The Contractor’s Compass we will explore other use cases in more detail.

Smart Built Assets on the Blockchain

For now, industry professionals need to know change is coming and prepare their enterprises to respond nimbly to that change. For example, not only can we leverage new and improved databases and create, deploy and execute smart contracts on the blockchain, we can actually create, operate and maintain smart built assets on the blockchain. A smart built asset enjoys a live connection to the internet and constantly broadcasts data related to critical real world conditions. Information broadcast over the network might include energy usage, temperature, water pressure, surveillance video and a myriad of other data points of interest to the owner and the owner’s operations and maintenance personnel. Few smart built assets exist in the world today. And very few owners understand the concept, much less the value of a smart built asset.

One way to think about a smart built asset is to compare it to a smartphone. Just 10 years ago Apple introduced the iPhone and we began replacing “dumb” flip phones with “smart” phones that connected us to the Web. Prior to that we treated cell phones as communication devices that we used to talk, text, and send messages to voicemail or beepers. After the advent of the iPhone we learned a smartphone could be a navigation tool, provide seamless access to email, record notes, record audio and video, send data, receive data and surf the wider Web generally. We didn’t know what we didn’t know about smartphones. Today, we don’t know what we don’t know about smart built assets.

And we really don’t know what we don’t know about smart built assets connected to immutable and transparent information that resides in a common, but secure, data environment like the one envisioned by blockchain technologies. Imagine the tools and processes deployable in a built environment where key stakeholders enjoy access to such information on a need-to-know basis. Software vendors, suppliers, service providers, trades, constructors, owners and their operations and maintenance personnel all benefit for access to critical information as such information leads to informed decisions made at the right moment in time. This is the central promise of blockchain technologies deployed in an integrated, collaborative and secure (thus trusted) built environment.

The question trades, suppliers and other involved in the built environment must ask, relative to the digitization of construction, is whether you wish to position your enterprise on the cutting or bleeding edge of these new tools and processes. Those on the cutting edge gain insight and competitive advantages. Everyone else winds up on the bleeding edge, where competitive advantages bleed away and the enterprise dies.

James L. Salmon, Esq., joined Benjamin, Yocum & Heather as a BIM and IPD consultant in 2010. As president of Collaborative Construction Resources, LLC, Salmon advocates the use of virtual planning, design and construction tools and integrated project delivery. Salmon also serves as an adjunct instructor of a master’s-level BIM strategy course offered by Middlesex University in London. Salmon is also a special advisor to the buildingSMARTalliance’s Thought Leadership Committee. Salmon advocates the use of integrated project delivery and the use of virtual planning, design and construction software tools. He relishes the challenge of replacing the built industry’s broken culture with a smart procurement culture. Salmon works with clients to modify existing legal frameworks to ensure support for the vision, skills, incentives, resources and actions required to achieve the changes necessary to adopt, adapt to and deploy a smart procurement culture throughout the built industry. He can be reached at (513) 721-5672 or jameslsalmon@gmail.com.

 

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