STUDENT AND ACADEMIC SERVICES

Faculty of Arts & Humanities SMITHARD

Joseph
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Course Code Course Name

1630 MASTER OF ARCHITECTURE
Year Student Number
2 16061813

Unit Code Unit Name

1D7Z0808 1718 9Z1F Professional Studies 3
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1CWK100 1 Coursework 100%

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 Joseph Smithard 16061813

studies
rofessional
P
 joseph smithard 16061813

Section A: Critique on Section B: Critique on

practice management business management
Design and build: The impact of procurement on procedural structure and the Can smart contracts be the solution to the UK’s construction sector ‘productivity
architecture profession. puzzle’?

Introduction 2 TIntroduction 32-33

Facilitating the problem: preliminary themes 3-4 What are smart contracts? 34-36

Methodology 5 Methodology 37

Discussion: Part 1 Issues in procedural structure 6-10 Discussion 38-41

Discussion: Part 2 What’s wrong with design and build? 1 1-19 Enabling the smart contract 42

Discussion: Part 3 Change: What can we do? 20-24 What changes with smart contracts? 43-45

Conclusion 25 Conclusion 46-48

References 26-30 References 49-51

Appendix 52-53

Critical Reflection
54-55

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Introduction

There is an increasing polarisation in the profession where ‘design’ and ‘delivery’

specialisms are rapidly increasing. The notion that “if you do one, you can’t do the other”
(Middleton, 2016) is perpetually slandering the integrity of capable professionals that
can. The increase of ‘design and build’ combined with the re-tendering of architectural
services is separating the design, procurement and construction process (Farmer, 2016),
subsequently driving down fees and adding friction to the already underperforming
construction sector (ONS, 2017). It is observed that architects have grown to accept
that their professional appointment ends at RIBA stage 4 (in some cases at stages 2
or 3) (Bennett, 2017). As such, the culture of re-tendering means that certain firms
are pigeonholed into acting as design architects rooted in the preliminary planning

Critique on Practice stages, whilst others are happy to outsource the construction delivery at a lower fee. In
consequence, not only are architects surrendering their designs to the pitfalls of value
Management engineering, but they are value engineering their own role out of the construction industry.

Design and build: The impact of procurement on procedural structure
and the architecture profession.
The aim of this report is to discuss the problem of design and delivery being mutually
exclusive, and the knock on effect this creates for the practicing architect. The hypothesis
advanced is that design and build contracts and multi-stage tendering are acting as
a precursor to negative-impact, competitive fees. The intention is to evaluate what has
influenced the zeitgeist of a profession that has become epitomised by a self-destructive
attitude of undercutting fees and saturating design quality. More forward, the report
looks to interrogate the procedural structure of the design and build procurement route
alongside the RIBA plan of work. In doing so the report hopes to recognise key constraints
that are damaging the profession and to identify opportunities for alternative practice.

1 professional studies
 joseph smithard 16061813 4

Facilitating the problem:

preliminary themes

To understand the scope of the problem
this article presents key examples of
referential statements and statistics that have
established themes:
Earnings relative to inflation
with no fee at all: more than 60 per cent
of practices kindly undertake speculative
£108.3 design work for their clients’ (Thomson,
2014: Online). This statement published
in the Architects Journal evaluates results
median weekly earnings of full- of the 2015 RIBA Business Benchmarking
Procurement
The RIBA ‘Future Trends Practice Survey’
indicates that: ‘Currently, over 50% of
the construction value of UK architects
workload is for contractor clients’ (RIBA,
2017: Online). This suggests that a large

The 1977 ‘New Earnings Survey’ indicated
median weekly earnings of full-time male
architects at £108.3, against £72.3 for all
males in full-time employment. This is a
50% differential. In comparison, today the
figures stand at £764.9 and £591.5, a 30%
differential. If this figure is measured relative
to inflation, the median male full-time weekly
earnings have increased by almost a quarter
since 1977. However, for architects the real-
term rise in earnings is less than 7% (Green,
7% raise in earnings
time male architects in 1977 Survey. The findings, alongside Thomson’s
comment, indicate a serial issue in the
industry of inefficiently optimised fee
£764.9 proposals. Point 6 of the survey summary
goes on to say that ‘there remains no
median weekly earnings of full- correlation between success at winning
time male architects in 2017 work and profitability’ (RIBA, 2015: Online).
Essentially, bid optimisation is winning work
but not stipulating productivity. Furthermore,
point 17 of the survey indicates that ‘more
£72.3 than 60 per cent of Chartered Practice still
don’t have a business plan (RIBA, 2015).
ca. 25% raise in earnings
proportion of work in the United Kingdom
must be coming under the design and build
procurement route, leading design to be
placed into the hands of the contractor.
With the troubling indication that many
architectural practices are undertaking
speculative work for free, there is a case
for claiming that not only is design quality
dropping but its value is also diminishing.

2017), meaning architect’s earnings relative This suggests that not only is the profession
to inflation have not increased proportionally median weekly earnings of male self-detrimental in undercutting its own fees,
over time. workers in 1977 but there is a worrying degree of ignorance
towards business strategy.
Fees and business planning
£591.5
“There remains no
‘Practices are chasing and winning projects correlation between
at fees that are too low, or worse, they are median weekly earnings of male success at winning work
doing large quantities of speculative work, workers in 2017 and profitability”

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Methodology Part 1
Issues in procedural structure

The hypothesis is that design and build contracts and multi-stage tendering are acting as a The construction industry has had a
precursor to driving down architectural fees, reducing design quality and fragmenting the long history of problems associated
construction process. with procurement strategies, their
implementation, their efficiency and their
The discussion is split into three parts. Part 1 identifies key themes to interrogate, namely measurement (Muriro, 2015). Similarly,
procurement and the associated procedural structure. In part 2 data is collected from studies undertaken by the Global
online journals and through the evaluation of relevant case studies. The comments Construction Survey (2015) found that
of industry professionals are intended to show an overview of opinions relating to the the construction industry has several
aforementioned problems stated above, whilst also giving an insight to the wider discussion challenges pertaining to failure to predict
regarding procurement and procedural structures. This data is not presented as being both construction cost and time resulting
necessarily conclusive or as evidence for any conclusions made. The aim is to portray a in numerous problems to construction
sense of the underlying attitudes towards the existing procedural structure for design clients and other stakeholders. The survey
and build generally. In part 3 the themes are interrogated, then conclusions and further indicated that:
evaluations are presented on opportunities for alternate practice. ‘only 31% of all respondents’ projects came
within 10% of budget in the past 3 years’,
It is recognised by the author that primary data would add rigour, with more time this would and ‘Just 25% of projects came within 10%
be something to better the report. of their original deadlines in the past 3
years’ (KPMG, 2015: 2).
justification for blame varies by context,
and it is accepted by the author that there
are many reasons for underperformance
within a construction project. However,
the implications brought about by the
procurement method adopted must
have significant effects to the outcome
given that procurement method sets
out the organisational and contractual
arrangements for project delivery’ (Muriro,
2015).

The litigious nature of the industry means

that failure to complete a project on time
(or within budget) will often preclude
Part 2: Discussion
a pass the parcel blame game between
client, designer, contractor, and supply
Part 1: Identify Themes chain. The big picture is that in reality the
construction industry is underperforming
Part 3: Suggestions for alt. practice
(KPMG, 2015), a statement confirmed
by the sector’s persistent rank as the
lowest for productivity (ONS, 2017). The

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What is
design and
build?
The design and build procurement route
is the most commonly used contract for
construction (NBS, 2015). The structure
combines the design and construction
process under a single entity; the principle
contractor. The procurement is characterised
by its design-construction-integration
(Griffith and King, 2003), entailing
the contractor to carry out the design,
construction and completion of work. The
arrangement dictates that one contracting
organisation takes sole responsibility,
normally on a lump sum fixed price basis,
for the bespoke design and construction
of a client’s project. All responsibility and
risk associated is thus placed upon the
contractor. The reasoning for construction
clients to use design and build as a
procurement route has been put forward by
previous researchers:
‘Innovation’
Clients get creative and informed solutions
for the project. (Beard et al., 2001)
‘Costs savings’
Design and build is associated with by
7 professional studies
shorter construction duration, shorter
construction time creates an expectation
for a reduction in cost. (Songer and
Molenaar, 1997)
‘Early cost establishment’
On the basis that project costs are secured
before the start of concept design, RIBA
stage 2. (Songer and Molenaar, 1996)
‘Reduced schedule’
Project completion time is expected to
be relatively shorter compared to other
conventional design led procurement
methods. (Songer and Molenaar, 1997)
‘Single entity responsibility for both
design and construction’
(Beard et al., 2001)
‘Builder/contractor involvement in the
design process’
(Gransberg and Lopez del Puerto, 2004)
‘Best value selection’
Competitive tender allows project to
potentially be offered to the contractor that
offers the most benefit to the client (even
beyond price). (FAR, 1996)
8
The existing procedural
structure
The typical approach for a client procuring a design and build contractor is as
follows:
Step 1, the client appoints a design team to develop the design and specification. [It
should be noted that there are many different types of designers and consultants, for
example, architects, engineers and project managers. This research is principally concerned
with the architect and will focus upon this role.]
This step is undertaken by the design architect up until the point of tender. The RIBA plan of
work (2013) aligns with this step typically up to concept stage 2, however the tender stage
is movable depending on when the contractor is appointed. As such, it is customary that the
design architect’s role in the development of design and specification should:
• ‘Identify client’s Business Case and Strategic Brief and other core project
requirements’ (RIBA Stage 0)
• ‘Develop Project Objectives, including Quality Objectives and Project
Outcomes, Sustainability Aspirations, Project Budget, other parameters or
constraints and develop Initial Project Brief. Undertake Feasibility Studies and
review of Site Information’. (RIBA Stage 1)
• ‘Prepare Concept Design, including outline proposals for structural design,
building services systems, outline specifications and preliminary Cost Information
along with relevant Project Strategies in accordance with Design Programme.
Agree alterations to brief and issue Final Project Brief’. (RIBA Stage 2)
Step 2, the client tenders their Employer’s Requirement (ER) which will have been
developed by the design architect. Contractors are then invited to respond with a lump
sum which includes their fee for completing design and works. The contractor is then able
to respond with Contractors Proposals (CP) in response to the ERs. Alternatively, they
can confirm that their CPs are in line the ERs (JCT, 2018). The design architect in this
 joseph smithard 16061813 10

procurement route now has two potential eventualities:

RIBA Plan
1. Their role is dispensable.
of work
The contractor completes developed and technical design (RIBA stage 3 and 4), then (2013)
delivers construction, handover and conducts post occupancy in-use services (RIBA stages
5, 6 and 7). [See diagram for details of RIBA stages]

2. The design architect is novated to the contractor after tender.

This is when the client requests that the contractor continues to employ their design team
to complete the design, thus novating the design team to the contractor by agreement. The
0 1 2
Identify client’s Business Case Develop Project Objectives, Quality Prepare Concept Design, including
design architect now works for the contractor and undertakes a design consultancy role for and Strategic Brief and other core Objectives and Project Outcomes, outline proposals for structural
project requirements Sustainability Aspirations, Project design, outline specifications and
the delivery of the project. In addition to the above eventualities, there is the potential for Budget, other parameters or preliminary Cost Information along
constraints and develop Initial with relevant Project Strategies
the design architect to be disregarded and a replacement delivery architect brought to be Project Brief. Undertake Feasibility in accordance with Design
Studies and review of Site Programme. Agree alterations to
into the process. Information. brief and issue Final Project Brief.

Step 3, the contractor completes the design and construction for the lump sum offered at
tender.

3 4 5
Prepare Developed Design, Prepare Technical Design Offsite manufacturing and onsite
including coordinated and updated in accordance with Design Construction in accordance with
proposals for structural design, Responsibility Matrix. Project Construction Programme and
building services systems, outline Strategies to include all resolution of Design Queries from
specifications, Cost Information and architectural, structural & site as they arise.
Project Strategies in accordance building services information and
with the Design Programme. specifications, in accordance with
Design Programme.

6 7
Handover of building and Undertake In Use services in
conclusion of Building Contract. accordance with Schedule of
Services.

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Part 2
What’s wrong with design and build?

Qualitative data has been taken from the ‘architects journal’ and ‘building design’ online cost may be beneficial to the client, it can
sources. A triangulation method is also presented by including case studies as reference have a negative impact on the design
points for the discussion. Comments by industry professionals have been chosen on the quality. In the same article Rob Bennett
basis of providing an insight to how design and build contracts are affecting practicing expands the discussion by referring to the
architects and the wider construction industry. The data chosen will be reviewed critically to procedural structure: ‘project retendering
analyse the hypothesis that design and build contracts are acting as an enabler to driving is threatening to those who see conceptual
down fees and saturating design quality. Subsequently, the qualitative data will be critically design and execution as a continuous
evaluated against the existing procedural structures to identify and propose alternative process and the position of the architect
practice methods. as pivotal to its direction’ (Bennett, 2017:
Online). It can be assumed from the above
comments that the dismissal, novation
The procedural structure of design and Grimshaw partner Mark Middleton states in
or recruitment of a delivery architect at
build projects is driven principally by his article for building design ‘this ignores
concept design stage is having a decisive
procurement teams that wish to illustrate the cost to put together a bid, the fees for
effect on the profession, as it is at this point
cost control to clients. Faithful+Gould, assessment and the significant time that
that the fragmentation of the architect’s
an integrated project and programme this incurs upon the project’ (Middleton,
role, or lack of, occurs. Furthermore, the
management consultancy state on their 2016: Online). This suggests that there has
discussion pin-points that one of design and
website that the benefits of using design to be a consideration over the fact that the
builds greatest strengths, speed and cost
and build procurement is that ‘Construction assessment fees attached to re-tender could
reduction, can also be a precursor to its
can start earlier, reducing the overall project gradually incur higher costs.
weakness: poor design.
delivery time - from inception to completion,
[there is also] the possibility of reducing In the architects journal article on design
“design and build all too
overall costs as contractors may be able to and build, Alex Ely of Mae Architects
often prioritises time and
design specialist elements at a lower cost challenges the prioritisation of cost and
cost over quality”
than professional consultants’ (Faithful time stating that: ‘design and Build all too
+ Gould 2013: Online). The assumption often prioritises time and cost over quality’
is that tendering at each stage reduces (Ely, 2017, cited in Bennett, 2017: Online).
risk and delivers lower fees. However, as This suggests that while reduced time and

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The Gateford Building

“Not designed by Studio Egret West”

A case example of this occurrence can be seen with a project that was preliminarily
designed by London practice Studio Egret West (SEW). Built ‘on the site of the 18-acre
EMI record plant, where ground-breaking records by The Beatles and Pink Floyd were
pressed’ (The Vinyl Factory, 2018: Online), the ‘Gatefold building’ is the first residential
scheme completed at the Old Vinyl Factory in Hayes, West London. What could have been
a show project for the development ended up in a debacle resulting in SEW requesting
their name and any association with the design to be removed. The project was procured
through design and build. The design architect’s SEW were employed to ‘wow the council
and win planning’ (Marrs and Waite, 2016: Online). Housebuilder and contractor Be:here
purchased the plot and consented design, they chose not to novate SEW and instead hired
Frank Reynolds Architects to deliver the project. The design proceeded to be heavily value
engineered ‘to an inch of its life’. ‘Flourishes like lightweight steel and bamboo walkways
have become heavier and joyless. The white split-faced concrete cladding has been
replaced by a cheaper, yellower finish and details such as the texture on the façade and
the rebated statement signage have gone’ (Marrs and Waite, 2016: Online).
cited in Marrs, 2016: Online). The Gatefold Building has evolved from SEW’s original
planning design to satisfy these demands, in particular the last two. The compromise in
design has been facilitated by the procurement. SEW were not novated and had no say in
the completion of design and delivery. The end product is not what they envisioned, hence
their desire to remove responsibility. Be:here stated in the architects journal that the change
in design was driven by the change of use from private market homes to long-term rental
properties. The reality is that even if FRA wanted to ‘maintain the architectural integrity
of the design’, their solutions for ‘sensible, effective and buildable details’ will always be
surplus to requirement in structure of a design and build contract.

Frank Reynolds Architects on their website state that they ‘take pride in delivering effective
and professional post-contract design services to contractors under D+B contracts. Starting
with a thorough understanding of planning vision, we work as a team to realise the project,
maintaining the architectural integrity of the design whilst finding sensible solutions, effective
and buildable details’ (FRA, 2018: Online). For their part, it is likely that FRA effectively
undertook the role in which they were asked, and that it is not always as simple as
maintaining design integrity. Frank Reynolds of FRA in a comment for the architects journal

Archirect’s Journal: 2016

stated that ‘the pitfalls and benefits of the Design and Build procurement route are well
understood. In this process ‘design success’ is not simply a question of, or guaranteed by,
novation. It depends upon various factors, including the clients ambitions, the buildability
of the planning scheme, a changing brief and the contractors priorities’ (Reynolds, 2016

2011 Studio Egret West render of the Gatefold building (top right) and the near-
completed building photographed

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The dangers
of cost-
cutting
There is a case for the argument that had
the SEW been novated the original design
integrity may have come through. So why
doesn’t novation happen more? Damien
Sharkey, associate director at specialist
residential developer HUB said to the
architect’s journal: ‘we have novated
architects on projects, but this does have
some disadvantages. Who carries out the
monitoring role? It raises a potential conflict
of interest. In addition, it is very difficult to
find an excellent concept architect that is
also an expert in delivery’ (Sharkey, 2016,
cited in Marrs and Waite, 2016: Online ).
Sharkey pin-points the issue of monitoring
the contract. If the architect on a project is
appointed as the employer’s agent prior to
tender, they are expected to coordinate the
tender process, the novation of consultants,
the collation of contract documents,
the implementation of change control
procedures and so on (DBW, 2018).
‘we only deliver about
30-40 per cent of our
residential planning
consents’
15
16
To then work as a design consultant for residential planning consents’ (Rutt, 2016, in a competitive market. This means that
the contractor can potentially propagate cited in Marrs and Waite, 2016: Online). the cost cutting practice of the contractor
a conflict of interest if the architect had
a direct influence on the tender process Stephen Proctor, founding director at
is effecting skills, filtering out business,
driving down fees and pitting architecture
and procedural structures. Furthermore, Proctor & Matthews Architects shifts the professionals against one another.
Sharkey’s observation that it is difficult to find discussion onto the role of the contractor.
‘an excellent concept architect that is also ‘The planning team is judged on whether The dangers of cost cutting for the
an expert in delivery’ starts an interesting it can secure a quick and good planning professional: Malcolm Fraser Architects
debate. (Sharkey and Waite, 2016, cited in permission, which requires a certain type (MFA)
Marrs, 2016: Online ) of skill then the
construction team MFA was an
Meredith Bowles of Mole Architects said comes along and its Edinburgh based
to the Architect’s journal ‘There are a lot bonuses are based practice that won
of practices who are desperate to build on lowering costs. eight RIBA awards
things but are only ever appointed up to The cost-cutting and was shortlisted
planning stage. When that happens you incentive leads to for the Stirling
lose the skills to be able to do it. Ditching the construction Prize in 2002. After
design architects at planning stage is team ditching the operating for 22
de-skilling our profession’ (Bowles, 2017, architects to take years, MFA went into
cited in Mark, 2017: Online). Bowles advantage of a voluntary liquidation.
considers the procedural structure of not cheaper practice’ The practice
novating architects and letting them see out (Proctor, 2017, cited declared their final
projects as a potential cause to Sharkey’s in Marrs and Waite, accounts as having
observation. Middleton, in building design, 2017: Online). assets of £350,942
comments that ‘Definitively, any good Novation in this but liabilities of
architect can design and deliver projects. instance doesn’t Malcom Fraser. Herald Scotland, 2017 £379,248 and
Creativity and practicality are not mutually occur because the contractor believes net a worth of just £12,607 (CH, 2015).
exclusive’ (Middleton, 2016: Online). the original architect may resist attempts The practice became a victim of what
Critically, the suggestion is that architects by the contractor to value engineer the Malcolm Fraser called ‘process rather
can deliver projects, but the procurement project. With design and build being one than product’ (Fraser, 2015: Online)
process is causing their ability to dilute. of the most used procurement options in focused procurement. Fraser in a blog
This is backed up by Steph Rutt of Hawkins the construction industry (NBS, 2015) entry for Scottish Construction Now stated
Brown noting in the same article that they smaller firms in the market can use delivery that although his practice obtained high-
‘only deliver about 30-40 per cent of our consultancy as a way to generate cash flow profile work the procurement system meant
professional studies
 joseph smithard 16061813
that they were also challenged with very
competitive fee contexts. To maintain the
practice whilst doing such high-risk jobs
they needed to pick up jobs with a greater
profitability to sustain, which unfortunately
for MFA did not happen as other firms were
happy to offer lower fees. This process is
creating a volatile industry with cut-throat
conditions driving down fees. This case is
illustrated well through the 2012 building
design survey on fees. ‘Fees are commonly
quoted as being between 8 and 12%
although, according to a survey by building
design only 21% of architects achieve fee
levels of above 5% while 55% are paid fee
levels of 4% or less’ (Building Design, 2012:
Online). For MFA the competitive tender
process was rooted in the procurement.
It meant that they were forced to conduct
speculative work at no fee in the hope
to secure design work: ‘we also worked
proactively on putting numerous projects
together ourselves [at feasibility stage]
but despite many, many attempts they
didn’t turn into live projects for us.’ (Fraser,
2015: Online) This left MFA with a non-
sustainable business model that was also
devaluing their own design intentions.
The dangers of cost cutting for a
project: Grenfell Tower
Planner Peter Stewart of Peter Stewart
Consultancy commented in building
17
18
design online that ‘once [the original
architect has been dumped], it is rare for
the scheme to be smartened up, rather
than dumbed down, and it is the details in
particular that usually suffer’ (2017).
Mies van der Rohe’s: ‘God is in the detail’
pertains relevance to the case of Grenfell
Tower, where the detail has played God.
Grenfell Tower: Aftermath. Sky News: 2017
On the 14th June 2017, the 24 storey
residential tower block in Kensington, West
London, caught fire. It caused 71 deaths
and over 70 injuries (BBC, 2017). The cause
of this incident was a malfunctioning fridge-
freezer that caught fire on the fourth floor.
The subsequent rapid growth of the fire is
thought to have been accelerated by the
building’s exterior cladding. The tower was
publically announced for renovation in 2012
(KCTMO, 2012) which was completed in Online) and the Kensington and Chelsea have acted as a ‘chimney effect’ helping
2016. The principal designer and principal Tenant Management Organisation’s spread the fire. The cladding made up of
contractor on the refurbishment of Grenfell (KCTMO) subsequent decision to instead Reynobond panels sandwiched a layer of
Tower were, respectively, Studio E Architects fit ‘cassette fix aluminium cladding in polyethylene between aluminium sheets.
and Rydon, a construction, development, lieu of zinc cladding’ (The Guardian, The panels are flammable and building
maintenance and management group. 2017: Online). The material alteration regulations recommend non-combustible
The project was procured through design and cladding detail is under investigation cores to be used on buildings taller than 18
and build (Derbyshire, 2017, cited in with initial considerations being that: The storeys (The Guardian, 2017).
The Guardian, 2017). The debacle Celotex RS5000 insulation made from
surrounding the incident is principally polyisocyanurate releases toxic fumes The public inquiry is ongoing, but key
focused on design architects Studio E’s such as hydrogen cyanide when it burns. issues associated with procurement and
initial proposal to install ‘zinc cladding The air gap, that was detailed to ensure multi-stage tendering have come about.
with a mineral-rich “fire-retardant” condensation on the building evaporates The procurement choice and subsequent
polyethylene core’, (The Guardian, 2017: and doesn’t damage the outer walls, may value engineering has overruled the safer
professional studies
 joseph smithard 16061813
cladding option. The change was made
after tender and reportedly made a saving
of £293,368 for the overall cladding budget.
Due to the procurement, the architects
will have had no say on the final material
choice. Architects for social housing (AFSH)
in their Grenfell Tower report elaborated
on the role of Studio E in this project: ‘the
architects were engaged only to add gloss
to the project marketing – to raise the
Right-to-Buy value of the property under
the coinage of architect designed (AFSH,
2017: 22). The report goes on to pinpoint
the issue of cost cutting and the removal of
the architect’s role after concept design: ‘If
the architects are not in charge of enforcing
compliance with contract specifications,
then they would have been cut to the bone
by the contractor to maximise every penny of
profit’ (AFSH, 2017: 23).
The emphasis on cost saving is further
displayed through the multi-tendering of the
project. The original contractor, Leadbitter,
had been dropped by KCTMO because
their price of £11.278 million was £1.6 million
higher than the proposed budget for the
refurbishment. The contract was then put out
to competitive tender with Rydon’s bid being
£2.5 million less than Leadbitter’s (ITV,
2017). The refurbishment scenario would
have likely gone as such: KCTMO tendered
their employer’s requirements, the contractor
(in this case Rydon) submitted a price, and
19
KCTMO probably selected the lowest cost
in the interest of the public purse. Rydon
will have come with a set of contractor’s
proposals to maximise profit on tight
margins. Studio E have not been novated
and have no say on the design after
tender. Henceforth, cuts to the cladding
budget were made and the installation
of a dangerous cladding alternative was
chosen.
Without even mentioning the ineptitude of
the contemporary fire building regulations
(the cladding complied), the failings of
this project can be linked to the adversarial
procurement process. Design and build
in this situation has championed margin
protection and cost saving measures over
design quality, and unfortunately in this
instance a lack of quality has had fatal
consequences.
20
Part 3
Change: What can we do?
The difference between quality at design stage and delivery stage can be indicatively
illustrated by how many Housing Design Awards were given at concept or completion
stages. ‘Shockingly, of the 34 winners in the design (‘projects’) category of the awards
between 2009 and 2013, only seven subsequently gained recognition in the category for
completed schemes. More tellingly, none of the projects where the design team changed
landed a ‘completed’ award’ (Marrs and Waite, 2016: Online). This notion aligns with
previous opinions presented in the article suggesting that design and build might be the
primary culprit.
Housing Design Awards 2009-2013
34 7
Winners at design stage Winners after completion
Architects and planners should form an designs to be diluted without a valid case.
alliance This would ensure some retention of design
quality and stipulate a cultural shift towards
There needs to be a shift towards the a realisation of its necessity.
recognition of good design, and this
could be instilled through a collaborative The role of the executive architect
attitude between architects and planning
authorities. Well written planning conditions As design and build procurement is
that put demanding scope on detail and fragmenting the construction process,
material choices could stop contractors from there needs to be a look towards
substituting integral elements of the concept alternative methods for seeing out projects
design. Furthermore, architects should write from inception to completion. Executive
all original scheme conditions in as much architects working in collaboration to
detail as possible making it difficult for design architects could instil the need for
professional studies
 joseph smithard 16061813
quality by being involved throughout the entire design and delivery process. Within the This rebalancing could be facilitated by
design and build context improved productivity could be achieved in the early concept three things: outcome led procurement
design stages through the collaborative efforts of the design and executive architect. In the (OLP), post occupancy (POE) and
case of the design architect not being novated after tender the executive could provide building performance evaluation (BPE),
contract administration services, without conflict of interest. This could provide the solution and flipping the procedural structure.
for reskilling the profession by giving opportunities for practices to offer their services
alternatively, thus promoting the architect’s role beyond that of stage 2. Executive architects Outcome Led Procurement
can de-risk situations for their clients and provide industry specific insights and independent
adjudications that irradiates the need for costly consultant intermediaries. Moreover, they Outcome Led Procurement (OLP) would
can be utilised for their technical skills applicable to the detailed design stages and supply allow clients to consider the financial
chain. Furthermore, they can provide advantageous local knowledge to large contractors implication of their procurement choice
in new areas. Although this role is less focused on the design element of the construction earlier. Particularly with public contracts
process, its commercial orientation could be the necessary precursor for architects to where the public purse not only pays for
become more business savvy, drive up fees and create work for themselves in a competitive the construction but also its maintenance,
industry. OLP could promote a more valuable
Rebalancing the tender system procurement choice. ‘Procurement has
a big effect big effect on cost and, more
There needs to be a significant rebalancing of the tender system that puts more emphasis importantly, on the benefits the project
on design and delivering a quality product. The existing tender system is a balancing act realises relative to that cost’ (CE, 2015:
between design and cost. There needs to be a shift towards design being the primary Online). Most procurement is based on
focus of a project with cost acting as a mediating facilitator. Changes to the procurement, short-term low-price tendering with no
where the architect is maintained as design custodian and outcomes are analysed from consideration for outcome benefits of the
an early stage, can emphasise a cultural shift towards quality. ‘What we do enriches lives final occupant. OLP would instead place
and makes people happier, wealthier and healthier. Unless we can convince at this basic, emphasis on value, described as the benefit
utilitarian level we are not going to get the recognition our art form deserves’ (Fraser, 2015: relative to cost. In construction terms this
Online). is the ratio between building costs and
business benefits. The Royal Academy of
Cost Engineering published a paper in 1998
based on research on the London office
market, the research identified a ratio of
1:5:200. ‘1’ being the construction costs,
Design ‘5’ being the operating and building
maintenance costs over a 20 year period,
Tender and ‘200’ being the business operating
21 professional studies
22
costs (including staff costs) over a 20
year period (RAE, 1998). This model
identifies that the cost of the building was
a two hundredth of the cost of carrying out
business in the building. Looked at from
another angle, most clients fixate on the
construction costs (1) rather than looking
at how they can reduce the operational
and maintenance costs (5), which could
be achieved by putting more emphasis on
how they can reduce the costs of carrying
on business through a building that better
meets their needs (200) (CE, 2015).
Other research has identified varying ratios
in regard to specific sectors, however, all
have arrived at ratios where the business
benefits are many times greater than
the construction costs. This suggests that
spending too much effort on keeping the ‘1’
as low as possible and neglecting the ‘5’
or the ‘200’ will cause the long-term cost of
the building to outweigh the initial capital
cost.
Post occupancy (POE) and building
performance evaluation (BPE).
Richard Saxon’s ‘Be Valuable’ publication
highlights that the design and management
cost are typically 10% of the construction
cost. At the other end of the process, he
suggested the value added by the occupier
organisation would typically be 25-100%
more than the business costs. If the value
 joseph smithard 16061813 24

added by the occupier organisation may be 25-100% more than the business costs, design
and management costs could be contributing to the potential business benefits at a
staggering ratio of 1:600 (Saxson, 2005).
The RIBA published the ‘post occupancy evaluation and building performance evaluation
primer’, stating that early integration of POE/BPE commissioning, ideally agreed at RIBA
stage 1 can lead to clients getting the best outcomes for their clients.
‘Helping clients get the best out of their projects is the main reason for evaluating
a building. Beginning by looking at a client’s motives for embarking on a project –
their desired Project Outcomes – evaluations can get to the core of the client’s and
occupants’ needs and fine tune the way the building delivers these.’ (RIBA, 2016:
Online)
Integrating OLP and POE/BPE could utilise feedback from users of how a building works in
practice, so that these lessons can be applied to decisions on future projects, in particular
the procurement route. These evaluations will help designers close performance gaps,
create better design choices and be cost efficient.
influence the early design stages.
‘Undertake In Use services in accordance with Schedule of Services’. (RIBA Stage
7)
Based on feedback from users, contractors and clients from POE/BPE, information could
be fed into the beginning of the plan of work. This precedence style system would see
stage 7 put before concept design. Evaluation information could be shared with the client
of the next project and ideally made public, so the rest of the industry can learn from these
experiences. Hopefully in doing so appropriate outcome led procurement choices can be
made. ‘This can help designers to close the performance gap, that of designed energy
and organisational performance and the actual measured performance of these areas.
The more designers, clients and other members of project teams learn about how their
buildings perform in use, the better their next buildings are likely to meet the complex needs
of the clients and occupants – completing a virtuous circle of learning’ (RIBA, 2016: 01).

Operation & Business Costs Outcomes

Maintenance
Construction
Design

Flipping the procedural structure

The RIBA practical guide to stages 7, 0, and 1 can facilitate the notion of integrating post
occupancy information and ‘In Use’ (RIBA stage 7) information, which can then be used

23 professional studies
 joseph smithard 16061813
Conclusion
There is a case for arguing that design and build contracts and multi-stage tendering are
having a negative impact on the architectural profession, the wider construction community
and the general public. While there are positive aspects to design and build, there are
clear indications of concern towards the procurement routes’ influence on quality. As
explored in this article, many industry professionals feel that the architect’s role must be
rekindled from contemporary fragmentation caused by multi-stage tendering. Architects
need to prove they are able to design and deliver valuable and quality construction
projects. This could be facilitated by rebalancing the tender system with an emphasis on
design over cost. This would reinvigorate the architect’s role in construction and revitalise the
future of construction projects.
Alternate practices in the profession could allow for new roles in the industry. Executive
architect, and post occupancy evaluation roles could provide new career opportunities
for practices wanting to access parts of the work stages that have been restricted by the
design and build procurement. This could reskill the profession and offer new revenue
streams for practices. However, in doing so the profession needs to learn from its previous
mistakes. There needs to be a widespread halting in practices conducting work for free, the
level of professional integrity needs to be maintained by not offering work at unsustainable
fees and architects must champion new strategies such as outcome led procurement and
post occupancy evaluation to show clients that alternative procurement routes can offer
better value and quality than design and build.
25
26
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 joseph smithard 16061813 32

Introduction

Key Terms: Smart Contract, Blockchain, Distributed Ledger, Cryptocurrency, peer-

to-peer, BIM (Building Information Modelling), IOT (Internet of Things).

(See appendix for basic definitions)

The UK has a problem with productivity, and the construction sector has poorer productivity
growth rates than any other (ONS, 2017). Simply put, productivity is the amount of goods
or services produced by a person in an amount of time (NBS, 2014). Whilst it is tempting
to argue that productivity is a direct indication of how hard people work, there are many

Critique on Business more factors that have a direct influence. There is the impact of skill; greater skilled workers
have more productivity. Then there is the availability of the tools a person needs to do their
Management job. The development of software and infrastructure promotes efficiency and thus creates
greater productivity. However, with the UK predicted to see a 20-25% decline in available
Can smart contracts be the solution to the UK’s construction sector labour force within a decade, and the additional burden of Brexit on existing and potential
‘productivity puzzle’? workforce availability (Farmer, 2016), a cutback in skilled workers may prove to be a crux
in the “productivity puzzle”. Fundamentally, the potential for a significant drop in workforce
must alter the industry’s existing attitude of muddling through. ‘Although there is a
peripheral awareness of ‘lean’ and other optimisation techniques used in other industries,
there is no mainstream shift towards embracing such thinking as a catalyst for process and
productivity’ (Farmer, 2016: 14). Asking personnel to work harder or hoping for that influx
of a generation of skilled construction workers is impractical. Now more than ever there is a
need for a streamlined process, where the availability of the tools needed for each member
of a construction project to do their job efficiently is achieved.
The construction industry has a collaboration problem acting as the root to its ‘change
inertia’ (Farmer, 2016: 33). The litigious nature of the industry means that the obligation of
all parties to act in ‘good faith’ holds no concrete legal standing. There is no appropriate
process of sharing risk (Farmer, 2016), distrust causes business plan uncertainty and the
term “business ethics” is deemed an oxymoron (Duska, 2000). In 2013, the Construction
Trade Survey concluded from its pool of responses, that the single most important issue

31 professional studies
 joseph smithard 16061813
affecting construction businesses was late payments (DBIS, 2013). This harms companies
cash flows and stipulates the need for unnecessary borrowing to pay for materials and What are
labour. An efficient system would allow for more accurate forecasting as to when and how
a company receives and distributes its cash flow. Not only would this increase productivity
smart
but it would also reduce the need for legal action. As it stands, the Housing Grants, contracts?
Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic
Development and Construction Act 2009, governs the administration of payments. ‘The way The etymology of ‘smart contract’ began
that the payment process is treated by many payers and payees turns the whole exercise with a report written in 1994 by Nick Szabo.
into a game where each party tries to better the other’ (Rowlinson, 2015: 10). Currently, He defined the process as ‘a computerised
the act becomes clearer as more cases pass through the courts, yet this continues to leave transaction protocol that executes the terms
grey areas. Intrinsically the existing system is governed by human bureaucracy and external of a contract. The general objectives of
institutions to legitimize decisions. What if the contract itself has the potential to become smart contract design
automated, eradicating the strain of human intervention? are to satisfy common
The aim of this report is to inquire whether an automated system through the use of new contractual conditions
innovative smart contracts, could be the missing tool that encourages productivity in the (such as payments
construction sector. As it stands, The Government Construction Strategy 2016-2020 wants terms), minimise
to increase research and development into technological advancement in all areas (IPA, expectations and
2016). Therefore, the objectives are to evaluate this new technology, the good practice minimise the need for
that could facilitate its use and a discussion as to whether it could realistically supplement trusted intermediaries’
productivity. (Szabo, cited in
Tapscott, 2016: 72).
The key characteristics Anonymous: 2017
of smart contracts have been described as
follows: it is in digital form and is embedded
as code in hardware and software. The
performance of the contract and the release
of payments and other actions are enabled
by technology and rules-based operations.
Lastly, the smart contract is irrevocable
as once initiated, the outcomes for which
a smart contract is encoded to perform
cannot typically be stopped. Performance is
33 professional studies
34
automatic. (Norton Rose Fulbright, 2016).
The smart contract challenges the issues
attached to trust based purchase models
and assumes its structure from the advent of
cryptocurrency. In 2008, the as-yet unknown,
person or group Satoshi Nakamoto
published “the white paper”: ‘Bitcoin:
A Peer-to-Peer Electronic Cash System’.
Nakamoto’s paper identified the issues
of relying exclusively on external financial
institutions for collateralization when
processing financial transactions. ‘What is
needed is an electronic
payment system based
on cryptographic
proof instead of
trust, allowing any
two willing parties to
transact directly with
each other without the
need for a trusted third
party’ (Nakamoto,
2008: 1). This form of
transaction thus works through a ‘peer-
to-peer’ network which in its simplest
form establishes a network between a
number of devices without the need for a
separate server. The Bitcoin payment system
removes the need for trust and instead
operates through cryptographic proof. All
transactions work on a vast public peer-to-
peer network that acts as a public ledger.
Transactions are grouped in blocks, and
a chain is formed that records the history
 joseph smithard 16061813
of said transactions, this is known as a
‘blockchain’. The blockchain functions as a
distributed ledger that is essentially an asset
database shared across a public peer-to-
peer network. All participants in the network
have an identical copy of the ledger, and all
changes to the ledger are recorded public
information (GOS, 2017). This transparency
prevents stealing and double-spending and
gives users a definitive record of who owns
what, when.
Smart contracts in the construction industry
can utilise blockchain technology as a
way of creating trustworthy contracts
void of human manipulation. This creates
a ‘Panoptican effect’, where all party’s
behaviour is moderated as they know there
is the possibility that their conduct will be
properly observed at a later date (CBC,
2017). The result ‘allows trust in a business
that lacks it’ (Saxon, 2016: Online). An
undisputed record of actions could prevent
dispute and irradiate the need for costly
intermediaries. Smart contracts would
have instructions rooted in transactions
and payment delivered if instructions are
fulfilled. This conducts as a data driven ‘if/
then” protocol removing some of the risk
and scope for delay from the payment
process.
‘If a bricklayer is done with building the
wall, then he asks for it to be inspected.
If the inspection is successful then the
35
36
bricklayer is paid.’ (Bimplus, 2017: Online)
‘If a consultant appointment is completed,
then warranties in favour of beneficiaries
will be issued for signature.’ (DPS, 2017:
Online)
In theory, a fully automated smart contract
will store mutually agreed if/then protocols
between parties, it will be registered
on the blockchain and cryptocurrency
can subsequently be used for collateral.
Decisions are made by an indisputable
?
digital algorithm that evaluates the
agreement made by all parties. There is
no need for a bank, and a project could
potentially be executed from inception
Request confirmation Request broadcast Network of nodes
to completion with no need for human
over p2p network validate request
interaction. Furthermore, a smart contract
could be comprised of a multitude of
self-executing sub contracts that transfer
data upon completion; for instance,
generating payments, transferring relevant
documentation and even indicating
progress reports (Mason, 2017).
Confirmation The new block is Once verified the
then added to the request is added to
existing blockchain other actions
Blockchain Actions
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 joseph smithard 16061813 38

Methodology Discussion

The hypothesis is that there is a case for semi-automated smart contracts and that this can
stipulate a trajectory for productivity in the construction sector. However, a fully automated
contract is contemporarily infeasible until the interoperability of the technology aligns with The discussion is taken from the subjective views of a range of contributors on an online
the comprehension and business case of the industry. forum. Their responses orientate around conflicting levels of trust in regard to the limitations
of technology, the necessity for its implementation and the impact/need for human
The discussion has two parts. Part one explores the pro and contra of smart contracts involvement in the smart contract.
based on qualitative online data. Why and if smart contracts should/shouldn’t be in place
at all. The second part explores in depth how smart contracts could be enabled, whilst In response to the question of what
further critically analysing the pros and contras to smart contracts based on how they benefits do smart contracts provide? User
would work. Qualitative data from an online forum and journal articles will be reviewed to 1 said: “Avoiding lawsuits and reducing
critically analyse the pro and contra of smart contracts. Comments by users in forums have instances of substantial disagreement
been chosen on the basis of them showing an overview of the discussion. The contributor’s is an excellent use case for immutable
identities are unknown to the author and presented anonymously, their input is intended distributed record keeping.” It is recognised
solely to promote discussion. Subsequently, an in-depth exploration of how smart contracts by user 1 that a positive consequence of
would work will form a further basis to critically evaluate the pros and contras of smart using a smart contract is that a permanent
contracts. record of actions is available to the users.
Alongside this, the transparent nature of
It is recognised by the author that primary data would add rigour, with more time this would the blockchain means that a permanent
be something to better the report. ledger has an indisputable record of who
conducted an action and when. Having a
transparent record of actions available to
all parties could for example help to identify
liability without the need for argument.
For instance, if a supply chain item is not
dispatched or lost in transit, hence delaying
the on-site team, the distributed ledger
could indicate when it was lost and send an
automated message to all parties involved.
The necessary party can apply for evidence-
based extension of time and the contract
can be altered efficiently to suit.
The topic then shifts to User 2 and 3
challenging the limitations of automation
suggesting that there is still a role for
human factor:
(2) “The real world doesn’t work in rigid
ways that programs do.”
(3) “They’re not inherently a bad idea, I
just don’t think they have many real world
uses.
Contracts that are simple enough to be
expressed and verified with code are usually
not the type of contract that would need
to be automated in a cryptographically
verified way. But real world contracts are
usually much more complicated and rely
on subjective judgments.” User 3 alludes
that there may be a continued need for
third party verification by a neutral arbiter
when operating under a smart contract.
Hypothetically this role could continue to
be undertaken by the Architect as contract

37 professional studies
 joseph smithard 16061813
administrator. Both users are questioning
the automated contract’s ability to make
judgements on issues that were not pre-
programmed, these can be location specific
contract clauses or insurance provisions.
User 1 responds to their scepticism by
questioning why measures can’t be coded
into the smart contract to account for
dispute.
(1) “There are long established practices,
methods and measures for reducing
disagreement. Of course parties can be
intractable, but if agreeing upon dispute
resolution procedures and third-party
consultants as part of construction contracts
is common practice now, why wouldn’t
similar measures for reducing disagreement
be applied in automated contracts?”
However, user 4 is aware that the
scope of potential complication remains
unaddressed.
(4) “Because doing so doesn’t add
anything. Filing a lawsuit is already
what you do if existing measures aren’t
sufficient to resolve a disagreement. You’ve
got an independent architect verifying
the plans, you’ve agreed on a set of
terms and standards, you’ve certified a
completed value -- as you observed, all of
that stuff happens already. Nevertheless,
someone still has a disagreement about
the performance offered...” This comment
also locates an issue with the industry
39
of unrealistic up-front costing, where
contractors optimise their prices from the
beginning and make up for lost surplus via
change orders and claims. As a comment
adjacent to this discussion a degree of
automisation could shift the emphasis from
margin protection to productivity. User 4
continues:
(4)“…What good does an automated
contract do, here? Either it’ll refund the
money to the owner and the builder will sue,
or it’ll send the money to the builder and
the owner will sue (or it’ll keep the money
and escrow while the parties fight). The
automated contract sends money to one
party or the other based upon a set of static
conditions, but it can’t resolve a genuine
dispute.” As user 4 suggests, an issue arises
when the contingency for error isn’t covered,
by which case the smart contract cannot
settle dispute. At this point it would be
necessary to consult traditional third-party
adjudication through legal advice nullifying
the advantage of using the smart contract in
the first place. It should be noted that this is
considered as a worst-case scenario. If the
problem is accounted for in code, then this
argument conversely becomes redundant.
The discussion goes on to address the
issues associated with information. User 5
states that:
“Real world contracts also rely on
information and understanding that simply
40
doesn’t exist within a cryptographic system. The only solution are “oracles”, external services
that provide inputs to the smart contract. But those services don’t have any of the touted
properties of smart contracts, so it ends up being nothing more than overly complicated
escrow.”
The notion of using oracles as an alternative to long-running contracts on the blockchain
means that all finance intended to go into the contract would be placed into a ‘multisig’
(multi-signature) address controlled by entities known as ‘oracles’. ‘Every time someone
wants to send a message to the contract, they would send the message to the oracles.
The oracles would run the code, and if the code execution leads to a withdrawal from the
contract to some particular address then the oracles circulate a transaction sending the
funds and sign it’ (Etherium, 2017: Online). This is a low-trust approach and could nullify
some of the time saving capabilities of using blockchain and it essentially adds an (albeit
secure) intermediary. It is useful to consider that this could be a solution for the issue of
long term contracts. At present, there is a degree of interoperability where it is unknown
whether we have the ability to programme code over long periods. Construction contracts
often operate over extended periods of time, this means there is potential for external data
to be lost. This loss of data could corrupt the smart contract thus halting its functionality. The
use of oracles could therefore act as collateral for this eventuality.
The final two contributors summarise the consequences that human and automation factors
can still have upon smart contracts.
(6) There’s an old software adage that goes “garbage in, garbage out” -- that is, it
doesn’t matter how beautiful or well written your code is, if you receive garbage input, you’ll
invariably have garbage output.
(7) Of course there’s also one major threat with every custom smart contract: if there’s a
bug, you’re permanently screwed.
People code and can make mistakes. Once the smart contract is conducted through
blockchain the error carries forward and doesn’t change. This happened to the DAO
(Decentralized Autonomous Organization), the DAO was a stateless organisation with
the objective to provide a decentralised business model for commercial and non-profit
enterprises. Operating as a form of investor-directed venture capital fund, it was built
through the biggest ever crowdfunding campaign in history (Financial Times, 2016). In
2016 users exploited a vulnerability in the DAO code and stole a third of their funds. This is
the potential for error that human factor can still influence through blockchain technology.
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If there is an issue with the automated system and it crashes, everything fails; leading to a can make decisions on behalf of the client
question of what kind of contingency can be planned for such an occurrence? Enabling must be outlined. An overseer is defined and

A vision of incremental improvements represents the best chance for smart contracts to be
the smart acts as contract administrator. This person
retains ancillary powers over the contract if
adopted (Mason, 2017). Realistically semi-automation seems the only logical extension contract cessation of work must be ordered. The role
of how a smart contract can be administered. An agreement is made between client and further records timing, financial transactions
primary contractor, and this is replicated to subcontractors and suppliers through the For the smart contract to be truly integrated and discrepancies. The contract will set out
blockchain. Payments are automatically executed and collaterised through cryptocurrency, into the construction industry there are an intended timescale for the project and
and these are released once works are completed and satisfy the contract. At some point adjacent technological advancements that must indicate a contingency process for
human intervention will occur, more so perhaps with the first smart contracts. This could need to also be adhered to. These include occurrences that could alter this timeframe.
act as an incremental process, where human intervention can be surplus to requirement ‘BIM level 3 and beyond, cryptocurrencies The contractor must provide or be given a
meaning as more smart contracts are administered better solutions in code can irradiate and the blockchain, big data/internet design of what will be built. The detail and
human necessity. Jim Mason uses a weather provision in a typical construction contract to of things and appropriate payment adherence is directly related to the form of
provides some valuable insight. ‘A traditional contract lists exceptionally adverse weather mechanisms and liability arrangements’ procurement and the stage at which the
as a relevant event, thereby allowing an extension of time. The contract does not however, (Mason, 2017). This section will outline design is handed over. The contract must
define what is exceptionally adverse so in theory this is open to interpretation. However, the rationale for why the construction express terms for access and possession of
the New Engineering Contract deals with weather objectively and employs the 1 in 10 year contract is in place. Following this will be site and indicate when responsibility (risk)
value assessment. This is a term of contract which can be written into code and automated. a discussion on fabricating an evolved is consequent to the contractor. Details of
This can be achieved by linking meteorological office recordings against the criteria in the smart contract, the pros and cons and the sub-contractors, health and safety, and
blockchain’ (Mason, 2017: 16-17) implementation strategy of how it can be insurances should also be covered.
put into place. The article will then look
Creating an automated system that manages itself in this model is complex, though there forward to the opportunity for integration in
is potential that through incremental advancement this could happen. As we have not yet the construction process, in particular with
reached this level of technological understanding it seems desirable at present to maintain BIM and the IOT (Internet of Things).
human involvement in this process. With automisation potentially disrupting the status-quo of
existing human roles in the industry, this perhaps incites the profession to evolve new roles in Existing contract obligations
confluence that harness a greater level of productivity.
The contract is in place to indicate the
There are clear doubts throughout the discussion over the implementation of smart contracts services to be provided by the contractor.
in its early stage use and human factor construct. However, these issues are also present in In return, it must outline when and how the
the existing form of contract. The incremental improvement structure, overseen by a human contractor is to be paid, and this must also
administrator at present seems to be the favoured integration method. include cost liability in the event of project
over-run. The extent to which the contractor

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What changes with smart
contracts?
Payment
The payment process can be streamlined and at the very least smart contracts could make
the process quicker. Instead of using an escrow as a third-party intermediary, the same
process of agreed payments based on pre-determined milestones or progress can be
maintained in code. Payments can function through cryptocurrency and spot checks in the
project through the Internet of Things. The protection of a traditional escrow, usually seen
through banks or legal services are no longer needed. This saves money and irradiates the
need to conform to working hours or banking holidays. Through cryptocurrency a multi-
signature address can be created and act with similar intention to the standard form of
contract for project partnering (PPC 2000). Using multi-signature technology is completely
free and means that anyone can serve as the third party, but only if all parties concerning
the contract agree upon this appointment. An example of a potential method would be that
if all parties agreed upon the contract as a partnership, the third-party adjudicator could
be internally appointed without the need for excessive payment. This means all parties are
acting with the same intention and it further provides flexibility and increases productivity.
This example is a semi-automated version of the smart contract where the human factor
remains with the third party.
Building Information Modelling
BIM can be seen as a clear precursor to smart contracts (Perry, 2017). However, despite
being a major buzzword in the construction industry, its use in practice is still reasonably
scarce. The National BIM Survey reported that in 2017 only 55% of respondents described
themselves as being confident using BIM, whilst in regard to BIM maturity only 7% reported
working up to BIM level 3 (NBS, 2017). Level 3 is the stage for collaborative design
through shared project models, thus suggesting there is an industry angst towards BIM-
based collaborative working. The NBS survey indicates that 95% of respondents intend to
43
44
incorporate BIM into their practices within the next 3 years, indicating that there is belief
of it being a necessary tool. The problem could be attached to BIM’s place in contract
agreements. At present the Joint Contracts Tribunal suggest incorporating the contractual
provisions outlined in the BIM ‘CIC protocol’ (JCT, 2015). This works as a multiparty
contract add on, where the CIC protocol takes precedence over the main contract in the
event of conflicts associated with BIM. The attitude of the industry not working to level 3
could attest to the ambiguity of the CIC protocol’s choice of wording. ‘The most telling
limit in the Protocol is the obligation of the project team members to use “reasonable
endeavours” as a lower, less clear duty of care than the widely accepted standard of
“reasonable skill and care” (clause 4.1.2)’(Moseley, 2016). Compliance with timetable
is “subject to events outside the reasonable control”, which vaguely overrides the detailed
provisions for time extension in most standard form building contracts. Furthermore, there is
‘no warranty as to the integrity of the electronic data exchange (clause 5) and no liability
for the modification, amendment, transmission, copying or use of BIM models other than
for agreed purposes (clause 7)’ (Mason, 2017: 8). The ambiguity could be seen as a
transitioning method for easing in the use of BIM in the eyes of the insurer, yet by BIM level
3 input into the model becomes untraceable as the model is now a collaborative entity
editable by the entire design team. At present only by having a multi-party contract would
an individual be insured for actions from and beyond BIM level 3. This adds a level of
uncertainty that has perhaps informed the standoffish zeitgeist of the profession.
The multi-party contract is the current solution to working beyond BIM level 3, but it is a
costly process and, as stated above, remains vague. The counter-argument is that smart
contracts do not need to be aligned to the BIM agenda and can be modelled by each
transaction. Instead of a multi-party contract, numerous self-executing, straightforward
contracts that are based on performance could operate. Cryptocurrency would facilitate
the payment process, and interim payments can be verified and recorded through the
blockchain. The Internet of Things can utilise remote sensors that record when components
of the construction have been installed. This indicates when said contracts have been
adhered to remotely, potentially without the need for human intervention, and subsequently
generates payments in accordance to the contracts (Mason, 2017).
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Efficiency & Change
As mentioned above the Internet of
Things can remotely provide updates on
construction projects. Elements such as
supply chain deliveries and construction
installation can all be recorded or indicated
through remote sensors and tracking.
This data can be recorded through the
blockchain and can stipulate payments and
even forecast changes in completion and
cost. This information would be available
to the entire design team creating an
indisputable record which can create a
level of trust that irradiates the financial and
time cost of dispute. In regard to the existing
process, automated smart contracts could
give credible estimations to setting and
changing deadlines. It could provide an
accurate and permanent ledger of actions
on a construction site, and it can act as
an authority for the construction industry to
utilise technologies such as BIM and the
Internet of Things. Conversely, it should still
be noted that there remains a question
of how smart contracts deal with change.
In a perfect world automated processes
could deliver a project from BIM model
to handover, we could code all potential
eventualities and we could sit back and
wait for the project to finish, on time and
in budget. However, doubt surrounds the
ability to code, say, the force majeure
clause (Mason, 2017:9). ‘The term force
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majeure relates to the law of instances
and is frequently used in construction
contracts to protect the partisan in the event
that a segment of the contract cannot be
performed due to causes that are outside
the control of the parties, such as natural
disasters, that could not be evaded though
the exercise of due care’ (Legal Dictionary,
2017: Online). Typically, disputes over an
‘uncontrollable event’ would be resolved
through mediation, adjudication, arbitration,
litigation or a dispute review board. The
question remains: how could this be
coded? This harks back to the notion that
incremental improvements would develop
the smart contract, and as cases occur it will
become more adept at having a solution.
As this development unfolds the case for
human factor still remains.
46
Conclusion
Potential
Smart contracts have the potential to
streamline the construction process by using
automated systems that increase speed
and eliminate the cost of intermediaries.
Payments become secure and parties
are protected from insolvencies and late
payments. Inefficient costings and margin
protection could become a thing of the
past. Blockchain technology could promote
blame free construction by providing a
transparent and secure, encrypted ledger.
As such the industry could finally see an
acceptance of collaboration, internally
and beyond with its clients. Smart contracts
can offer a new level of standardisation
where flexible contracts can be chosen
and changed according the situation
necessary. This new level of security could
finally propagate the government (IPA,
2016) and industry (NBS, 2017) desire
for full integration of BIM into the design
process. From supply chain co-ordination to
construction management, smart contracts
could facilitate a cooperation between BIM
and the Internet of Things, providing real
time information and utilising a data-driven
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decision-making process. This could lead
to an unprecedented level of efficiency that
could solve the industry’s productivity woes.
Uncertainty
However, the potential of smart contracts
are marred by an overarching level of
uncertainty. They continue to have uncertain
legal status with currently no government
regulation. As a result, there is a potential
issue if governmental institutions decide
to make a legislative framework for smart
contracts (AtoZ, 2017: Online). Furthermore,
questions remain over its interoperability
and implementation costs. Smart contracts
require coding, and therefore it is essential
to have a capable member of staff to
programme the internal architecture of
the contract. There is a case for smart
contracts being a positive influence on
the construction sector’s productivity
issue. With the predicted worker shortage
looming and the potential for productivity to
continue to fall, technology such as smart
contracts could create a stream of new
professions that monitor and regulate this
 joseph smithard 16061813 48

process. Moreover, there is also the need
to conquer industry norm, where, for their
part, contractors and specialized trades
may stand to lose from a move to a more
efficient system, in which many of them win
orders by optimizing up-front pricing and
then making up for lost surplus via change
orders and claims (MGI, 2017). Smart
contracts could facilitate productivity, but
the industry attitude for higher revenue
rather than lower margins could continue
creating friction.
must remain the focus whilst technology
overcomes the temporary barriers of
reliability’ (Mason, 2017: 17). Until this
point, incremental implementation seems to
be the logical phase plan for integration.
In the short to medium term, human factor
continues to be needed, not only to solve
functionality but also to create faith.

The case for semi-automation

Smart contracts linked through BIM and

the Internet of Things, conducting self-
directed decisions through sensors and
remote blockchain reasoning is the long-
term agenda for construction industry
integration. At present, the technology and
ethical interoperability is still at a point by
which a fully automated system is not only
improbable, but dangerous. A range of
advancements need to occur to counter the
nervousness presented in the discussion.
‘The business case for their adoption

The case for semi-automation

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digital currency’ [Online] [Accessed on 22nd January 2018] https://www.ft.com/

References content/600e137a-1ba6-11e6-b286-cddde55ca122

Government Office for Science (GOS). (2017) ‘Distributed Ledger Technology: Beyond
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Smart Contract
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and seller being directly written into lines of code. The code and the agreements contained
therein exist across a distributed, decentralized blockchain network. (Investopedia, 2017)
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Blockchain
silver-bullet-for-efficiency/10022407.article
A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions.
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currency transactions without central recordkeeping. Each node (a computer connected
contractsdaos_a_bad_idea/
to the network) gets a copy of the blockchain, which is downloaded automatically.
(Investopedia, 2017)
Rowlinson, M. (2015) ‘Practical Guide to the NEC3 Engineering and Construction
Contract’. Wiley-Blackwell
Distributed Ledger
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assets for sharing across a network through entirely transparent updates of information.
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(GOS, 2017)

Schollmeier, R. (2002) ‘A definition of peer-to-peer networking for the classification of

Cryptocurrency
peer-to-peer architectures and applications’. International Conference on Peer-to-Peer
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of exchange that uses cryptography to secure its transactions, to control the creation of
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Tapscott, A. (2016) ‘Blockchain Revolution: How the Technology Behind Bitcoin Is
Changing Money, Business, and the World’. Portfolio: London
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All images/diagrams are by the author unless otherwise stated.
partitions tasks or workloads between peers. Peers are equally privileged, equipotent
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(Schollmeier, 2002)

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BIM (Building Information Modelling)

BIM or Building Information Modelling is a process for creating and managing information Critical Reflection
on a construction project across the project lifecycle. One of the key outputs of this process
is the Building Information Model, the digital description of every aspect of the built asset.
Strengths
This model draws on information assembled collaboratively and updated at key stages of a
project. Creating a digital Building Information Model enables those who interact with the
Finishing full time education is a daunting thought.
building to optimize their actions, resulting in a greater whole life value for the asset. (NBS,
2017)
The nature of the architecture course being so long is both frustrating and comforting. I
have thoroughly enjoyed my time in university and similarly have come to appreciate this
IOT (Internet of Things)
as being directly related to the scope of the subject. I have always been a firm believer
The Internet of Things (IoT) is a system of interrelated computing devices, mechanical and
that architecture school should be focused on teaching students about the theory of
digital machines, objects, animals or people that are provided with unique identifiersand
architecture, and that the practice will come through subsequent practical experience.
the ability to transfer data over a network without requiring human-to-human or human-to-
For the most part, this has been the case, the breadth of understanding around a topic I
computer interaction. (Forbes, 2017)
had no comprehension of prior to formal education is satisfying – though there is so much
more. The education process has influenced by outlook on the notion of architecture and in
association my wider social and political standpoints.

Weaknesses

However, my assumption of understanding the practical side of architecture over time and in
practice has only been half right. The observation from my perspective has been that there
is a miscommunication between education and practice. Whilst I feel more accomplished as
a designer, and have begun developing my theoretical affiliations, I do not feel as though I
prepared well enough for practice. At present, my view is that architecture school is relying
on practices to train students on the practical and business side to architecture. However,
practices are assuming students have this knowledge from school or are having to spend
extended periods of time having to train entry graduates. This disconnection is another
crux in the productivity problem, students do have the capacity to be educated better in
this area of the field, and could come into the profession better equipped. Not only is this
inefficient for practice, students are entering the field underprepared in a fashion that
devalues their actual skillsets and gives validity to their roles being underpaid.

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Opportunities

There are definite opportunities in the architecture field I would like to follow, and I
recognise that the architecture degrees have provided me with an extended range of
employable skills. I am personally motivated to utilise my existing skillset as an entry
for accessing the job market in mainland Europe. I would like to utilise my degree and
practice whilst integrating within another culture’s procedural structure, the opportunity for
comparison is deeply motivating.

Threats

Advancing technology has outpaced relevant teaching, I feel that even upon completion of
my studies I will need to gain further technical skills. Considering the amount, we’ve had to
invest into the undergraduate and master’s degrees this is a disappointing.

55