There’s hope on the horizon for the construction industry, which has been criticised for sluggish innovation. In the UK, proptech startup Ehab is using blockchain to decentralise the development process for the likes of prefab and 3D printing companies so that they can produce more affordable and sustainable housing.
Josh Graham started building Ehab, a blockchain-based platform designed to help smaller developers build sustainable, affordable, customised homes, because he personally found it “incredibly hard” to get this kind of project off the ground.
Fresh out of university and with boundless enthusiasm for saving the planet and solving housing accessibility issues, Graham and his friends looked at ways of building environmentally-friendly housing. He says his earliest attempt at a sustainable building project “inevitably failed” because in the UK it is “so incredibly hard to do what we needed to do.”
“There are so many barriers to small developers, and a large proportion of developers are trying to build in a better way,” he told The Fifth Estate from the UK during a recent phone conversation.
“So we wanted to build a platform to unlock building sites and money for smaller developers to help them build something more sustainable.”
Graham noticed other big problems plaguing the building and construction industry, such as poor management of onsite construction processes causing delays and budget blowouts. He also noticed people and communities were not engaged enough in the development process.
This is why the group set up the Ehab platform. The idea was to help get sustainable and affordable projects from the “idea stage to completion in a frictionless digital way” using blockchain enabled smart contracts.
Combined with 3D printing and modular construction, this technology has the potential to drastically reduce inefficiencies so that sustainable and affordable building projects reach completion in bigger numbers, Graham says.
The plan is to start with residential with the aim of eventually expanding into commercial buildings and other areas.
How it works
On any given building site, there’s typically a complex web of subcontractors and several interactions going on at one time. There’s also various assets to keep track of.
By using smart contracts, which are codified, self-executing contracts that exist across a distributed, decentralised blockchain network, the construction of a house can benefit from much-needed transparency and automation.
Graham says that that platform would be used by a project manager, for example, to handle the delivery of bricks or other materials to a site. They’d be able to access the platform through their phone to see when the order had arrived – no matter where they are on the site – and confirm that the order had arrived as expected.
Everyone on the site then knows that this order has arrived, because “it might be relevant for someone else on the site to know it has happened”.
At this stage, Graham says all the blockchain is doing is storing the information and that “the humans have to confirm it is true.” So there is still potential for inaccurate data to make it into the ledger.
Imagine automatic payments so if the builder goes under it doesn’t drag all the subbies with it
But the plan is to keep minimising the chances for error by adding smart codes into the system that trigger digital actions, such as automatic payments. This means that once the brick order is delivered and signed off, to return to the original example, the supplier is paid automatically.
By “‘disintermediating’ all that potential for error” and getting the money “straight to whoever is adding value at that time”, you help protect individual stakeholders. This could help minimise damage when things go awry, such as when British construction services company Carillion infamously collapsed and took many of its subcontractors with it because they hadn’t been paid.
Even further into the future, sensors will streamline this process even further. GPS-enabled Internet of Things (IoT) devices will be able to tell when material orders reach the site, for example.
The transparency afforded by the platform is the “biggest win”. Graham says.
For a big project with multiple subcontractors, lead contractors then have a secure, accurate paper trail to refer to.
“It becomes a providence piece. Ten years later you know exactly what materials were used and who constructed it.”
This construction aspect is just one of five portals in the platform. The first three are about connecting homebuyers, landowners and developers to bring a project from inception to a final design, and securing funding from investors through the Funding Marketplace. The fifth is for investors to keep track of their investments.
Graham says there are companies doing elements of what his company is doing, including the UK-based Brickchain. There’s also a US-based company called Digibuild that focuses on commercial buildings, and “obviously a lot of the blockchain real estate companies trying to enter the market.”
Could the platform be used in Australia?
The goal is to turn the platform into a “globally relevant system,” but Graham admits that this come with its challenges.
Smart contracts will likely need to be modified to accommodate the unique legal requirements in each country.
“Each new country we move to will need a dedicated set of contracts, but that’s just a cost,” he says.
Graham says there’s been strong interest from investors and potential partners.
“I’ve never had someone who said they wouldn’t want to use it.”
Currently, at the beta stage in development and in the first stage of seed funding, the company of three is looking for strategic construction partnerships to help it scale, including partners with 3D printing capabilities.
He says the enthusiasm is largely driven by the “buzz of blockchain”, but he also believes there is momentum building to innovate the construction industry in the UK.
“The construction industry knows they should be innovating but are waiting for that silver bullet,” he said.
“The younger people want change to happen, but that’s not even strictly true… there are people that have obviously fought for change for a long time.
“There’s a bit of momentum now, not just in proptech. There’s a convergence from a variety of things that are pushing and pulling the construction industry.”