When facilities managers hear about Bitcoin in the news, chances are they are not thinking about disruption to their own industry.

Yet consensus is growing that the blockchain technology which enables Bitcoin will disrupt several industries, and property and facilities management are no exceptions.

That raises questions about what blockchain is and how it will disrupt FM. For answers, Sourceable spoke with Rogier Roelvink, associate director, Turner & Townsend Associate and Professor Jason Potts, director of the Blockchain Innovation Hub at RMIT.

According to Potts, blockchain technology was first invented in 2009 as a means by which to prevent digital currency files from being copied and thus to enable digital currencies to spread without fear that people would simply ‘print’ additional copies for themselves.

At its core, it is a distributed ledger technology which can be used to maintain digital records of almost anything that you can keep a record of. This could include money, physical assets, land titles, company shares, ID documents and more.

Roelvink describes the technology as a chain which holds information to which you can add new records to create a store of information.

“In basic terms, there is a database which holds the information – digital or manual, it doesn’t matter – which has certain value for you, your client or your organisation and into which you can take that information and add a new event,” Roelvink said.

“You now have two blocks in the chain. Incrementally, you add events to it. If you put them all in a line, you get a chain which eventually falls together to form complete records of a particular event. Essentially, it is a store of verifiable information.”

To illustrate, Roelvink talks about how the technology might be applied to the everyday situation of obtaining a driver’s licence. To do this, Roelvink says you might have to prove three things. These are (1) that you understand the road rules and the theory of driving, (2) that you have had lessons and the required hours practice, and (3) that you have passed a skills test.

To prove the first point, you would create an information ‘block’ of records which when put together demonstrate that you passed the theory test. This would include records of you (a) having attended an office and presented identification documents to prove that it was you who sat the test; and (b) the test results which prove that you have a satisfactory knowledge of driving theory.

The second ‘block’ would demonstrate that you had lessons and the required hours of practice. Again, a set of independent records come together to verify this. There is an exchange of money between you and the instructor (proving that you have paid for lessons). Technology within the vehicle itself (fingerprinting) could demonstrate that you were in the driver’s seat. The car could record how far you drove and the amount of time you were seated behind the wheel.

The final ‘block’ would show that you passed your practical test. This would show that (a) you were in the car (possibly via fingerprinting), (b) the tester was in the car, and (c) the tester verified that you drove in a satisfactory manner.

“Individually, none of these sets of information have any value in themselves,” Roelvink says. “Put together, however, all of these sets of information (which have been verified by independent data sets) enable you to go to the road authority and say, ‘here’s my information, please give me my licence.’

“Blockchain technology is essentially digitising all of these bits of information and enabling the relevant parts to be shared with any party which needs to have access to it.”

For facilities management, Roelvink uses the example of a cleaner. In this case, you might have seven blocks of information.

Block one would verify that the cleaner had completed a Certificate III in cleaning operations. This would be verified by the registered training provider who produces a certificate which verifies that the person in question has passed the relevant tests. That in itself could be verified by a mini-blockchain involving different teachers and lecturers.

Block two shows that the cleaner was in fact offered a job. This is verified by the cleaner (via the employment contract), the cleaning company’s HR records (which show the person is on the books as an employee), the tax office (through the person being registered for PAYE) and records of the client organisation which verify that the person has access to the premises – provided that block three happens and the cleaner passes security checks.

Block three might verify that you have passed the relevant security checks. Under this block, you could have evidence that (a) you have made an application for a valid criminal record check, and (b) the police ran your name through their databases and found that you do not have a criminal record. Following that, the client’s records would verify that they have accepted the evidence that you passed security checks and have building access. There is now a digital record set which proves that the cleaner is duly employed (block 2), has passed security checks (block 3) and is now considered to be acceptable to be allowed to work.

Block four would recognise that the cleaner attended work during the time in question. This could be verified by either by security records (CCTV/security passes), which might show that a person holding the cleaner’s security pass duly swiped in and out at the required times. This might be further supported by the shift supervisor signing off on attendance records.

Block five would verify that cleanliness standards were met. This could be verified by an absence of complaints as well as inspections performed by either the supervisor at shift end and/or the facilities manager the following morning.

With verification from blocks four and five that the person attended and performed to standard, the cleaning company could now pay the cleaner (block 6) for the work. This creates an exchange of money from one bank account to another.

Using information from blocks four, five and six, the contractor could secure payment from the client (block 7). This would be authorised on the basis that various records show that the cleaners were present (block 4), the standard of cleanliness was met (block 5), and that the cleaner has been duly and properly paid (block 6).

‘A simple explanation of blockchain in FM

In the above example, various parties could make decisions on the basis of verifiable information. The cleaning company could hire the cleaner on the basis of training provider and police records verifying that the person has relevant qualifications and does not have a criminal record (blocks 1 and 3). The client can grant access to the premises on the basis that cleaning company, tax office and police records indicate that the person is employed by the cleaning company and has passed security checks (block 2 and 3).

The cleaning contractor can authorise payment to the cleaner on the basis that multiple sources verify that the cleaner was present and performed satisfactorily (block 4 and 5). All these are verified by records from sources including the training provider, the client, the cleaning contractor, the tax office, building security and financial transactions.

Similar concepts could also be applied to asset management, where Roelvink says blockchain could provide digital records that:

  • The asset was created (block 1), verified by the builder/installer, owner and monetary ledger
  • The asset is operational (block 2), verified by an automated system, owner and facilities manager
  • The asset requires maintenance every 2,000 hours (block 3), as verified by historical records of operational data
  • The asset’s real time hours are counted (block 4), verified by an automated system
  • A maintenance order is issued (block 5), verified by the automated system, historic operating data and prediction software.

The blockchain could then continue, with records being created of the contractor being engaged, arriving, performing work and accepting payment.

Images courtesy of Turner & Townsend

According to Roelvink, blockchain’s advantages are twofold.

First, facilities managements are being increasingly bombarded with requirements to ‘prove’ that they were at the right place and have performed contracted services. Responding to these requirements consumes significant time.

Blockchain technology, however, should enable much of this to be automated. Any services contractors who provide clients with monthly reports about their activities, for example, would no longer need to do this as clients would have a blockchain which would let them know of any work which had been done (this would sit behind dashboard reports which the clients themselves could run).

Next, by drawing in verification from multiple sources, blockchain technology in theory makes the system more secure. Forgery of previous employment records on a resume, for example, would become more difficult if the applicant would have to fudge not only their own resume but also HR records of the company concerned, tax office records and building security records (of being issued a security pass with the company in question).

Naturally, there are barriers. Technologically, much development remains to be done within blockchain itself. Thus far, its use has focused around cryptocurrencies; its development for broader commercial applications remains in a fledgling state. Security and privacy concerns surrounding personal or contractual information make some parties nervous about sharing information.

Potts says blockchain will cause dislocation for some who currently perform verification and checking processes – many of which may be automated.

Nevertheless, he says this may free up parts of the industry to move further up the value chain.

He says blockchain has potential not just in FM but in the broader property sector. This includes the design and construction chain as well as the sale and leasing of property-related assets.

In FM, he says there is strong potential for the technology’s use not only in contracting but also in asset management.

Though in its infancy, blockchain has potential to disrupt numerous industries.

Facilities managers should prepare themselves.