Complex Made Simple

Expert: What’s the future for Blockchain, Cryptocurrency in construction?

Karim Helal, CEO and founder of

While there’s been much hype over blockchain and cryptocurrency in the past few years, we take a look at how these technologies are set to bring significant change to the construction sector, and
how they might provide solutions to many age-old industry problems.

By- Karim Helal, CEO, and Co-Founder, ProTenders

Even if technology isn’t your key area of interest, you will likely have read something about blockchain and its potential impact on how we trade and conduct business, Blockchain researcher
and entrepreneur, Bettina Warburg said “Blockchain technology is a decentralized database that stores a registry of assets and transactions across a peer-to-peer record.

It’s basically a public registry of who owns what and who transacts what. The transactions are secured through cryptography and over time that transaction history gets locked in blocks of data that are cryptographically linked together and secured. This creates an immutable, unforgeable record of all of the transactions across this network. This record is replicated on every computer that uses the network.”

Read: du launches first health blockchain solution to ensure patient safety

So now we’re all clear about what blockchain is, how can it help to streamline and improve the construction sector? Perhaps the best way to answer this question is to work backwards from some
of the challenges we know exist in the industry already.

According to Deloitte’s 2018 report, Blockchain and cryptocurrency – Application to Engineering & Construction, some of the primary challenges include low traceability (of both accountability and products), counterfeited goods, paper-intensive and inefficient purchase ordering processes while more general issues include the verification and approval of completed works and payment delays.

Just by looking at some of the fundamental features of blockchain, it becomes clear to see how they can help address some of these challenges, starting with trust.

Working with reliable, trustworthy people makes a significant difference to the success of a project, which is why one of blockchain’s most important features is the verification and tracking of digital identification. Not only does it verify the standards, qualifications, and experience of the individual or company involved, it also records their previous performance, meaning professionals will be able to build a ‘digital reputation’ for their work over time.

As a decentralized, encrypted ledger, blockchain also offers a transparent way for any given stakeholders to record and or validate the exchange of value; whether services or currency, meaning
unless all the authorized parties acknowledge that an event or transaction has occurred, it will not register as complete.

Read: With ‘Fasah’, Saudi makes blockchain leaps in cross-border trade

This principle neatly fits into one of Blockchain’s most useful features, Smart Contracts. Let’s say an MEP contractor claims to have delivered their part of the project; they can request that it’s inspected.

If the person responsible for inspecting the work approves it has been delivered to the necessary standard, the MEP contractor is paid automatically and the Smart Contract becomes delivered.

Taking this principle a step further, a group of Smart Contracts can be aggregated to create a Decentralised Autonomous Organisation (DAO), which can effectively guide a project from contract to contract, process to process, while keeping all stakeholders fully informed.

In fact, Smart Contracts have multiple applications across the lifespan of the construction process and beyond, for example, products can be purchased directly from the supplier using staggered payments, where liability is transferred as it makes its way to the job site.

Similarly, a Smart Contract can be used to integrate with the Building Maintenance System of a completed project enabling it to order worn or broken parts automatically through IoT applications, thus eliminating the need for third parties thereby reducing cost.

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Not only do Smart Contracts provide a clear and transparent system for accountability, they also reduce administrative reporting and monitoring, while mitigating project risk, essentially addressing several of the key challenges currently facing the GCC market.

As mentioned earlier, the construction industry has developed a reputation for being slow to adopt technological change, so it might be wishful thinking that the industry at large would suddenly decide to adopt blockchain overnight.

For many forward-thinking professionals, the most likely starting point for blockchain integration will be through enhancing BIM (Build Information Modelling). As a tool, BIM has proven to be popular not only for its in-depth detail of a project which can be shared with various stakeholders but also its ability to save cost in raw material by providing highly accurate BoQs.

A logical next step would be to see blockchain as an enhancement of BIM with real-time checks and balances and an automated payment system in order to maintain cash flow for all relevant parties. By combining real-time information with automated actions, blockchain could even extend to activating insurance policies for laborers only when onsite, thereby reducing premiums over the duration of the project.

There are of course several challenges in addition to slow technological adoption such as ensuring confidentiality (where required) between parties in terms of finance and protecting IP. There’s also the issue that some stakeholders are more advanced than others and that in order for blockchain to be an intrinsic success, it will require the involvement of all parties.

Read: The next big blockchain idea could come from a GCC 11th grader

This being said, the last few years have yielded some significant leaps forward, not only in terms of how we approach the construction process but also how we deliver sustainable, cost-effective solutions. The reality is that whether you take into account the increasing volume of articles within sectorial publications, or by simply listening to industry stakeholders, there is a genuine sense that the industry demands change. Among others, mitigating project risk, and increasing efficiency by adopting blockchain could be the main drivers for construction. is a leading Construction Intelligence and Tendering platform, enabling thousands of Developers, Consultants, Contractors and Suppliers to reduce risk, showcase their companies, and find new leads and partners, securely and efficiently.