Research

+ LEGAL

Legal Services are entering a period of major disruption caused by new legal technologies, such as Artificial Intelligence, Internet of Things and Blockchain. CBC are at the forefront of major innovation in alternative dispute resolution for the Construction Sector, which we describe as Algorithmic Dispute Resolution, a form of ODR (Online Dispute Resolution).

In terms of LawTech, we broadly divide online dispute resolution into: a) Consumer ODR – uses technology to facilitate the resolution of disputes between ecommerce parties, typically online suppliers and consumers; b) Judicial ODR - any means of settling ‘ordinary’ disputes where there is a hearing (using technology) but outside of the courtroom, such as divorce or personal injury cases; and what we refer to as c) Corporate ODR – the use of technology to manage the resolution of any contractual disputes that may emerge from major multi-partner projects or financial transactions.

We divide disputes can into either anticipatory disputes, usually contractual, where the use of ADR in the event of a disagreement is mandatory,and post hoc disputes, , where there is a voluntary decision to litigate after the dispute as arisen. Algorithmic Dispute Resolution will concentrate in anticipatory disputes.

Blockchain technologies can be used for case management, discovery and the process of litigation, where automation can be introduced at many stages. Further, the use of blockchain to provide a trust is an important factor in building agreed repositories of underlying transaction documentation as well as fairness in any automated decision making or negotiation solution.

+ FINANCING

Without any doubt, blockchain technology has the potential to revolutionize construction financing, given that it carries the underlying principles of cryptocurrencies, such as BitCoin. There is much talk that blockchain technology will shape and stand for modern finance. Or according to Harvard Business Review: “The Blockchain will do to the Financial system what the internet did to Media”.

In the light of that, blockchain will impact construction not only through smart transactions, which follow smart contracts, but also through a massive digital and completely decentralized financial system for construction. As it is distributed, blockchain resists changes and systems failures or attacks. Once again, blockchain technology has the potential to democratize construction and particularly financing in a bottom-up rather than top-down approach by supporting peer-to-peer activities of small-scale actors.

The long term financing of infrastructure and construction is based upon a combination of the projected cash flows of the project, the use of the building and the relative strength of the balance sheets of the developer and contractors.

Finance can be by equity investors, or syndicates of lending institutions. Security over the assets is often factored into the equation. Techniques often used include special purpose vehicles, limited recourse financing and securitisation.

Blockchain can be used in both the fundraising ( ie by crowdfunding through token sales in an ICO [Initial Coin Offering] and the governance of the fundraising body, thus encouraging international bodies such as the World Bank to invest in infrastructure projects. An example would be by the use of a DAO [Distributed Autonomous Organisation], which could also be used for project and site assembly as well as continuing asset management during the life of the building.

Further use of blockchain can be envisaged in payments, risk management and authentication. This would introduce substantial access to funding for major projects in cities and countries where barriers currently exist, which would result a dramatic improvement of people's lives around the world.

+ CULTURE & CHANGE

Culture change in the industry in the adoption of this new technology. The construction industry has become notoriously litigious as projects have larger sums at stake, and as a consequence of being a buyers market where contractors and sub-contractors are forced to price their services more competitively. Blockchain has the potential to reverse the current trends by creating a ‘Panoptican effect’, where all parties behaviour is moderated as they known that there is the possibility that their conduct will be properly observed at a later date.

The detailed and accurate recording of decision making in the design process will disrupt the current relationships between the various parties to the process, by the creation of a more collaborative approach to liability, which in turn should encourage a less ‘defensive’ approach to decision making and thereby encourage innovation.

Research into changes in current business practices, in particular by the use of automation of processes such as the purchase of materials and the verification of quantities will encourage best practice to develop in areas where current restrictions create market imbalance.

+ DESIGN, CONSTRUCTION & SAFETY

Construction industry is largely characterised by fragmentation in processes, services and firms. One of its persistent problems is the disconnect between design and construction. This disconnect is mainly due to the lack of open and trustworthy information across the supply chain. Blockchain technology has the potential to adverse these effects through the use of open and transparent transactions.

Apart from minimising the interfaces between Design and Construction, Blockchain technology can contribute to improving both in isolation. First, blockchain can facilitate Computer Supported Collaborative Work (CSCW) and Computational Design in general, by enabling transparent information flows. Second, blockchain technology could nicely complement information and change management in Building Information Modelling (BIM) systems, both authoring and managing tools. Thereafter, leveraging smart contracts and trusting environments, blockchain technology can improve Supply Chain Management and logistics control.

+ BUILDING SERVICES

Internet of Things (IoT) is changing the way assets and buildings are serviced. Through the use of sensors, connected and smart appliances, buildings could leverage from truly life-cycle thinking in construction industry. And blockchain technology could facilitate the feasibility, scalability, privacy, and reliability of IoT applications in construction.

With the advent of connected devices pertinent to Building Management Systems (BMS), blockchain could rationalize and regulate information flows to and from building systems reliably and securely.

+ ENERGY & SUSTAINABILITY

As Blockchain gathers the attention of many industries, its benefits for distributed transactions, promise a revolutionary approach for the energy sector. The privacy concerns of energy clients, the challenging energy tracking and the growing demand for smart grids from both large and small-scale energy suppliers necessitates higher transparency in the sector. Additionally, various emerging sources of energy generation, such as rooftop solar, demand response, and electric vehicles complicate the energy grid.

Blockchain technology, due to its cryptography principles, could ensure trust and security in energy transactions and reduce transactional costs, removing intermediaries. Subsequently, blockchain could facilitate a bottom-up way to manage energy flows from various small-scale energy producers, as opposed to the current top-down model.

+ SMART CITIES & SOCIAL WELFARE

As Smart Cities aim to integrate and manage various physical, social, and business infrastructures, to provide better services to its inhabitants and ensure their well-being through optimal use of the resources. Therefore, Information Technology (IT) is a key enabler of Smart Cities, featuring technologies such as Internet of Things (IoT), cloud computing, and smart networks.

Ensuring security is a persistent challenge in all these innovative solutions, which hinders the utilisation of such smart infrastructures from citizens. Blockchain technology has the potential to increase information security and privacy between dwellers of various urban cultures and local government and thus lay the foundations for the full utilisation of smart cities objectives and resources.

+ POLICY & COMPLIANCE

Blockchain technology essentially offers a new view on governance, an ‘open sector’, according to John Clippinger, ready to challenge traditional, top-down leadership paradigms. Whereas many of its traits have direct relation to the financial sector, governance and decision theory are the next key application areas. For construction, all record-keeping operations, such as permits, transactions and briefs could be digitized through blockchain technology, resulting to immense benefits in time and cost.

The applications of blockchain technology in construction industry suggest implications for privacy and copyright protection. Apart from legal, also ethical and professional transformations are required to leverage from blockchain technology, which in turn could enhance citizen engagement and transparency in the current increasingly digitised construction industry.