HS2 Ltd has successfully implemented blockchain in a section of its procurement pipeline to increase trust, efficiency and value. It hopes to expand its use of the technology to wider processes on the supply chain.
HS2 Ltd head of innovation Howard Mitchell spoke at NCE’s TechFest on 2 December, alongside Costain strategic growth manager Charlie Davies and blockchain lead for Deloitte’s real assets advisory practice Alexander Marx. Together, they explained the objectives and outcomes of the blockchain trial undertaken by the Skanska, Costain, Strabag joint venture, alongside Deloitte, on High Speed 2 (HS2).
Blockchain is a form of cryptography that links together blocks of information in a secure chain, where each piece of information is given specific timestamp and transaction data that is practically impossible to hack or alter. This means that that any data being input to the blockchain only has to be inserted once and it can never be altered again, preventing any tampering or human error as the information gets shared throughout the network of parties who need to access it.
As for its use on HS2, Marx explained: “It was really about what’s the value case – what does blockchain do better than other technologies that makes it worth the effort of putting it in place? For us that was trust, transparency and accountability.
“Trust because you create a single version of the truth that everyone shares, and it’s verified.
“Transparency because you can share information across that network to encourage collaboration
“And finally accountability, because you can trace the business process from start to finish with clear and undeniable records of what’s been done when.”
Marx outlined three key uses for blockchain in HS2 – and potentially all construction projects in the future.
The first is to identify points in the supply chain where there are bottlenecks – where information or processes are held up. This provides an ability to spot trends that could be stamped out to improve efficiency.
Secondly, he explained how having complete confidence in the data being shared means that they can start to use smart contracts and payment automation. For example, with blockchain baked into the technology, data will be created about when contractors arrive on site and leave with undeniable accuracy, meaning payments can be directly automated – no timesheets or administrators necessary. HS2 says using blockchain has reduced the total number of business processes for timesheets and invoices from 24 to 11.
The third main use of blockchain is material origination. Every single item, even down to a lowly bolt, will have its information inserted to the blockchain, and from that point a record is kept on when and where it was manufactured, where it’s transported, where it’s included in the assembly, that assembly’s transport to the construction site, and ultimately its location in the final structure.
Material origination data will be particularly useful as we move towards greater implementation of digital twins, as the information for each little piece of a building will have robust data behind it that can be mirrored in the digital version. Origination data, including how it has been manufactured and where it has been transported, will also give much more detailed results when calculating carbon emissions for any given building.
HS2 has started putting blockchain into use with one of its plant suppliers, Lynch. By ensuring that everyone in this section of the supply chain is using the same, secure information, they have been able to crack down on bottlenecks and start using more automated processes.
Davies explained: “We really innovated and connected up the supply chain in terms of proving this concept out; working with finance teams and working with commercial teams, as the gap between the two is sometimes not quite understood.”
This increased speed of payments by 50-60%. He added: “What that amounted to over the lifetime of [HS2’s] SES sections 1 and 2 main works – so Euston out to the M25 – was quite considerable savings.”
They now envision expanding this much further.
Mitchell, speaking on behalf of HS2 Ltd, said: “As a client, we’re not just looking for the benefit to be a proof of concept or isolated just within one part of the route. We are now looking to expand the learning that we have from this particular case and cookie cutter it.
“So, we will lift throughout the first phase of the programme and then also start the dialogue with the second phase of the programme, where this should become more of the norm.
“But this is just one use case against many.”
Marx underlined this by explaining: “What we hope to do in the next few years is expand out in terms of its features and functions.
“It can be applied more broadly to other areas of timesheets and invoicing, while also looking at the rest of the process to move towards a one stop shop, essentially, for how you procure plant.”
He also said that in time it will expand into other processes, such as different types of procurement or how to capture carbon.
Marx also wanted to highlight that this won’t just have positive impacts for HS2, but all layers of the supply chain. “Paying for supplies faster, that has benefits not just for the cost of doing so but also for their costs when it comes to things like trade finance and all other things associated with it,” he said.
In conclusion, he wanted to emphasise the potential for blockchain to bring a new level of standardisation to the construction industry. “What this really is for us is a move away from one project, once programme, one organisation’s style of technology implementation, and to much more of an ecosystem-driven approach,” he said.
“We can start standardising the way we do things – especially in these more administrative tasks, which is something manufacturing has done so well [to drive] their productivity forward,” he said. “If we can build an ecosystem which is fair and equitable to everyone, there’s no reason we can’t adopt a similar approach.”