Federico Monsalve (FM): How did your interest in the applications of blockchain to the construction industry begin?

Dermott McMeel (DM): It is partly because, before being a researcher, I was an architect. My father was a builder and quite passionate about the sector in general. At the time, I was watching out for the Building Research Association of New Zealand’s funding prospectus. One of the things they were looking for people to research was blockchain; we applied with what we thought was an interesting idea and have received the funding. Now, we are reaching out to the construction and design community.

FM: To what end?

DM: We’re offering to host a series of workshops this year to help people understand blockchain. We do this by having them build a blockchain out of Lego; this might sound strange but it’s a really good way to see what this new technology lets us do. We are holding a workshop in April in Wellington. It starts off with everybody having some Lego and some trading cards. We trade these cards between us for Lego; as you trade, you stick the Lego together. This creates a physical record of how much of something was moving, where it moved to, where it came from and where the money went.

People start, literally, to see the potential of blockchain through this visual, physical Lego record: not just of their money but of the stuff that is moving as well. Imagine your industry with that ability: How could you capitalise on that? How could it be improved through this sort of tracking?

The second part of our project is creating technology demonstrators to explore some of these things with industry, rather than it being purely a speculative exercise. We have the ability to take that next step for people and organisations that really want to look at it seriously. 

FM: So, at its core, blockchain is about the standardisation of ledgers, which allows for transparency in the whole supply chain, documentation, etc. Is that right?

Alex Sims (AS): Yes, there can be transparency in the whole supply chain and the documentation, which is a great benefit. Although, if required, you can allow some people to see parts of it only; for example, you might not want everyone in the supply chain seeing how much each entity was paying for the goods.

But blockchain does much more than that; it creates synergies and it unleashes potential. At the moment, it is hard to prove the provenance of goods because paperwork can be forged. Plus, payments, asset registries, customs clearances and insurance all operate on different systems. Blockchain would allow for all of these separate processes and more to be combined on the same system in real time.

DM: One of the things that our colleagues, who developed this workshop format – at the Design Informatics research centre in Edinburgh – talk about is disruption. Uber and Airbnb entered sectors with new technology, their digital platforms, and radically disrupted those sectors. This radical disruption puts jobs at risk, and completely changes the economics of these sectors and where the money is located. It can create risk for the existing players in an area that aren’t buying into it.

FM: Is it a disruptor or just another tool?

DM: History is a reasonably good teller of where these disruptors will pop up in a sector. It causes a crisis of confidence. People call it a disruption. It is not necessarily a good thing because it means a lot of jobs – a lot of people – are uncertain about their futures. We want to provide the starting point around what the steps are towards transforming the design and construction sector into this new type of economy. Our conversations are around this bigger picture. Blockchain is the catalyst. We aren’t trying to sell a technology but to understand a technology, and to help an industry understand a technology and the others that are there, and what they might mean for the future.

AS: It would be a mistake to see blockchain as a tool to slot into existing processes and make them quicker. A good analogy would be the replacement of horses with cars and other motorised vehicles. Not only did cars and other vehicles get people and goods to their destinations quicker, they transformed society.  

FM: Is there anywhere in the world that has already seen the benefits of blockchain in the construction industry? 

DM: Alex has introduced me to Maersk shipping, which has done some work in tracking. Rather than waiting for stuff to turn up at their factories, people are more willing to start making steps so that, when things do arrive, everything is in order. Our colleagues at Design Informatics are doing a project with Oxfam around its fair trade process. It is not money or efficiency that Oxfam values; it’s the ability to say “That is fair trade” or “We can guarantee those people are being paid for it”. The organisation has been exploring that ability to guarantee the provenance of it.

AS: There are real-use cases. For example, IBM has its Food Trust blockchain and Walmart has now made its suppliers of leafy greens use the system because it took five to seven days to work out where something came from; now, it can be done in seconds. It also worked with IBM, sending shipments of oranges from China to Singapore. Normally, it takes five to seven days for all the paperwork: now, one second. We all know that the cost of construction in New Zealand is too high. In the past, we have not had a good way of tracking things, such as the life cycle of a building. 

FM: The documents are not there or…?

AS: The documents may exist but, even if they exist, they are held by different people. In a properly designed blockchain system, you could, for example, know everything about the details of a building – even for one light switch. Say you had an electrician and found out they didn’t have the right qualifications. You can immediately see the switches that he or she installed and, therefore, avoid having to replace all of them. At the moment, we can’t do that.

DM: There’ve been a few high-profile cases in the New Zealand news about civil engineering works where the quality of concrete and steel was found to be less than what was expected. This requires a big retro-fit process, which is expensive and time consuming, and our trust in that company is shaken. Being able to have processes in place to verify that these things are happening as they should – and the transparency that comes with that – is one of the potential benefits.

FM: There was an opinion article in Wired recently where the author [Bruce Schneier] essentially said public blockchains are unnecessary; for example, in currency, it takes the trust that we had in banks and places it in digital-wallet makers. Is it like changing one focal point of power for another?

DM: I read the article and he does make some very good points: There are a lot of blockchain evangelists who make it seem to be magical and claim that is going to solve virtually all of the world’s problems. So, it’s important to have these voices from the technology experts reminding us it’s a very new technology and has limits we need to understand.

I heard an interesting story recently about a company trying to sell another company a blockchain system. Some rather savvy person said, “Well, talk me through a day in the life of our business with blockchain. How is it better?” And he couldn’t. There are a lot of people trying to jump onto it. While the tech experts work on the technological challenges, we want to be helping people understand why and how blockchain is different from what went before, and helping them figure out if or how it presents new opportunities for the ways they do business. Like Uber and Airbnb, this is all part of this shift towards platform economies.

AS: If you want something radical to think about (we will not be doing this), you can start to have things that own cryptocurrency wallets and can act for themselves. You might have a building that has its own cryptocurrency wallet and solar panels. It could start trading power with neighbouring buildings in a mini grid. And, if necessary, it could access spot prices from different power companies.

DM: It is a totally different way of thinking about how we utilise those infrastructures. But, if all of that is on a system that has its own wallet of money to start to spend, it changes the game completely. We like to encourage people to think about that. What does your business look like in 10 to 20 years under the influence of these technologies?

FM: It eliminates a lot of middlemen, doesn’t it? 

DM: There’s a long history of automation not reducing employment overall. Uber is a very good example of how convenience increases for us, the consumer. For the drivers, however, there’s more uncertainty in their employment and when they might get jobs or what those jobs might be. What interests us is how we understand this – what we don’t want and what we want managed better.

Ultimately, we don’t want an apocalyptic shift in quality of life for people in the construction industry. But it will happen if, arguably, like the taxi industries, we say we are fine because it is not something that is going to affect us. These things do affect businesses and we want to help industries look at how they can start to move forward in that process.   

Dermott McMeel is a lecturer and researcher in Design and Digital Media (Faculty of Creative Arts and Industries, The University of Auckland). Alex Sims is an associate professor in the Department of Commercial Law (Faculty of Business and Economics, The University of Auckland). The work reported here was funded by BRANZ from the Building Research Levy.

This article first appeared in Interior magazine.

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