Sensors, data and automation will increasingly define construction projects – as well as cityscapes

There are more than 1,000 ongoing smart city projects around the world right now. Sensors, data and automation will increasingly define construction projects, as well as cityscapes. The emergence of the connected city leads to many new possibilities – and challenges . For example, how do you integrate and leverage smart features? How do you safeguard personal data? What about creating a seamless interaction between various systems, including individual buildings and city infrastructure (such as transport and energy systems)?

I advise several blockchain companies and follow the evolving ecosystem closely. From personal experience it is clear that blockchain is about much more than cryptocurrencies and payment services. By 2020, there will be 600 recognised smart cities around the world and blockchain can underpin many, if not most, of the processes that will make those cityscapes smart.

The question becomes: if blockchain is going to be the foundation of smart cities, what does that mean for construction and real estate companies?

The growing cityscape

More than half the world’s population now lives in cities. Before the middle of the century, that number will jump to two-thirds.

While cities account for the bulk of many countries’ economies, they also present administrative, organisational, logistical, social and environmental challenges.

Smart cities that involve the use of information and communication technologies (ICT), as well as the Internet of Things (IoT) and other related technologies, have been heralded as the way to mitigate at least some of these issues.

However, smart city technologies like ICT and IoT come with their own conundrums. For example, how the various systems that ‘live’ within a smart city environment interact with each other and individuals. How does a smart building, for example, ‘talk’ with a driverless car, or know you, the passenger, have the right to enter, and let the vehicle through the outer gates? Or how does one automate and democratise the use of energy in a building, so that inhabitants can choose if they only want to use locally produced renewable energy?

The answer is that without efficient, protected data transfer and proper use of data, most smart city initiatives and technologies will fall short.

Blockchain to the rescue

All of which brings us to blockchain. For the smart city revolution to reach its potential, it needs a horizontal integration of individual services that is a) highly automated, b) highly secure and c) allows for streamlined, accountable transmission of data. Using buildings as an example, they need to be able to collect data as well as exchange it with other buildings, power delivery systems, driverless vehicles and weather forecast systems. Some of this data will be personally sensitive, some financial, and some business-related.

One possible solution is for individuals to have a blockchain-based ‘self-sovereign identity’ (SSI) – a consolidated digital identity. The goal is to provide individuals with a wholly unique and safe ID that also helps store data, in place of the fragments that each of us currently have scattered across different public and private organisations, applications and websites, with little to no control over their storage, updating or sharing. (Not to mention the risk of losing control of data to hackers.)

Without delving too deeply into the technology, blockchain’s decentralised distributed ledger technology (DLT), distributed key management and peer-to-peer encryption technology is regarded as about the closest thing to unhackable we know today. It also enables the use of smart contracts with an if/then structure (if A happens then B happens automatically). In other words, blockchain could potentially automate many of the processes and interactions between systems that smart cities will rely on. Simultaneously, it could allow for secure logging of data and data transfers within and between systems.

Large corporations are already engaged in developing these aspects of smart cities. For example, the Chinese e-commerce giant JD has opened a dedicated smart city research centre with a focus on blockchain and AI.

Country and city governments are also backing the technology: Sweden, the UK, USA, UAE, to name but a few. Perhaps the best illustration of the potential public organisations see in blockchain-driven smart cities comes from China. The country, which has been solidly against cryptocurrencies, looks set to integrate blockchain in many smart city projects, including the $380 billion development of Xiongan.

The many uses of blockchain

While some of the above is a glance into the crystal ball at what the future may hold, the construction industry need not wait with integrating/trialling blockchain technology. It already has several uses that can alleviate current bottlenecks and inefficiencies.

During construction projects, blockchain can add transparency and efficiency. This is doubly the case for the construction supply chain. Blockchain also shows potential in areas such as logistics and storage, payments, contractsand fleet management.

Logistics and storage aspects of construction projects alone could see savings in the six or seven figure range by using blockchain solutions, depending on the size of the specific project, while making the whole process completely transparent to all stakeholders.

Real estate companies can employ blockchain-based building maintenance, management, streamline contract processes and manage land registries. The latter is currently being tested in Georgia.

From tenant to user?

For both real estate and construction companies, it is perhaps worth looking at the emergence of smart cities and new, disruptive technologies from a bird’s eye view. They, along with changing customer demands, indicate that both industries are on the cusp of profound changes.

In the previous century construction projects and the finished product were, while not completely cut off from their surroundings, not nearly as integrated with other systems as is the case today. Furthermore, the tenants were generally less concerned with or interested in knowing how a project was completed – and the number of systems they could interact with and manipulate within, for example, a newly constructed building, was rather limited.

Today that is changing. Tenants increasingly want flexibility, control and transparency without sacrificing ease of use. To meet changing demands, construction and real estate companies may need to rethink how they view their customers. Instead of being tenants, they are end users – similar to the business-customer relationship found in the technology industry. As is generally the case within the technology sector, long-term future success in smart city environments relies not only on your products (buildings/infrastructure projects), but also how they can be integrated with other systems and on your subsequent use of the data that your solutions generate to gain insights and identify new business opportunities.

Data is the ‘new oil’, and construction and real estate companies are sitting on what is the equivalent of a sizeable chunk of the world’s resources. Historically, they have struggled to make full use of that resource, and perhaps blockchain’s biggest future boon for both industries is how it can allow those companies to collect and process data in new ways to boost innovation and drive new solutions.