A well known problem of the construction industry, for which it is often critiqued, is its inefficiency and poor productivity.
The highly levelled and separated structure of the AEC (Architecture, Engineering and Construction) industry, its nature to follow logical orders where works need to be done in a pre-set and connected system, and the number of stakeholders with opposing positions involved in each campaign are named as root causes of its problems.
Coordinating as well as harmonising all the necessary tasks, contract administration, handling claims, and supply chain management through manual paperwork is proved to be troublesome and inefficient. This is where Blockchain can come in with targeted solutions.
Blockchain is an information technology that essentially adapts to these structural problems. It can provide a direct solution to each of these problems or provide a all-inclusive platform where project design and management happens.
This can be achieve with a blockchain backed Building Information Model (BIM), integrated with a self-enforcing smart contracts. Those would be supplied by Arcartera, with details chosen by vendors and managed by a blockchain network in a larger scale of circular economy.
The ultimate goal will be to have an own Arcartera Blockchain that can serve for smaller Architect Projects. It could also be forged for bigger Construction Businesses that need a larger number of transactions. In step one, Arcartera is utilising the Polygon Network (MATIC) as well as its underlying Ethereum Environment for Smart Contracts and Utility Coins.
This technology is able to bridge the lack of trust between the stakeholders, automate a lot of current manual processes, provide a secure and reliable infrastructure for collaboration and information exchange while increase transparency and provide a reliable chronological record keeping.
Blockchain is an execution of distributed ledger technology, where peers are the data storage nodes. The number of peers is defined by the networks we currently use (MATIC & ETH) and may eventually be coordinated by Arcartera or its clients when its own chain or forks will be created.
In such a structure, the information is shared with everyone completely and verifiably with complete traceability and chronological order.
The technology itself is free and implementing a blockchain system is far cheaper than any other shared database system such as common cloud solutions.
There have been three generations of blockchain so far, that is, Blockchain 1.0 for digital currency, Blockchain 2.0 for digital finance, and Blockchain 3.0 for digital society.
Blockchain 1.0 is solely regarding the decentralize transaction of money and payments. Blockchain 2.0 works in a more general way and covers transactions related to any kind of asset. For instance, smart contracts and smart properties are examples of the second generation’s implications. Blockchain 3.0 goes beyond the concept of asset transaction recording and covers areas such as government, health, science, and culture. Arcartera is currently positioned in the 2nd realm of Digital or Decentralised Finance (DeFi).
Blockchain implementations in supply chain management and banking systems show it is highly secure and reliable. Public, consortium, and private blockchains provides different information management systems frameworks that can address different needs based on the level of openness and access it is needed. In stage one, Arcartera is utilising Public Blockchains, whereas the aforementioned own and forked chains will likely be based on a consortium or private blockchain.
A public blockchain such as Ethereum is accessible by anyone, and the data can be read or be written by any user, whereas, in a private chain, only the selected few can access the system.
Blockchain, due to its core system, would eliminate the need for trust between the parties or the need for confrontational contractual relationships due to the lack of trust.
As such, in the AEC industry it can help to bridge distrust between architects firms, contractors and sub-contractors.
We have found eight areas where blockchain technology’s applications can benefit the construction environment sector. These areas will be the main attention of this white-paper. Planning and writing DAPPS to run these will be our main objective for Stage 1 and Stage 2 of the Arcartera Protocol.
The eight areas are namely:
The challenges of using blockchain technology in the built environment sector are discussed in the following and directions for the DAPP development are given as the Protocol’s maturity progresses.
Smart Contracts are an integral part of the Arcartera Protocol. Before going into details, let’s have a quick look what it actually is: A smart contract can be defined as a computer program which consist of if/then statements. These help todivide the work into smaller measurable work packages and automate the process of compliance and payment.
Only if these conditions are met (if) the compliance or payment is executed (then). It is therefore crucial that a Smart Contract is carefully designed and agreed upon by all parties. Once deployed it can’t be changed any more. This is the base to ensure a successful cooperation between the trust-less parties involved.
The conditions where each work package or milestone is considered complete is defined, and the completion of each one would trigger the predefined compensation automatically. This approach of breaking the project into smart contracts would provide a new type of work breakdown structure, which would help all the stakeholders to better understand their obligations, requirements, and liabilities as well as how other work packages is going to affect theirs or vice versa.
As a result, a better holistic view of the project before execution and also during execution would be provided, where the real-time progress of the project can be tracked and provide a well-recorded track of developments during project execution.
Controlling the contract governance with a computer program would decrease the number of uncertainties involved in project execution as the outcomes and the triggers to each outcome is completely predefined and expected.
Signing off payments would become automatic dependent on the proof of work and compliance and reduce the need for administrative support in that aspect of the work.
The if/then system ultimately reduces the disputes from contract stipulations as the Interdependence between Structural Engineering and Construction Management conditions and compensations of the work is clearly stated by if/then statements and is governed automatically by a computer program.
Arcartera Protocol and its underlying network is the platform for implementation of smart contracts as a digital protocol.
The information recorded in blockchain would clearly show who is responsible for what work at what time. Any tempering and change in the project data would make that block of information invalid, and it is fully traceable to the party at fault. In other words, the data recorded in the blockchain network is secured and tempered proof.
The underlying assumption of construction contracts is that most of the rights and obligations of stakeholders are against each other. This environment is in direct contrast to the new collaborative project delivery methods, such as BIM requires.
The shared data environment provided by blockchain would allow a seamlessly automated compliance evaluation and provide an instrumental data record for dispute resolution.
Consequently, using Arcartera Smart Contracts on the blockchain eventually changes the landscape of use of escrows, liens, and other sorts of bonds in the construction industry. Smart contracts provide extreme transparency and potentially reduce the number of conflict points and also provide an unalterable track of project progress which can be used for conflict resolution in case it becomes necessary.
Cryptocurrencies such as our own Arcartera’s ARCA Coin are suggested to be used as the form of payment for transactions and Stable-Coins like HKD-T or others can be used as payment or collaterals in smart contracts. It is not suggested to use Bitcoin as it is not practical with current fluctuations in values.
Payments and collaterals could still be hard currencies handled through banks by integrating existing payment accounts and the blockchain network. Arcartera’s Smart Contract can issue ARCA Utility Tokens (not to be mixed up with the ARCA Coin) which can act as a proof of contract for banks or other lenders. Contractors that need to finance part of full amount of their project work can place the token to the lender’s wallet, so that they too have got a security. When the Smart Contract is fulfilled, it’s possible to create the condition that the wallet is paid which holds the ARCA Token.
The end result would be a reduction in the number of people involved in contract administration and a better record keeping of the procedures followed. Reduction of intermediary parties and paper processes such as payment applications would increase the efficiency of the industry, not because of the increase in productivity but because it would smooth the administrative process such as compliance and financial procedures and automate many of the processes involved, which would increase the speed of project governance.
Ultimately, our system smoothes the project delivery process and provides a transparent and traceable payment system.
Auditing the project cost, progress, labor practices, and any other project’s record will be much faster and more reliable compared to the conventional project delivery systems. Consequently, the industry will become more efficient and inherently more ethical. The increased transparency would also result in better accountability and better project governance.
Implications of blockchain in construction and contract administrations go beyond the scope of smart contracts. Issues such as temporal equipment lease and temporal insurance policies are already being discussed where the user only pays for the time construction workers are present at the job site, and the validity of this and other conditions under question can be securely verified through blockchain network.
It’s Arcartera’s goal to have a complex construction project executed though smart contract and blockchain. However, the viability of the concept is evident and implementing such a system in simple projects or subcontracts would be an appropriate first step to evaluate its performance in the real world. Therefore Arcartera Protocol is developing in Stages.
Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business’s supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.
The decentralized and fragmented structure of the construction industry’s supply chain very well pair with the decentralized ledger system of blockchain. Blockchain can provide the infrastructure needed to securely and reliably advance material traceability and promote the circular economy.
Arcartera’s smart contracts again, play a role in supply chain management and material tracing too:
Both supplier and buyer can be assured that they are going to get compensated for their money/product by using our smart contract. As a result, the purchase could happen more directly between the source and the end user without the need for local suppliers.
The payments can be sequential and proportionate to the status of material/product delivery, and the final payment could be tied to the final inspection/commission of the material/product.
Arcartera can implement warranty conditions into the smart contracts. If a supplier uses an inferior material, which can’t expand beyond the warranty period given, a pay-back can be integrated.
Given that source materials are recorded on the blockchain, future buyers of a home will be able to trace back where each raw component came from and potentially use the proof to apply for government incentives.
Arcartera Protocol therefore goes beyond a smart contract, into the extensive use of the ledger technology.
There is also a high potential for integrating internet of things or RFID tags with blockchain to provide real-time material monitoring system resulting in better site management practice and increase in construction efficiency.
Using a blockchain network for supply management would help vendors to easily show their certification of identity from authorities. The buyers can easily validate those certifications of identity and also see the track record of the vendor to check their reputation and capacity from previous works. As a result, a buyer and a vendor without knowing and trusting each other can engage in a transaction.
As mentioned earlier, a true circular economy is achievable through blockchain. When a raw material is extracted, its information can be stored on a blockchain network, storing its source and characteristics.
Then producers can use that network to order and obtain their raw materials. Each order is also stored, and it is traceable that each product consists of what raw materials from where. This chain of information continues to the end user who is buying the product and installing it in their project, which would increase the material transparency in the construction industry.
Furthermore, during the lifetime of a product when maintenance is necessary or if there is a question regarding its source or its materials’ source it is clearly traceable. There will be a chain of information from raw material source to factories, vendors, sub-contractors, contractors, and the final project. That would allow a fully transparent material usage in the industry, where planning for reusing of materials are possible through pre-planning and current knowledge of materials status and their background.
When BIM was introduced to the AEC industry, it provided a shared data environment. In it, all the information is stored in a project file that is shared amont participants. However, the location and maintenance of this shared data environment presented a new challenge. Which party is responsible for it?
As you might have guess, Blockchain technology is an excellent solution to such a problem:
On the base we have an always current distributed ledger system with high security. It can be used as an infrastructure for maintaining up to date BIM models during the project Lifecycle between the involving stakeholders.
In particular, BIM provides a single project environment where all the information regarding the project is created and stored.
We can then use Blockchain as the single platform to maintain and update such project environment and connect it with the reality of site work.
This provides time-stamped, tampered proof data.
The peer-to-peer structure of blockchain aligns well with the collaborative way that a BIM model is developed by different stakeholders, and ultimately, it even improves collaboration.
The tampered proof track record of changes to the model by each user can be used to find a party at fault in design or miscommunication. Any change to the model is recorded and communicated to other people linked in the blockchain network.
Consequently, the BIM related claims during the project lifecycle can be solved much more natural.
Connecting a project’s BIM model to a smart contract would need an information system to link project elements to reality and reflect the project progress on the model.
Arcartera proposes the use of either oracles, independant validators or, if applicable, a detailed Yes/No Code for the smart contract itself.
Blockchain can be used separately or in adjunction of governing the smart contract to link the BIM model to the smart contract and update the BIM model according to the project progress.
The smart contract program can be applied to the BIM model elements and linked to the project’s reality through blockchain.
As a result, the actual construction should match the model to get compensated.
If the contractor finds a clash or an error, he can send a change order or RFI, and it would be Interdependent between Structural Engineering and Construction Management -securely time stamped and recorded.
The granular work progress can be tracked on the model with or without reality capture technologies. The inspection process can be done by manual inspection or automatically through reality capture technologies such as 3D laser scanning or Lidar.
The use of Lidar in particular promises to be an integral step in Arcartera’s future development due to its vast availablity on recent smart-phones.
The end result would be a streamlined contract administration and better project governance.
The Integration of blockchain and BIM or Building Maintenance System (BMS) provides a reliable integrated system which can provide the complete history of the project.
It’s possible to trace every detail of the building to its source, including materials and contractors involved.
But facility managmenet doesn’t end at this point. Such integration can even stretch to the future and use smart contracts when maintenance is needed to automatically place a work order and upon the verification of completeness, release the payment to the contractor.
The concept of a Decentralized Autonomous Organization (DAO) may also be introduced as an organization, which is governed via multiple smart contracts.
A DAO can be attributed to a building through its lifecycle where everything from design and construction to operation, maintenance and demolition is done by smart contracts cohesively and autonomously. Blockchain is one of the few technologies can bear the burden of supporting such complex interactions through time.
Arcartera sees potential in such DAO’s but foresees that its integraton is in a secondary step or beyond of its development process.
One of the hottest discussed topics, independantly of blockchain, is sustainability. The material transparency which we had discussed earlier in supply chain management, would have an impact in sustainability in areas such as whole life cycle cost, carbon emission estimates, and raw material verification.
For example, the designers or users can make a sustainable choice by using material traceability through blockchain up to the source of any product’s raw materials.
Typically, the supply chain would provide the specific information required by the clients.
Acartera Protocol would enable not only the direct suppliers to provide the required information but also the indirect suppliers such as the raw material providers to a prefabrication factory can also put their information in the database for more accuracy and verifications.
This process provides consistent and structured asset information.
This database can be used not only for decision making during the design, procurement, and construction but also would be beneficial for the post-occupancy management of the facility.
Arcartera can also help energy management on a grand scale to achieve a smart grid. First, both energy consumption and production should be tracked using a blockchain. Then, this could provide a basis for a better supply and demand control and ultimately a true dynamic pricing for energy.
Existing CAD files for a real world building project can be converted into a Meta-Verse.
These can then be shared among designers and also with customers.
Once approved, the Meta-Verse displaying the actual building can be a place for Sub-Contractors that are responsible for a particular material or location, fulfilling their smart-contracts mentioned above.
Arcartera is experimenting the use of Virtual Reality Headsets such as Meta’s Oculus Quest Pro. In particular the protocol hopes to achieve a complete platform independant conversion of the 3D data into WebVR.
The research is on-going and first results will be posted here soon.
Arcartera Protocol utilizes Non Fungible Tokens in a diverse way to give site access to sub-contractors, as well as an ownership certificate for buyers of a certain building.
The unique nature of NFT’s ensures that only chosen wallets can store and use them, preventing uninvited guests from entering the construction sites.
NFT’s can also play a role for the payment systems and smart-contracts, to be issued as proof that a certain part of a project has been fullfillled.
This part of the White-Paper will be updates sonest.
Arcartera Limited had been developing Stable Coin Infrastructure as part of the Arcartera Protocol (AP). It was originally created for merchants and governments to create their own smart Stable Coins / Payment Systems. At the monent, it is being altered to be inegrated into a potential contractor / subcontractor payment system. The research below is still based on the stable-coin system and will gradually be updated to match a payment system for the construction industry:
STABLE COIN PAYMENT GATEWAY
Arcartera based stable coins have data driven utility tokens attached (ARCA) and are stored on shards for an ecological friendly Carbon footprint.
ARCA is a digital token created for the exchange and transfer of data and value on the Arcartera Protocol. It is also used for staking and to govern community funding.
How does it work?
Arcartera Protocol has two main components, Stable Coins that are pegged to a fiat currency, as well as ARCA Tokens for the data and financial transactions on the network itself.
Arcartera Stable Coins can be created for governments or merchants under their own name and currency. The first stable coin that was lined out on the Arcartera Protocol was the Hong Kong Dollar Token. It was the project that earned Arcartera the Letter of Appreciastion by the Hong Kong Monetary Authority.
Stable Coins can be used by friends and merchants: Friends can get paid, pay others or share bills. Merchants can sell, refund or create data. The data can be Loyalty Points, Reward Schemes or other information. It is is stored using the ARCA Utility Token.
Both the Stable Coin as well as the ARCA Token are Blockchain technology. They are used through a physical card or a smartphone app.
The app is not a crypto wallet, because AP based Stable Coins are stored on shards / Blockweaves, off the main blockchain.
This way Arcartera Protocol can charge transaction fees to merchants, that can be paid using the ARCA Token.
It’s also more safe, costs less gas-fee and creates a better carbon footprint.
Why is is safe? Transactions on the blockchain are irreversible. Storing them on AP’s own shards, which are only controlled by Arcartera is centralised but more safe. Users can at any time request to move their assets to the main blockchain, making their coins and tokens decentralised. Assets can be moved to a crypto wallet or any other blockchain address. There is also a function for fiat currency payouts at selected partners locations.
Why does it cost less gas-fee? Because transactions do not occur on the main blockchain, they do no occur the traditional costs. Arcartera controls the assets in their own data shards.
Why is is more carbon friendly? Because the transactions do are not subject to any proof-of-work or proof-of-stake procedure, only Arcartera’s on shard processes require energy.
The Arcartera Protocol’s smartphone app shows users their assets and offers transaction functions such as pay, request payment or staking. Naturally a user might think that the app is a crypto wallet, but it’s not.
The app can be considered, similar as a crypto-exchange. The assets are not stored with the user, but on Arcartera’s shards / servers. These shards are processed like internal accounts: While it appears that an asset has been received or left the app, in reality only account balances have been updated, to which each user has certain ownership.
Coin Holders can send or receive a maximum amount of transactions for free. It’s limited, so that the app can differentiate who a merchant is. Merchant have to pay transaction fees, while the process is free for regular users.
Fiat Currency, which is used to create stability for AP’s coins, is controlled by Arcartera as well. Each coin is backed by the equal amount of fiat, until a user requests a payout.
Successful implementation of blockchain in other industries such as accounting, financial technology, and commodity market shows the viability of this technology. Blockchain can hypothetically provide a platform for supporting the link between the physical world and the digital one.
It can also cover the whole Lifecycle of a project from material sourcing, contract administration to the operation, maintenance, and eventually demolition and material reusability.
Blockchain would help to smooth the project development processes and reduce the need for intermediary parties.
A common standard and template for each application area is crucial. Arcartera hopes to play a major role by developing its Protocol and initial Dapps.
Thus a loosely structured industry such as construction can use this system.
Consequently, everybody in the supply chain would be able to input their data and use the other stakeholders’ input in a meaningful manner.
One important issue raised in this study is while the Arcartera Coin can play a role in each discussed section, it is not necessary to be part of the system and blockchain can be used regardless of our cryptocurrency state.
The disaggregated structure of the construction industry makes it a suitable match for using blockchain.
However, this loose structure is a disadvantage in implementing innovation and new technologies.
This problem is more noticeable when a grand scale change is requiered.
As a result, the administrative gap within the industry is a hindrance to blockchain technology implementation in this industry.
Even though computer aided design and BIM is digitizing the construction industry, there is an apparent gap between the framework envisioned in this paper and the current state of digitization of the construction industry.
A looped two-step approach is necessary to, first study the industry to find the requirements and applicable areas. Then, the second step is to test the viability of the solutions and adjust the framework based on the empirical findings.
Arcartera currently is active in both the research- as well as the Dapp-Development stafe by experimenting with the results.
Current state of our network and its company
Arcartera Limited, the company that develops AP, has been formed already. We welcome you to follow our news blog. After originally making tests on the Ropsten Network, we have now successfully launched both the Arcartera Protocol Token and Coin (ARCA) on the Ethereum Layer 2 Network MATIC (Polygon). The next aim is to create our own Blockchain.
We have worked with the Hong Kong Monetary Authority (HKMA) who have issued a Letter of Appreciation for our cooperaton in their e-HKD project.
We have developed a Metaverse for the company DMC, who is using VR and AR apps to showcase their Lamborghini products to their clients.
Discussions have entered with 2 major listed companies that are active in the architecture field. NDA’s prevent us from mentioning their names here at this moment, contact us for more details.
Arcartera plans an exit-strategy through a IPO offering or by being sold to a consortium of architect firms. It’s even possible to sell the technology to the govenment.
Business Performance Mile Stones for the next 2 years
First six months
Transfer of Intellectual Property (Trademarks) to the company.
Official launch of the website, and development of both blockchain tokens (HKD Token Stable Coin and ARCA as utility token for additional smart services.
Basic Server Setup for the non-decentralized application and accounting data.
Second six months
Creation of the app that controls the above Stable-Coins and the utility token. User Interface as well as technical coding to see and move tokens (First 6 Months Mile Stone)
Creation of the server based accounting system that combines the Tokens with the App, so that tokens can be moved along different user accounts.
Third six months
Project is ready to be used and presented to key partners.
Business Development performing presentation of the payment solution to key partners: Banks, Retail Clients. Collecting additional feedback from them to improve or expand the solution spectrum.
Forth 6 months
First use-case prototype in action, field-tests.
On-Site tests of prototype network.
Gregor Hans Schoener (51%)
Arthur Ha (49%)
Gregor Hans Schoener
Greg studied Computer Science at the German University of Essen, after completing a 3 year management trainee program at a German bank.
In the year 2000, he founded the world’s first mobile internet community HOILEY, which was based on the WAP protocol.
In 2009, after 9 years in the digital community market, he founded DMC – a company that designs & manufactures aerodynamic parts for Lamborghinis. Greg was CEO and built the brand DMC to become a world-wide known name in the super-car scene.
With Arcartera, he’s excited to be back in the digital scene. He is Chief Executive Officer, overseeing the company’s general direction. His main focus is building the team, establishing a profitable business plan and ensuring rounds of angel & venture capital funding.
Arthur studied Business Management with a double degree at Swiss Hotel Management School and University of Derby. He then pursuited in a management role in the Langham Hotel.
In 2014 he was the founding member and management of a group of restaurants that was Hong Kong’s sensation.
In 2017 he founded PICS SPOT Thailand, which later then became CHARGESPOT ASIA, an e-Commerce company fitting the demands of portable charging needs.
With Arcartera, he is looking to bring back the skill sets in management and establish a strong uphold for the future of the company. As Chief Compliance Officer he will map the path for success, and sell the company’s proof of concept to potential users of the system.
The information used to create our whitepaper is used on these references and sources: