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If you think about blockchain, it’s usually in relation to cryptocurrency, like bitcoin, where the technology ensures secure, speedy, identity-protected transactions with its distributed or decentralized setup.
But the same qualities that make it ideal for handling currency transactions also make it useful for handling other types of transactions, including sharing information, sending reports, handling payments, ensuring completion of tasks and much more. In other words, bitcoin technology holds a lot of promise for things like project management.
In their Harvard Business Review article, “How Blockchain Will Change Construction,” writers Don Tapscott and Ricardo Viana Vargas, ask, “Can the same distributed ledger technology that powers bitcoin also enable better execution of strategic projects in a conservative sector like construction, involving large teams of contractors and subcontractors and an abundance of building codes, safety regulations, and standards?”
And their answer could apply to almost any kind of project management: “Using blockchain to automate the contractual processes and paperwork underpinning these complex projects could save money, free up valuable resources, and speed up project delivery.”
What is Blockchain?
Blockchain is often described as “a distributed, decentralized, public ledger,” which doesn’t help much if you’re not already familiar with the technology.
Simply put, it involves taking digital information (the “block”) and storing it in a public, decentralized database (the “chain”). The block contains crucial information about a transaction, the parties involved in it and what distinguishes this transaction from others.
Once a block is added to a blockchain, it becomes publicly viewable by anyone. However, it reveals no personal identifying information about the transaction participants. They are recorded only with unique digital signatures. The anonymity of the technology is why criminal hackers holding a business’s computer system at ransom (pay us or we’ll wipe out your database) will often ask to be paid in bitcoin.
Anyone can view the contents of a blockchain and users can also connect their computers to a blockchain network, so they see a new copy of the blockchain every time a new block is added. Because the same blockchain exists across many computers at the same time (in the case of bitcoin, this involves millions of people), the information in it is very difficult to manipulate or change, providing a crucial layer of security.
How Blockchain Will Disrupt Other Industries
As pointed out above, blockchain may have come to prominence with cryptocurrency but it is poised to “disrupt” many other industries, if it is not already doing so. CB Insights lists 55 industries that it will transform, ranging from law enforcement and ride-sharing to stock trading and real estate.
Of course, the effects on the banking industry are already being felt. For example, “Swiss bank UBS and UK-based Barclays are both experimenting with blockchain as a way to expedite back office functions and settlement, which some in the banking industry say could cut up to $20B in middleman costs.”
It’s also helping banks reduce the cost of cross-border transactions. And it’s allowing for the development of new, innovative financial services. For example, a new blockchain company BanQu is working with AB InBev to make payments to cassava farmers in Zambia. BanQu’s platform tracks the farmers’ products through the supply chain and then it sends digital payments to farmers via their mobile phones, which they can redeem even if they don’t have bank accounts.
When it comes to ride sharing, apps like Uber and Lyft already embrace partially decentralized models, using their apps to control fleets instead of central dispatchers. Blockchain can add new options to that dynamic, perhaps creating a “more user-driven value-oriented marketplace.”
As an example, CB Insights points to ride-share startup Arcade City, which handles all transactions through a blockchain system.
“Arcade City operates similarly to other ride-sharing companies but allows drivers to establish their rates (taking a percentage of rider fares) with the blockchain logging all interactions. This allows Arcade City to appeal to professional drivers, who would rather build up their own transportation businesses than be controlled from a corporate headquarters.”
In real estate, the sheer volume of paperwork, errors in public records and a lack of transparency can cost time and money in transactions. So blockchain applications can help record, track, and transfer land titles, property deeds, liens and can help ensure that all documents are accurate and verifiable.
In Amsterdam, HerenBouw is applying a blockchain solution developed by Propulsion Consulting to a large-scale development project in the city’s harbor. It focuses on “registering transactions at legally binding moments, where accuracy and an audit trail are essential.” Blockchain’s benefits include more timely information, clear, unambiguous communication and fewer mistakes.
“Stakeholders have a clear and evenly distributed incentive to register these facts on-chain: Either you won’t get what you ordered or you won’t get paid,” says Propulsion Consulting founder Marc Minnee. With fewer problems in their system, the stakeholders are able to “spend more time discussing creative design and building method options.”
Blockchain’s Benefits for Project Management
With such uses of blockchain, forecasts are suggesting a massive expansion in the technology’s revenues, with the market expected to grow to $23 billion by 2023.
Blockchain Research Institute in collaboration with Brightline Initiative released a report earlier this year on the potential of blockchain to transform the organization and practices of project management offices (PMOs). They “identified five key areas where blockchain-based platforms and applications can support the efforts of the PMO, including creating and managing digital records, exchanging digital assets, verifying and reinforcing acceptable performance, building reputation systems and executing smart contracts.”
Tim Norris, a digital PR specialist at MOSIMTEC, points out, “The most obvious benefit of blockchain is the ability to maintain an immutable record of events using distributed ledger technology (DLT). In tomorrow’s project management workflows, your team could rely on DLT for a number of critical functions, such as maintaining an unalterable source of truth.”
With a single trusted and automatically updated record can help when investigating discrepancies and disputes, with, say, an external project stakeholder, such as a client or subcontractor.
“For example, if you had scheduled your construction contractor to send people on a certain date and they send their people too late or too early, everyone on the ledger can verify if the subcontractor made a mistake or not,” explains Norris.
You can also use the information in the ledger to analyze business operations to find new efficiencies and savings of time and money.
One of the most useful benefits of blockchain is the “smart contract”—essentially a self-executing contract created of computer code, requiring no human intervention when put into place. The users agree on terms and conditions and when the contract is digitally signed it automatically comes into force. So if a supplier wants to be paid, they must complete the conditions laid out in the smart contract first.
The smart contracts can allow for automatic payments to vendors, contractors, and freelance consultants when conditions are fulfilled. They can also be set up for performance management, checking how project milestones are being met, automatically assigning the team member who completes a task a new assignment or rewarding them a bonus for an early finish.
Smart contracts can be used to automatically track and issue project status reports, and to handle procurement, time and expense sheets and so on.
The Blockchain Research Institute report points out:
“Blockchain can help PMOs and their stakeholders by automating record-keeping, reconciliation, and basic coordination tasks, thereby freeing managers for more challenging and value-adding activities. Blockchain-enabled PMOs can take advantage of automation to hasten their transition from passive entities that manage scope, costs, and schedules to active, adaptive partners who lead and execute strategic initiatives.”
And the freedom to do more valuable and rewarding work is a good thing.