The Future of Construction Projects: Geofencing, BIM and Smart Contracts

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The modern-day construction project is quickly moving into the future. Within the next few years, an automated materials delivery truck will deliver an order of lumber to a project site without the need for physical labor, and as the material is incorporated into the project a 3D model will be automatically generated and stored on blockchain. Three technologies that roofing contractors and those involved in the construction industry need to be aware of are geofencing, Building Information Modeling (BIM) and smart contracts. Together, these three technologies will forever alter the modern construction project landscape.

What Is Geofencing?

Geofencing is a virtual perimeter around a single point with predefined boundaries created for a real-world area such as a construction site.1Geofencing uses either Global Positioning System (GPS) or Radio Frequency Identification (RFID) to map the boundaries and track objects traveling in and out of the virtual perimeter. 

GPS is a satellite-based global navigation system that provides geolocation anywhere on Earth where there is an unobstructed line of sight to four or more GPS satellites. Geofencing with GPS works well when applied to construction projects due to its ability to be used anywhere in the world. GPS technology works with geofencing software to track equipment and people, as well as sending real-time alerts and notifications to project managers and contractors. 

RFID uses electromagnetic fields to automatically identify and track tags attached to objects. The most common use of RFID is tracking large retail store product movement and inventory. In fact, RFID technology has replaced the old barcode system because it is more efficient. RFID tags may be attached to heavy equipment and/or on employee’s personal protective equipment (PPE) to track their movements in order to give contractors a deeper understanding of the project workflow and needs. 

Tags or other electronic communication tools (i.e., GPS, iPhone, etc.) placed on/in physical objects communicate instantly with administrators using geofencing software. Geofencing software installed on computers, iPads, and other electronic devices allows the user to receive real-time information on who and what has entered or left the geo-fenced area, as well as other information such as object height and time spent in the area. The devices with geofencing software can receive text messages, email notifications, phone calls, and other forms of communication indicating when an object has left or entered a geo-fenced area. 

Programs that incorporate the geofencing software may be programmed to set up “triggers” that notify the administrators when an object has left the geo-fenced area. For example, heavy equipment can be retrofitted with a RFID tag that is set to trigger when it leaves a geo-fenced area and instantaneously send a notification to a project manager’s phone or tablet, allowing the manager to immediately act upon the information.

How Can Geofencing Technology be Used by Contractors?

Contractors can apply geofencing technology to a number of different aspects related to most construction projects. Fortunately, most contractors already supply project managers and other supervisors with mobile devices capable of using geofence software, making implementation of geofence programs an easy next step. Purchasing RFID tags and GPS equipment is one of the only primary costs associated with this new technology. 

· Security: An obvious and practical application geofencing provides contractors and equipment owners with is security. Heavy equipment, expensive machinery, and other tools can be equipped with RFID tags that, when moved outside the geo-fenced area, will immediately send a notification to a project manager or owner, via text message or other, informing them that the equipment has moved. This gives the party receiving the alert an opportunity to immediately call emergency services and report a theft-in-progress, rather than discovering the theft at a later date and reporting it at that time. Further, with stolen vehicle technology, a contractor, project manager, or equipment owner may also disable the equipment to fully prevent the theft. 

Installing RFID tags on expensive construction equipment provides those with vested interests in construction projects with the ability to lower costs related to theft and theft recovery. Further, preventing construction project theft will lower the high costs associated with project delays caused by replacing equipment. 

· Material Supply: Geofencing software will allow contractors and project managers to have ample electronic data to monitor the progress of construction projects. For one, geofencing software will specify when supplies have been delivered to the project, how long they have been on site before incorporation into the project, and where the materials have been incorporated. This allows contractors and project managers to better allocate materials to reduce the amount of overstock and loss or damage of materials due to non-use. As will be discussed in much greater detail later in the article, combining geofencing technology with smart contracts will heavily reduce costs associated with material delivery and payment problems. 

· Fleet Management: Geofencing can also be used to monitor the arrival and departure of trucks on a project. Placing RFID tags or installing geofencing software on the trucks navigation system will allow for easy monitoring of the truck’s movement. Project managers can receive immediate notification when a fleet truck arrives or departs from the project. This will allow the contractor to save on administrative expenses related to tracking fleet movement. Geofencing will also allow fleet owners to monitor the amount of time trucks take to move from point A to point B in order to better coordinate the fleet in the future. 

· Labor Savings and Monitoring: The data collected from geofencing software can be used to supplement claims for overtime and the amount of labor used during a construction project. Often contractors are forced to litigate issues relating to the number of employees working on a jobsite, the number of hours worked, and when the workers were on site. Geofence technology will allow contractors to store and compile labor information in an easy-to-use format to save on expensive litigation costs. 

Further, project managers will be able to monitor whether employees remain within the authorized project perimeter. This allows contractors to ensure employees remain diligent and focused on their work and reduce labor costs due to inefficient labor. In addition, if/when disputes arise as to whether employees worked a number of hours of overtime, both parties will have the geofencing data to quickly resolve the dispute and return to business as usual. All that is necessary to achieve the aforementioned benefits is placement of RFID tags on PPE or installation of geofencing applications on employees’ smart phones.

· Site Grading: Geofencing software installed on heavy equipment can help track with greater accuracy and increase progress towards proper grade, as opposed to using traditional methods such as survey stakes. A GPS device may also be installed within the heavy equipment’s cabin, allowing the operator to accurately monitor his or her progress. All of this information can be relayed to the project manager to better assist in deciding when to order supplies and labor to move on to the next phase of the construction project. 

· Increased SafetyGeofencing perimeters can be created around hazardous work areas to prevent unauthorized employees from entering the area and risking injury. This can be accomplished by creating the perimeter and setting RFID tags to send an alert to a project manager when unauthorized personnel enters the dangerous area. The project manager can then contact the foreman to ensure that the employee moves to a safer location or trigger an onsite siren. Contractors who utilize geofencing software for all employees, via their smart phones, can even have an alert sent to the specific employee who has entered the unsafe area, warning them to leave immediately. 

Geofencing tags located on mobile equipment can also monitor the speed that the equipment is traveling. If the equipment exceeds the safe speed limit, a foreperson can be notified. 

As it should be clear, geofencing technology offers contractors an abundance of benefits that will drive down costs and time associated with project completion. While geofencing will have a positive impact on projects, there still will be costs associated with implementing and using the new technology.

The Costs of Geofencing Technology

As previously stated, most contractors already supply project managers and other supervisors with the equipment necessary to implement geofencing (i.e., tablets, smart phones, and laptops). Therefore, one of the largest drawbacks, that being the initial cost of implementation, is already at least partially covered. 

The next step contractors wishing to implement geofencing technology must take is purchasing software compatible with the hardware already in the hands of project managers. The software will need to be implemented by a third party specializing in geofencing. The price of this software will likely pay for itself with the savings associated with geofencing. Further, resources previously allocated towards expensive and time-consuming data analysis will be no longer necessary as geofencing software will automatically compile the data on its own. 

One initial drawback will be training project managers and other employees to use the geofencing software. Contractors and project managers will need to initially educate themselves through third-party geofencing professionals on the ins-and-outs of using the technology. The next step will be educating employees on the intricacies of geofencing technology. If contractors opt to use geofencing software on smart phones, tablets, and other electronic devices, the employees will need to know how to respond and comprehend alerts and notifications sent to their devices. This requires a review and update of the employee manual. 

Any change to the workflow of a construction project will have its obvious costs and adaptation period; however, the future is fast approaching and contractors should prepare to embrace this new technology.

Building Information Modeling (BIM)

In addition to creating a better understanding of material movement and location, RFID and other geofencing tech can be combined with BIM to supplement 3D models of a construction project. According to the U.S. National Building Information Model Standard Project Committee, BIM is “a digital representation of physical and functional characteristics of a facility” that can be used as a “reliable basis for decisions … from earliest conception to demolition.”2For example, RFID tags may be placed on decking material, and as the decking material is placed on the structural components of a building, a real-time 3D model is augmented to reflect the addition.

Before BIM, building design was reliant on computer-aided design (CAD). CAD creates a model of a building using three dimensions (width, height and depth), which are in turn used by roofing contractors to complete roofing projects. BIM uses CAD concepts and adds more dimensions, such as time and cost, to give project managers a more complete understanding of project workflow. 

The entire project can be modeled prior to construction beginning by using BIM, allowing for better preconstruction coordination among roofing contractors and other parties on the project. A roofing contractor can have a better understanding of materials and labor needed, as opposed to using older and simpler CAD technology. Further, project managers can use BIM software in concert with smart contracts to automate most of the project. A more detailed discussion of smart contracts and BIM is included later in the article; however, a better understanding of smart contracts and blockchain is necessary before delving into that discussion. 

Blockchain and Smart Contracts

The advantages offered by geofencing technology are abundantly clear. As previously mentioned this article, two of the technologies that will forever reshape the construction project landscape are geofencing and smart contracts. To better understand what smart contracts are and how they will also help drive the construction industry into the modern era, a basic understanding of blockchain is necessary. 

If you’ve ever used Google Drive or Microsoft OneDrive, then you already have a basic understanding of blockchain. Certain cloud-based programs allow a number of users to access a document at the same time, and as each user edits or adds to the document, all of the other users are able to view these changes and additions in real time. Blockchains work in an analogous manner. They are a database that tracks transactions, in the order they occur, and creates a record of each transaction. 

By combining blockchains with smart contracts, as well as BIM, a new form of project management can be, and already has been, created. In its simplest form, a smart contract is “a computer program that works on the if/thenprinciple.”3For example, ifa roofing contractor has installed decking on a building, then an inspection is requested to ensure the decking has been properly installed. If the roof deck passes inspection, then the roofing contractor is paid for his work and can be given authorization to continue to the next phase of the roofing installation. All of the different smart contract sections, as well as changes made to them, will be permanently recorded on the blockchain, eliminating a number of different issues inherent with typical project management.

Smart contracts work together on what is known as a Decentralized Autonomous Organization (DAO). The DAO is an organization that is run through rules encoded as the smart contracts. The DAO provides the ability of blockchain to deliver a secure record of the different transactions that occur. This enables roofing contractors and other individuals involved on a construction project to view the current status of the project on a fixed record that encompasses all of the transactions that have taken place.

Smart Contracts and Geofencing

Geofencing data, RFID triggers, and notifications can be used as a supplement to smart contracts that govern a construction project. Working together, these two dynamic technologies can increase project efficiency and lower project costs. 

· Materials: One of the biggest geofencing and smart contract applications is through material purchase, delivery, use, and payment. All contractors are familiar with the problems inherent in construction projects regarding payment. Subcontractors who finish their work want to be promptly paid, they want to have regular disbursements of payment if the payment isn’t to be made in full at project end, and they want the retainage held by the general contractor/owner. General contractors want to ensure that the work performed by their subcontractors passes inspection before releasing funds and will hold on to the retainage until such inspection is passed. When disputes arise as to the quality or progress of work performed, late payment issues will inevitably rear their ugly heads. With blockchain, many of these issues can be avoided, or at the very least mitigated, through the use of smart contracts which automatically provide payment when different aspects of a project are completed.

Just as with subcontractors and general contractors, the same issues arise between subs, general contractors, and their material suppliers. Issues arise over the delivery timing, prompt payment, payment amount, and a host of related problems. Combining smart contracts and geofencing, many of these problems can be alleviated. 

Using the if/then principle and site grading example mentioned previously, if the site grading equipment communicates to the project manager that proper grade has been achieved, then materials, such as concrete and steel, can automatically be ordered for delivery to begin the fill process. Once materials arrive on the site, and a project manager verifies that they are as contracted for, a trigger will be sent to the blockchain automatically sending payment to the material supplier. Further, if the materials arrive on time, labor may be directed to complete the site grading and filling process of the construction project. This simple example demonstrates the amount of resources saved and increased project efficiency from use of this new technology. 

· Labor: Another symbiotic effect from combining geofencing technology with smart contracts has to do with paying employees for their labor. As previously stated, geofencing allows contractors to monitor when and for what amount of time employees are on-site. Smart contracts allow employees to be paid automatically for labor performed. 

Employees who wear geofencing RFID tags or have geofencing software applications installed on their smart phones will be able to have their clock-in and clock-out times automatically recorded based on their entering the geofence perimeter. The geofencing software can communicate this information to the smart contract, and release payment according to the specific terms programmed in the contract. This removes the clerical and human error often found in standard time-keeping tools used today.

· Reduced “Paper Trail” Litigation: Owners and suppliers have become well aware of the legalities involved in most construction projects and are often ready to take advantage of the unprepared roofing contractor. When a construction project ends up in litigation, the party with most detailed and descriptive paper trail will typically be the most successful in the courtroom. 

Most contractors know to keep accurate written records of all communications involving disagreements over workmanship, material arrival or other potential information that is involved in claims on a project. These written records can include change orders, emails, text messages, and other correspondence. 

Geofencing and smart contracts will work to remove a number of the costs associated with litigating disputes between contractors and their employees when it comes to overtime and other employment related issues, as the data will be stored on the blockchain. A blockchain is “essentially a distributed database of records, or public ledger of all transactions or digital events that have been executed and shared among participating parties.”4Once a record has been created on the blockchain, it can never be deleted. This allows for instant verification that a transaction has occurred and allows for participants to view the transaction. Blockchain removes uncertainty from the playing field and allows for consensus between parties. All those involved with a construction project will be able to view transactions as they happen, eliminating uncertainty that usually comes with whether an employee was on-site and for what amount of time. 

Smart Contracts, Geofencing and BIM

Smart contracts and geofencing information can be used even further by being embedded within a BIM model that is secured by blockchain. BIM software allows data inputs from multiple sources. These sources can include smart contracts and geofencing data. 

As stated earlier, BIM can incorporate more than just the three standard dimensions of width, height, and depth. BIM can incorporate time and cost. The dimensions of time and cost can be further supplemented with smart contracts within the BIM software so that the entire project is centered on one convenient application. Building on the prior example of placing RFID tags on roof deck materials, once the roof deck has been installed, BIM software can work with the smart contract if/then principle to automatically send payment for completion of a portion of the scope of work, and request the next phase of the project to begin.

Through the use of blockchain technology, smart contracts, BIM and geofencing, construction projects could enter into a new, technology-driven, risk adverse system that reduces disputes and increases the likelihood of prompt payment and project efficiency. Roofing contractors and the rest of the construction industry will need to work together over the coming years to adapt to this new phase of construction projects. Soon all aspects of a construction project will be included in a singular platform that allows all those involved, including contractors, government officials, lawyers, and so on to work dynamically to reach project completion. 

About the author: Trent Cotney, CEO of Cotney Construction Law, is an advocate for the roofing industry and serves as General Counsel for FRSA, RT3, TARC, WSRCA and several other roofing associations. For more information, contact the author at 866-303-5868 or www.cotneycl.com.

Author’s note: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. 

Sources

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Source: roofingmagazine.com =>The Future of Construction Projects: Geofencing, BIM and Smart Contracts

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