Kevin O’Grady
Associate Director at ARUP / Chair FIBREE London
Introduction
SAP and ARUP with industry experts led a consortium of companies and institutions to try and address some of the key pain points felt in the UK construction industry through a Proof-of-Concept using blockchain as one of the foundational technologies. Once complete, the findings and resulting assets were then used to drive a pilot project with HS2, High Speed Two – one of the largest and most demanding transport projects in Europe, to address some of their early-stage project challenges.
The key goal was to provide transparency and trust, between the different involved parties including SMEs (Small Medium Enterprises), across one of the most reused processes in the construction industry.
This article highlights the key challenges that SAP and ARUP were trying to address, the solution and the business value that can be recognised with similar approaches in the construction industry but also in other industries.
Neil Ashworth
Enterprise Architect at SAP
Challenge
The construction sector is primarily a logistics model to service a one-off manufacturing process, where every activity requires the coordination of people, materials and equipment over periods lasting several months to several years on larger infrastructure projects.
The key pain points in the UK construction sector are probably common in most geographies:
- Lack of adoption of technology by SMEs (Small Medium Enterprises)
- 98% of companies in UK construction are SMEs
- The construction sector in the UK employs around 10% of the UK workforce through 300,00 mostly SME businesses1
- Historically, the sector has been one of the least productive, with the highest rates of litigation and lowest levels of supply chain integration resulting in poor value for money for client organisation
- Highly decentralised with a lack of coordination
- Difficult to track material, plant and resources and to understand how late or incorrect delivery impacts program risk
- Difficult to make prompt payments for deliveries on schedule
- Difficult to address the circular economy and track the “golden thread” through the whole life cycle of a build without an audit trail of what has happened
Many of these pain points have been identified in industry reports including “the Rethinking construction: the Egan report (1998) and Constructing the team: the Latham report (1994)”
As a result, it is difficult to track material, plant and other resources from the complex supply chains and understand how late or incorrect delivery impacts program risk or how to make prompt payments on deliveries that are on schedule.
We focused on HS2, as the client organisation in the Proof-of-Concept, and subsequent Pilot with a repeatable generic process that would be repeated 100s or 1000s of times in a program. We wanted to help to de-risk the HS2 program, enabling a paperless supply chain and facilitating asset data audit trails that can be used by operational teams as the project transitions into passenger travel. As the HS2 program was moving from design to build, the focus was increasingly on managing the operational side split across the Main Works Civil Contractors (MWCCs), stations, rail systems and other major works.
For the Proof-of-Concept we chose the generic process of procuring material based on a design spec, through to delivery on-site, receipt, inspection of quality and validation that material meets initial design.
Solution
The initial Proof-of-Concept involved several organisations and independent industry experts:
- HS2 (client)
- Skanska Costain Strabag JV (a MWCC, Main Works Civil Contractor responsible for roughly ¼ of the HS2 delivery)
- Wood plc (contractor)
- TATA Steel (manufacturer)
- ARUP (design and services)
- Cardiff University (academic)
- SAP (technology and business process)
The diagram below illustrates the process flow followed by the Proof-of-Concept and schematically shows how the transactions were added to the blockchain.
Diagram 1: Proof-of-Concept process flow (source: SAP)
One of the key goals of the pilot was to capture real-time metrics to compare against planned activities.
For the pilot we adapted the Proof-of-Concept use case and focused on the procurement, delivery, and operational use of leased plant (JCB, Digger, Generator etc..) operated by SCS for the purpose of excavating earth and transporting excavated material to disposal sites, whether landfill, temporary for further treatment to create by-products, third party use or temporary for later use such as topsoil.
The pilot then continued with the tracking of the plant using Telematics and IoT sensors on site to identify productivity KPIs.
We did not propose to address the classification and removal of the earth away from the site in this pilot, although clearly this will form part of the wider business process when moving to programme adoption.
Overall “Muck Away” high level process with key attributes related to the plant and the material (earth) is shown in the diagram below.
Diagram 2: “Muck Away” process variant (source: SAP)
Business Values and KPIs
For the Proof-of-Concept, we identified 15 business values. The importance of which often depended on which party you represented and in which role. To summarise, the key business values were:
- Transparency & trust among parties reducing litigation
- Enable prompt payment by allowing all parties to see that activities and tasks have been completed on time
- De-risk programs by providing real-time access to dashboards and events highlighting issues before they become problems
- Non-disruptive and open architecture to enable easy adoption
- SMEs would not need to invest in technology and would be provided access via mobile or web apps by the network owners
For example, the program/project management role saw immense value in the analytical dashboarding with the real-time insight into what was happening at the site. By setting up certain KPIs, the PM function could see problems early, potentially saving millions.
The SMEs on the other hand rarely have any insight into the wider program and prompt payment is the key issue.
Table 1: Business Values identified in the Proof-of-Concept.
We instrumented the analytics dashboard with KPIs aligned to many of these business values to be able to track value, project issues and progress.
We strongly believe that all these values can also be applied to environmental KPIs for complex programmes whether it is the tracking of certificates and ensuring the correct treatment of material or through the circular economy, the monitoring of EPD data related to materials in buildings and works, and the potential reuse of materials in other programmes.
We believe that some business values will benefit the whole industry from SME to Client and form part of the government's goals as well. Other business values are more specific to the role of the participant in the industry. The following mapping is a high-level view of this. We realise that there will be exceptions to this broad rule depending on the program and the participants.
One of the challenges is to work out how much or how little to store on the blockchain. Our findings were that the blockchain should store the references and vital information to facilitate decisions. Documents, product details and other more detailed information around the process should remain in off-chain datastores accessible via APIs.
Additional processes
We identified several additional processes that could benefit from this approach for the early stage of the HS2 programme:
- Delivering of concrete
- “Muck Away” which includes the categorisation of waste/earth by geologist, its removal from site including tracking and certification of disposal or reuse.
Conclusion
We felt confident that through the adoption of this technology we could bring up to 5% cost savings and more intangible benefits to construction programs.
We have subsequently seen that the concept is equally applicable to many other processes and use cases in the construction industry, real-estate industry as a whole and in other industries such as local and central government, utilities, pharmaceuticals, and life science to name a few.
Basically, any use case that suffers from the same challenges with complex or simple multi-party relationships can benefit from this technology and approach. In the FIBREE broader vision this can feed the building passport linking to the UOI (Unique Object Identifier), providing key point in time information linked to timestamps that indicate how, when and with what specifications and potentially with what issues. This links to the concept of the “golden thread” key to establishing sustainability and reusability of parts and the circular economy.
1 Referenced in a number of reports:: Office for National Statistics: Construction statistics, Great Britain: 2021, RICS: Role of SMEs in the UK Construction Sector 2019, UK Government BEIS report 2022