Abstract
Construction customers want more complex facilities delivered faster and at a lower cost. Transaction costs account for a significant proportion of each new or refurbished facility (a 2017 report from the Infrastructure Client Group in the UK suggests as high as 50%), yet they contribute no value to the customer. Blockchain is being suggested as a way to reduce transaction costs by eliminating the need for intermediaries to build trust as a prerequisite for successfully executed agreements. This study first describes the thinking that underpins blockchain technology, outlining how it works, and the potential limitations of the technology. Second, using a case study, reviews the potential cost savings from the use of blockchain for a real estate company. The results reveal a potential cost savings from blockchain deployment at 8.3% of the total cost of residential construction, with a standard deviation of 1.26%. Third, we explore the implications, risks and applications of blockchain technology for improving flow in the end-to-end design and construction process and we identify opportunities for future research on blockchain applications in construction.
Highlights
Some construction activities create value for one or more of the construction delivery system’s customers
The aim of this paper is to begin to explore whether blockchain might be a way to reduce the time, money and efforts that create no value for customers
In order to show the potential of a blockchain in the building construction project, data were collected from a real estate development company
Summary
Some construction activities create value for one or more of the construction delivery system’s customers. Some of those that don’t are currently necessary to enable the delivery of the value that customers want. The aim of this paper is to begin to explore whether blockchain might be a way to reduce the time, money and efforts that create no value for customers. As Turk has stated, construction is a collaborative process [1]. Collaboration around any economic activity requires trust. Most people do not trust blindly—they want verification and reassurance that the other party is worthy of their trust, and in commercial settings they often buy that reassurance from intermediaries, middlemen and women, go-betweens, and matchmakers who they feel are trustworthy
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