1652286717104 Blockchain

Benefits of Smart Contracts and Blockchains

Oct. 9, 2018

Smart contracts have the ability to increase effectiveness and efficiency, moving those in charge of facilities from a function-centric to a data-centric position. However, we must first understand its foundation – the blockchain.

People’s role in facility management is evolving and real-time communication can help people stay in the know. Facility managers today can use emerging technologies such as smart contracts to identify, capture and distribute data across everyone who needs to see it – in real time.

Smart contracts have the ability to increase effectiveness and efficiency, moving those in charge of facilities from a function-centric to a data-centric position.

Before delving further into smart contracts, however, we must first understand its foundation – the blockchain.

(Photo provided by Enstoa)

What is blockchain?

Blockchains are distributed ledgers that create a permanent and shared record of every transaction associated with an asset – essentially an unbroken chain of trust.

Each record is time-stamped and appended to the event before it. Blockchains have the potential to generate breakthroughs in four areas: visibility, optimization, supply and demand.

How Smart Contracts Fit into Blockchain

Think of smart contracts as the workflow layer that sits on top of the blockchain.

Smart contracts stipulate that each piece of information in the transaction passes through a pre-existing set of rules and definitions before being added as a block, allowing for each specific contract to be automatically checked and processed.

The information is stored in such a way that smart contracts can be inspected at any time by any of the stakeholders for progress and changes.

The agreement to have smart contracts amongst all parties allows information to flow into the right places at the right time. It also removes assumptions. For example:

  • the assumption that someone wrote a work order
  • that a contract was executed
  • that specifications were met contractually
  • that the correct equipment was purchased.

There are many bits and pieces that, using traditional methodologies, are fragmented.

Smart contracts enable digital transformations, create standardization and sustainability. Everyone is aware of the obligations, terms and conditions – what contracts have been signed and what they specify. Accountabilities become clear. Administrative efforts can also be drastically reduced with the automation of workflow.

Once upon a time, you may have had to look in a dozen different places for the latest revision, warrantee, or ownership information, now everything is in one central location.

When it comes to maintaining records over the full life cycle of an asset, there is much room for improvement for the vast majority of organizations.

[Related: De-Risk Building Management with the Cloud]

An individual can purchase a used car virtually anywhere and pull up a Carfax report to find out everything that has happened to that vehicle over its lifespan – even with multiple owners. Should that same individual buy a multimillion-dollar building, he or she may have little idea what’s inside or how it has been maintained.

Benefits of Smart Contracts

All this can change with smart contracts. Every transaction is captured. We’re no longer searching for a needle in a haystack. The answer isn’t only in the mind of someone who retired five years ago. The data we need has been recorded in the correct place and is accessible to evaluate and use to make informed decisions.

The benefits of smart contracts can be seen right from the beginning stages of a capital project – and facility management should be involved very early on. Ideally, a facility and its components should be designed with ease of maintenance and operation in mind.

Strategically, this makes all the sense in the world – both from a profitability and a processing stand point. An asset may last for several decades and its total cost of ownership should be considered from the very start of the capital planning process. Once it’s installed, you must live with the consequences.

For example, an HVAC system requiring yearly maintenance may be physically situated in such a way that makes access near impossible. Performing routine work becomes a major effort. Had the unit been oriented a little differently, however, maintenance would be much easier.

Moving to a data-centric approach, enabled by smart contracts, makes this possible. Accessibility would be naturally brought in to front end engineering and design decisions, and the facility manager would be actively involved in this process.

Those who invest and make final design decisions, however, are most often not the same people who will operate the building long term.

[More on data: 5 Steps to Optimize Your Facility with Data Analytics]

Smart contracts hold everyone accountable, not just for performance on the front end, but also sustainability on the back end. Smart contracts can also be internal as well as external. In the case of the HVAC system, the engineering design and project management teams would be required upfront to provide a unit that contractually aligns with the needs of operations and maintenance.

Technology is moving rapidly. The evolution is happening. With smart contracts, the opportunity lies before us for both substantial process improvement and real time management. By embracing this change, we can begin to break down the silos of data and create a better, more sustainable way forward.

Michael Matthews, vice president of strategy & consulting at Enstoa, has over 25 years of experience managing large capital projects and portfolios around the globe and specializes in strategic business consulting and smart technology solutions that enable leading organizations, worldwide, to spend more strategically on improving operations. 
Todd White, director at Enstoa has 25 years of physical asset management experience, and firmly believes that successful turnarounds are dependent on the holistic capabilities of the organization. By integrating engineering, maintenance, manufacturing and operations objectives, he enables organizations to increase reliability and operations efficiencies.

Two handpicked articles to read next:

Voice your opinion!

To join the conversation, and become an exclusive member of Buildings, create an account today!

Sponsored Recommendations