Capital projects budgets are big—and the stakes are too. The financial risks of doing work in the built environment are significant for everyone involved. A more collaborative, up-to-date approach not only reduces the risks inherent to capital projects, but it can also enhance quality of life and improve the industry as a whole. With quality crews now in high demand, the incentive for doing so has never been stronger.

The importance of an integrated system of record

When owners use a corporate system of record—one to which only they have access—highly seasoned project stakeholders can neither access nor impact vital information about the project they are managing. This lack of interaction is one of the biggest challenges engineering, procurement and construction firms face; it is a major obstacle to establishing a collaborative atmosphere.

Owners often want to keep their data behind a firewall in case of a claim, but this ends up being a losing proposition due to the cascade of misunderstandings, misaligned specs and, eventually, expensive change orders that result from crews trying to do their jobs with one hand tied behind their backs.

Even the most sophisticated project management system in the world won’t achieve even half its potential if architecture, engineering and construction partners aren’t allowed to participate. To build a more collaborative, efficient construction industry, we need shared, highly integrated systems of record that stakeholders can manage together.

Using contracts to build trust and transparency

Too often, construction contracts are structured primarily as risk-shifting vehicles. It’s normal, of course, to use contracts to manage risk, but when their purpose becomes foisting mutual risk entirely onto other parties, it sets a contentious tone before digging even begins. On capital projects, the risks—like the rewards—should be shared.

Blockchain and smart contracts have created a lot of buzz about their ability to generate more transparency and trust among business partners—and with good reason. They have been central to big productivity gains achieved by the manufacturing sector in the past decade.

With blockchain and smart contracts, a centralized tracking system is created before the onsite work starts. All companies involved define the rules, deadlines, penalties and rewards for the project. The smart contract then automatically enforces these obligations as the project progresses, which builds trust and thereby enhances collaboration.

As an example of how smart contracts build trust and make it easier to share risk, consider an event common in many capital projects: a big steel purchase. The smart contract can be set up so that when the steel leaves the producer’s site, a portion of the cost is automatically paid. When the steel arrives at the jobsite on or before a certain agreed-upon deadline, an additional payment is automatically made. If it’s late, a fine is automatically imposed and collected. Once the steel has been installed, yet another payment is automatically made to the contractor.

This approach distributes the risks more evenly across the parties involved, as well as across the timeline of the project. Once the ground is broken, the benefits of on-time, on-budget delivery are dramatic. The potential for cultural and quality-of-life benefits are significant, too. Collaborative efforts and transparent activities guarantee increased feelings of trust and a shared sense of purpose for all participants.

Onsite workers as a data-gathering team

A holistic approach to data means getting information out of documents and into a kind of currency that can be used in meaningful transactions. Rather than a big enterprise technology platform being the gatekeeper for everything that happens between all the various systems—human resources, accounts payable and procurement—those systems can talk directly to one another.

Putting data at the center of projects makes it possible to manage exceptions versus needing to generate a flurry of bureaucratic activity over minutiae. For example, many parts of a construction project—from low-level procurement events to the grade of a fresh hole dug with a bulldozer—could be automatically approved without the need for coordination or control functions.

For owners, a holistic model means being able to do the same amount of building with far less overhead. In fact, in some cases, organizations can do the same amount of building with just 10% of the existing overhead.

So much valuable data is thrown off by construction projects on a daily basis—and most of it isn’t being captured. Owners should think of construction crews as an onsite, data-gathering team. Whether via automated processes (such as sensors) or by manually entering information into a shared system of record, when workers can inform and impact digital assets, they make them smarter and better—and gain a greater sense of ownership and pride in the work. This democratization of data will increase the success of teams that collaborate effectively in the construction industry.