4.2 B LOCKCHAIN AND C IRCULAR C ONSTRUCTION S UPPLY C HAINS
4.2.4 Conditions for Implementing CCSC Through BCT
The questions the participants answered were split into the categories of BCT and CE. Therefore, this section will be explored in the same manner. The findings from interviews with the blockchain experts and construction industry actors were clear in terms of the need for a clear business case, regulations and use-cases in order to implement the technology and transition to CCSC.
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4.2.4.1 Incentives for BCT
When the interviewees were asked about what they thought would be the catalyst for implementing BCT into the construction industry the interviewees had a few different opinions. However, there was one theme that most seemed to agree upon.
This theme was one of economic incentives. Every interviewee mentioned the subject in one way or another. One of the most detailed summaries was stated as such;
“It has to start with the authorities making new regulations. (...) Much of the innovation in our field happens when governmental construction agencies order something new, with new regulations. Then the economic incentives in the industry will react” - D1.
The notion was continued through the other interviews as well with slight variations such as two other interviewees who answered more directly; “The client has to say that they will put, let’s say, 100 thousand extra in the contract if the entrepreneurs utilize or do that” - C2. Further, one of the interviewees argued bluntly that, “The incentives must be present. (...) Ultimately, economic incentives must be taken into account” - D3.
Another view was the view that the technology must be evolved from its current consensus algorithms, such as “proof-of-work”, due to its high electricity usage and high transaction costs. This was argued by one of the blockchain experts and put in such a way; “we need a secure and low transaction cost blockchain and a much more developed layer of Smart Contracts on top of that layer too” - B2. This view was shared with another interviewee who also stated that BCT is energy intensive, an attribute which is in need of advancement.
4.2.4.2 Requirements and Regulations for BCT
When the interviewees were asked about which actions that would be necessary in order for the BCT to be utilized there were some who argued that the most likely way it would find its way into the industry was through requirements or regulations.
The reason for this was explained by one of the interviewees to be that; “A prerequisite for blockchain to create value is that we have control over the process
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(...) We must have a set of rules and requirements - it is not so much about the technology, but the process” - D4. This was started because everybody in the supply chain with access would have insight into the processes the technology would process and everyone with access could behold the information the technology stores. This was further elaborated upon by another interviewee who mentioned that; “The discussion has always been about what to share with whom, and when.
We must focus on collecting and sharing data, but we have not yet put in place all the rules, accesses and exchange points” - D2.3. Further, it was explained that one of the most basic conditions for blockchain is that the entities in a supply chain have to share information, and today, no one wants to share too much. As information about hourly wages, mark-ups and contracts are secret, companies will not give up this information freely. “It is shared across companies who are in business. What do you want to share, and what do you ensure that you share little enough so you don't reveal trade secrets” D2.2. Through the same logic, another interviewee stated that there “must be an amendment to the law that says we have to do this.(...) or it must be a requirement from the client” - D3.
4.2.4.3 Use-Cases and Business Models for BTC and CE
When discussing how one could implement BCT in order to reach a CE in the construction industry, there were two arguments in which all of the actors were in consensus. First, for the technology to be effective, digitalizing the supply chain is important. This was best described by one of the participants who argued that “a digital baseline is the starting point, and then you need a community of people that are invested in the systems to do it” - B2. Second, in order for the industry to embrace the technology, there must be conducted use-cases that can provide information to which extent the technology can be utilized and how economical it is. As one of the participants mentioned; “It has to show that it has utility through solving real problems in use-cases. It has to turn out to be good for business - that it pays off” - C1.
Further, the interviewees argued that the construction industry is a traditional industry and that their practices currently “get the job done”. However, even though there is a reluctance in changing a winning formula, the entities are willing to find new solutions in order to increase profits. The interviewees therefore argued that
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business cases must be conducted. As stated by one of the blockchain experts; “It's like ‘Show me the benefits’. And there are no business cases yet. (...) They want to see business cases with actual tangible benefits. And this is something we cannot offer them now” - B1. Another interviewee further expanded on this notion with the argument that; “We must also be able to create the business models that enable us to achieve economic growth and a reduction in the greenhouse gas accounts” - D4.
Another interviewee also followed this train of thought, and argued that the largest barrier that the phenomena would have to overcome were to be inducted into business models as there is a difference in knowledge of the topics. Further, interviewees also argued that there “is a big gap between the theoretics and commercial entities who are to make money” - D1.
Another view was also shared across a number of the participants. The technology could not just be added onto the systems that are being used today, it has to be integrated into business models as stated by one of the blockchain experts; “the most important prerequisite is that blockchain is contextualized within the sector, and not only within the sector, but in certain business models” - B1. Further, it is also argued that the technology must be embedded into solutions where no one notices that it is there. “It must be added in the form of a technology or standard that functions as a foundation that very few people should worry about” - C2.
There was also a view that was stated by one of the participants which should be considered. “The industry could not care less about which technology it utilizes.
BIM, BCT or whatever. As long as it is economical and easy to use” - C2. This was further strengthened by another interviewee who argued that; “This is a very traditional industry, which requires some time to turn around. There is also a lot of focus on quality, time and economy. The biggest challenge at the moment is probably that everything is measured in economics” - E1.
Another interviewee also shared this view through the notion that every contractor has won the tender due to its low price, as this is a criteria which is valued greatly.
The entrepreneur will therefore also deliver within the budget, hiring the lowest priced workers, in order to ensure a profit. As stated by one interviewee when arguing about profits when taking part in CE; “no one is interested in taking risks or using something they are not familiar with as that will increase the risk” - C2.
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Further, when asked about the information about material properties, one interviewee answered;
“It is of the utmost importance. In terms of what kind of properties, we want from our supply chain (...) properties do not appear through thin air. They must be facilitated by incentives for construction, political socialism as mentioned earlier and also the conscious choice of the actors doing the SC”
- B1.