Blockchain will revolutionize asset management. Here's how.

What if we could build an asset database that the asset owner had full visibility and control over, even if they weren’t active in its upkeep? What if asset ownership was transferred with a single click? It turns out we can do this, right now, using blockchain.

Typically, infrastructure asset owners, such as road agencies, port authorities and utilities providers face challenges with balancing asset integrity and OPEX following construction or installation. This is achieved by following the Original Equipment Manufacturer (OEM) maintenance regimes. Whilst this strategy ensures validity of warranties and peace of mind for the asset owner, it is rarely a cost-effective or achievable approach after warranties expire and multiple contractors have maintained the assets. In our experience, this issue impacts more than half of all major asset owners.

It is at this point (handover or maintenance integration), that asset registers are found to be incomplete. This impacts the re-engineering of maintenance regimes, slows delivery of new maintenance contracts and can result in further asset condition surveys. The responsibility of data integrity or transfer of ownership is often left to the outgoing maintenance contractor, who has little incentive to deliver a complete and accurate product.

But what if the data integrity and security (including maintenance activities, warranties and defect registers) were guaranteed at asset installation, for the full asset lifecycle? What if we could build an asset database that the asset owner had full visibility and control over, even if they weren’t active in its upkeep? What if asset ownership was transferred with a single click? It turns out we can do this, right now, using blockchain.

Asset Management, Reimagined

At its core, a blockchain is a distributed ledger maintained by a network of computers, each of which independently validates changes to the ledger by other members. It can be considered a spreadsheet, or database that is stored on many different computers simultaneously.

Securing the maintenance history and unlocking asset value through more rigorous record-keeping is certainly an exciting opportunity from a blockchain-backed asset-management strategy. Another is that asset transfer between organisations or government agencies (or even private individuals) could be automatically enabled using Smart Contracts.

‘Smart Contracts’ is a term to describe software that lives in the application layer of a blockchain system. Typically, these programmes auto-execute once certain conditions are met, for example: Transferring of liability from operator to owner after X years of maintenance or transferring of property ownership to mortgage payers once the full value of a property has been paid. These contracts typically require more rigour to set up than traditional legal contracts, but once this is complete, there is no need for a trusted third party to support their use.

The data integrity challenge

The immutability and security offered by blockchain technology, while highly impactful, also presents a new set of challenges. The inability to edit maintenance ‘transactions’ means that all activities must be verified off-chain prior to being captured, as any incorrectly-entered information will remain on-chain indefinitely and can never be deleted. Preventative workarounds include robust Quality Management Systems, which reduce the risk of bad data entering these platforms. Corrective workarounds include cancelling the asset outright on-chain and duplicating the asset history against a new ‘blank-slate’ asset. This approach functions much like the cancelling of shares by publicly-listed company and although undesirable, presents a solution to the data integrity challenge.

Looking Ahead

Perhaps the greatest challenge to blockchain implementation is the lack of understanding of the technology by businesses. However, early adopters, particularly businesses and public sector organizations with progressive organizational cultures are finding great value in implementing blockchain solutions.

Smart Dubai has estimated that by moving all government transactions to a blockchain protocol could save the government around $1.5bn per year. Working towards this optimization strategy, the Dubai Land Department (DLD) successfully launched a blockchain-power system to secure financial and real-estate transactions almost 3 years ago.

Delivering a blockchain-backed optimization strategy

Despite being a useful and promising technology, real-world implementations of blockchain that unlock value require strategic thinking and long-term planning. The blockchain graveyard is littered with well-intentioned projects built on the ‘blockchain first, questions later’ paradigm. And this is where industry would benefit from strategic thinking.

Nascent technologies are challenging to plan for, not only because of the dearth of suppliers able to implement them, but also because they have many unknown iterations downstream and unproven use cases. What works well today, may be obsolete tomorrow. So how can we deliver a robust framework for business optimisation that leverages the benefits, but also future-proofs against large-scale changes and overhauls?

The answer lies in solving real problems with proven technologies that are the best solution for business challenges. While it may be appealing to build bespoke blockchains with complex consensus algorithms suitable for unique processes, the rising Blockchain as a service (BAAS) cloud-based platforms are a far more attractive approach for public and private sector organisations focused on accelerated delivery. These packages can be deployed and tested quickly and allow asset owners to determine whether the advertised benefits can, in fact be realised. Coupled with cost-benefit and risk assessment analyses, utilising blockchain technology within any strategic asset management plan (SAMP), whether in transport, aviation, energy or real estate sectors, can provide positive business impact.

As a leading advisor for engineering, design & project management services including asset management, we at Atkins Acuity believe that blockchain has the ability to transform the built environment, including asset management implementation.

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