Transcript: How to Create Risk Transparency with BIM, IPD and Blockchain

Our problem in the built industry is that we contract for people to participate in projects in silos to resolve their differences through adversarial conduct, and those encourage mistrust. Nobody trusts anybody else. Well, those are all direct products of the legal agreements that we sign. You get exactly what you contract for, and we contract for silos, adversarial conduct, and mistrust. The ledger technology would be so powerful in the built environment.

The ability to provide careful parameters for the duties, rights, and responsibilities of parties in a blockchain environment lends itself to the crafting of a legally integrated agreement because clarity with respect to rights, duties, and responsibilities in the legal realm is one of the keys to good contracts. We're no longer going to have to resolve differences through adversarial actions because the disputes that arise are going to be resolved because everybody knows their risk right away. Hello and welcome to the Constructor Podcast, the best way to build it, episode number 75.

I'm your host, Brittany Campbell-Turner. This podcast is dedicated to helping property owners have certainty in their decisions about their construction projects. We talk about fostering trusting relationships, help you to understand how to lower risk of being under budget and on schedule, and most importantly, exceed your end user's desires. Last episode, we spoke with Mike Petruski, Director of Events and Growth Marketing at iOffice. He's also the host of the Workplace Innovator Podcast, enhancing your employee experience.

The week prior, he released my interview on the Workplace Innovator Podcast. So check out my interview with Mike and Mike's interview with me so you can take advantage of the crossover. In today's episode, we will be speaking with James Salmon, President at Collaborative Construction, and he is also the Executive Director of the American Subcontractor Association of Ohio. James was part of our panel discussion at the Blockchain in Construction event that I hosted here in Chicago in conjunction with the Chicago Blockchain Center and the Construction Blockchain Consortium.

If you remember Kimon Enuma's episode found at constructor.com slash EP57, he talked about creating agility and efficiency and open architecture as a platform. Kimon mentions James Salmon in that episode. So I actually reached out to James and we connected after that, whereby I invited him to speak at the Blockchain in Construction event. James is actually a lawyer by trade and is passionate about the common data environment, BIM, integrated contract models, and that naturally led him to blockchain. The interesting thing about James is that he is passionate about the openness of information so that everyone sees the cards on the table versus closed competitive and adversarial contractual approaches that we're used to in construction.

With that, let's get into the interview. So today we are speaking with James Salmon, President at Collaborative Construction and Executive Director of the American Subcontractor Association of Ohio. James Salmon was also part of our panel at the Blockchain in Construction event that we held here in Chicago. Welcome to the Constructor Podcast, James. Thank you for having me.

I'm glad to join you. You've also been involved with the International Blockchain Real Estate Association. We actually interviewed Ragnar Liffresar in episode 67. You're definitely in the blockchain space, but what I do want to talk with you first about is integrated contracts. You're a lawyer and I want to talk with you about how did you get into integrated contract models in your career in the first place?

Well, I spent 20 plus years litigating failed construction projects of every stripe. And as a young attorney, I was just going into the next piece of litigation and reviewing the next giant pile of documents. But as my career progressed and I began to pay a little closer attention, I noticed that we were repeating the exact same problem again and again in the built environment. Every single construction dispute arose as a result of failure to communicate effectively. And I began to cast out for solutions to that.

And that search led me to integrated project delivery and building information modeling. So you didn't want to be litigating and solving for the same problems over and over again. It sounded like you wanted to solve new problems, ones that weren't allowing us to kind of beat our heads against the wall all the time. Right. I mean, the litigation model is a really good model for putting your kids through college, but it doesn't do much for your clients.

You know, we talk about lean construction. I think we've talked about the IFOA, integrated form of agreement and other IPD contract types. But one we have not covered is the validation period contract. I wanted you to actually share with the audience what that is and then also how is it different from a more traditional IPD contract model. The validation period contract is an innovation that I have seen deployed in Canada by municipalities in Canada that are attempting to procure built assets from integrated teams in the best way they can.

Because they're public entities, they're required to bid the work, but they're doing it under request for qualification program that makes sure that the entities that are bidding the work are actually qualified in advance. And then they ask qualified teams to respond to a pretty traditional request for proposal. But that request for proposal is wrapped around some very substantive collaborative processes and some really good integrated project delivery tools and processes that come out of the Sutter Health tradition in California. And as a next layer in that process, once the owner has developed a pretty solid program where they've detailed their scope, cost, and schedule, not in real precise terms, but they have a really good idea of how much they want to spend, how long they think it's going to take, and the scope of the project.

They invite the teams to the interview phase of the selection process to provide a guaranteed maximum price for something they call a validation period contract. And the integrated team that wins the work is actually going to sign that validation period contract. And what it contemplates is that the integrated team made up of a general contractor, key designers, sometimes both architects and engineers, as well as key trades and even some key suppliers or specialty trades, they will proceed under the validation period contract to determine, the way I put it, determine whether the owner is drunk on their own whiskey or not.

And the program, as put together, realistically be completed. The interesting thing about this whole process is that the owner, the municipality that is procuring the built asset from the integrated team, agrees to pay that team this guaranteed maximum price in exchange for the team completing this assessment of the scope, cost, and schedule of the owner's program. It strikes me as a really effective use of the team's resources and a really good check of the owner's expectations for scope, cost, and schedule on a project. Yeah, absolutely.

One thing that you mentioned to me is that there are cities in Canada that may have sustainability goals that they're hoping to reach, and that's a justification for going down this verification period contract. Could you tell me a little bit more about how that works? So what the municipalities up in Canada have done is they've been a little bit creative about the way they find their way through what I call the procurement thicket. As a public owner, you're typically shackled to a set of procurement laws and regulations that require you to obtain hard bids from entities that are proposing to deliver a built asset to you.

The federal Canadian government has put forth some what I would call green requirements, some requirements that public entities that utilize federal funds on projects try to deliver those projects in what they call a green environment. Low carbon footprint, high energy efficiency generally try to comply with some of the requirements of a green project. I would rather use the term smart built asset than green assets or that kind of stuff, because to me a smart built asset is one that balances the requirements of what I call Kermit green, which is the feel good, let's be green for the environment, against what I call Benjamin green, which is your financial reality.

That's what a smart built asset is, is one that balances the requirements of the environment against the realities of your economic restrictions. And so the municipalities up in Canada looked at the green requirements and they looked at the existing rules and regulations that shackled them to a hard bid, design, bid build process, which we all know to be woefully inefficient. And they said, look, if I'm going to deliver smart built assets that both environmentally sustainable and economically sustainable, we can't do that under the old design, bid build delivery model.

We have to have a more modern delivery process. And so what they have done is they've worked closely with their attorneys who advise their city councils in some of these smaller jurisdictions, Oakville and the city of Erie, for example, which are both suburbs of Toronto, they have come up with a procurement ordinance that basically says we're going to procure our built assets from integrated teams because that's the only way that we can be both environmentally and economically sustainable. And so they've passed that local ordinance and they've authorized themselves to procure built assets from integrated teams.

They are doing a really good job of it. Several projects that I've been involved up there have been very successful. I think that is a model that U.S. jurisdictions ought to find a way to adopt and adapt to our existing laws and regulations because finding a path through the thicket is really one of the challenges that we have and finding a way through the regulatory and statutory red tape and achieving the delivery of truly smart built assets on behalf of owners, especially in the public sector, is something that we really need to do.

I mean, a lot of people who listen to the podcast have probably heard me say, I've worked in the public sector as a consultant and I've had interesting and growing experiences I'll say it that way. I am very familiar with the desire to be able to point the finger, therefore having the ability to say, okay, we're going to come back to the architect and say we can charge for errors and emissions and then going back to the contractor and say, okay, well, you're at fault here, whatever the case might be.

I think that's something that not just public agencies, but the industry on a whole, we're used to going about business that way. And it's really exciting to hear that municipalities are understanding that the collaboration is that much more important in order to get the job done. What are you calling smart assets or sustainable or energy efficient or reduced carbon, however you want to describe it, it makes a lot of sense to do more collaboration all throughout the project in order to achieve your goal. You're saving dollars, like you mentioned at the end.

There's no one who can really argue something that should not take place on a project. Right. And if you utilize good integrated project delivery principles on the front end of your project as an owner, you're going to wind up with a highly qualified team that is capable of delivering that built asset to you along with a robust digital asset that will enable you to manage it intelligently over time. And if you write the legal agreements properly, you can align the interests of all the parties. The thing about good IPD is that it allows you to contract for the behavior and the results that we all say we want in the built environment.

The reality is, is that we're always contracting for something else. In the early of my career, I litigated a wide array of cases. I did some products ability cases. I did some pharmaceutical defense. We pursued claims on behalf of some plaintiffs that were terribly burned in fires.

And in a lot of the litigation that I handled, I was always able to find a really good engineering firm that could create a possible model of the thing that broke or failed in the product's liability arena. And then I also was exposed to some really high end fire science models that showed how fires progressed through structures. And I began to ask in my regular construction cases, hey, where's my model? You know, why can't I get something that I can use to communicate the failure mechanism of this particular dispute to a jury so that they understand what went wrong?

I was told, oh, well, we have to do things in a 2D environment. This is the way we've always done it. I bet nobody's ever heard that in the built environment before. I was like, dude, I know that you can do this because I've seen it over here in this other realm. So let's talk a little bit about BIM and how that relates to the digital asset that you're referring to.

You got into BIM consulting and IPD. But what got you interested into the digital side? Well, I was in the early 90s. In the built environment, you did not receive a model of your facility. And you certainly didn't enjoy access to a fly-through 3D model that you could utilize the way we see it done environments today.

And by contrast, over in my other world, when I was litigating product's liability claims, they were bringing me pretty decent models. Then again, I also saw some really high-end fire recreation models done in some very interesting software tools that were very effective at showing how a fire progressed through a structure based on fire science analysis. They did some recreations that were very effective. Armed with all that knowledge, I began to cast about and try to find something that would work in the built environment. I very quickly came up on BIM as it stood in the early 90s.

I also came across Will Lichtig and his efforts on behalf of Sutter Health out in California to put a new legal framework in place. I thought that those two tools combined were exactly what we ought to be doing for all of our clients in the built environment. Not just owners, but designers and constructors and trades. I thought that everybody would get on board right away and say, oh, this is the greatest thing since sliced bread. But apparently people in the legal realm are not very interested in taking the golden goose that is litigation out behind the barn and chopping its head off.

Man, there are a lot of people in construction that are interested as well. As you can tell, BIM is still taking a lot of time to get adopted. A lot of architects are hesitant to transition to a new software. It's really interesting what's taking place. In defense of the architects, the design professionals are tasked with adopting this new business process, the new business model, and thinking about it entails expense.

They have to spend money on software, spend money on new upgraded hardware, and then spend money training their personnel to deliver pretty high-end product on that new set of software tools. By contrast, over in the general contracting world, really good BIM, doing good VDC essentially allows you to stack the change order deck in your favor if you receive a set of really crappy 2D drawings from the architect. Everybody seems to be proceeding with the understanding that this is a great way to continue our waste-based business models and we can continue to solve problems and never really deploy BIM and IPD in a full-on integrated environment where a collaborative team works to put all these tools to work, but we'll just all continue to operate out of our silos and to milk the system for more than we have in the past.

As much as I'd love to continue the conversation about our beloved waste-based system, I'd like to transition here about blockchain. We had a lawyer on a past podcast who talked about how blockchain is giving faster access to justice, and I think it dovetails really well from the BIM conversation, but I'd like to know what your perspective is on that. It seems like you've been adopting different ways to learn how we can get to that faster access to justice. How can you get your BIM model so you can review about FHIR or whatever it is?

It seems like you continuously throughout your career have been looking at that. Yeah, I think that's a good way to put it. I had not heard it put exactly that way before, but in my experience litigating in the construction realm extensively for 20 years, plus a good bit of plaintiff's work and then some defense of pharmaceutical claims, claims against pharmaceutical companies for drug problems and the like. First of all, there's a statistic out there that everybody should be aware of. Over 98% of all lawsuits that are filed are settled before they go to trial.

Everybody wants to be a Perry Mason, but you don't get to do much Perry Masoning as an attorney because cases don't make it to trial. The reason cases don't make it to trial is because there are very sophisticated players who are involved in litigation who look at the risks. Once you understand your risks, the only way a case really goes to trial is if somebody miscalculates. Again, somebody has to be drunk on their own whiskey one way or the other, either thinking they're going to escape liability or thinking they're going to hit a home run ball in order to go try a case because invariably some offers are exchanged prior to trial that make it very uncomfortable for you to move forward.

Now, of course, there's cases that are dismissed through summary judgment and defendants escape liability in a variety of other ways. Once you've been through the discovery process, the key to settling any piece of litigation is knowing what your risks are. If you utilize BILM properly in the built environment, there's no reason for people who are involved in construction disputes not to know their risk because you're going to have all 52 cards turned up face up on the table. It's like playing poker with a seven-year-old cousin and everybody turns their cards up and you continue to bet the pot.

Everybody knows exactly what's going to happen. That's the way litigation is in a fully transparent environment. That's one of the things that's always really attracted me to the BILM tools is that this is going to give us a chance to resolve differences much more quickly and much more effectively and much more fairly because there's not going to be any hiding of the ball. When I began to hear about blockchain, the software protocol that underpins Bitcoin and all of that, I was very intrigued because the three key characteristics of the blockchain are that it provides you with an immutable record that is transparent and all parties get to see that record and it's highly secure.

If I can have an immutable record that's highly transparent and I can stand up a blockchain for a specific project, then I can do all kinds of very interesting things in that environment to the benefit of the project and to the detriment of the waste-based delivery models, the waste-based business models. It will force everybody who's involved in that project to adopt value-add business models in order to earn a profit rather than trying to extract their profit from a waste stream because there's going to be a very transparent knowledge on the part of all players as to where the waste lies and there's going to be a concerted effort to eliminate that waste.

That's an overarching concern of good IPD agreements. If you're going to contract for the delivery of a built asset and you want it to be a value-add effort, then you want everybody involved to have their interests aligned and be pulling the wagon in the same direction. The direction you're pulling the wagon is towards the addition of more value. You're going to avoid the elements of our broken-built culture, good BIM and good blockchain environments where everything's transparent. You're no longer going to have to resolve differences through adversarial actions because the disputes that arise are going to be resolved because everybody knows their risk right away.

In addition to that, the interests of the parties are aligned and you're going to have a far less likelihood of becoming adversarial to begin with because you're pursuing collaboration. Then finally, those two factors enhance trust. Our problem in the built industry is that we contract for people to participate in projects in silos to resolve their differences through adversarial conduct and those encourage mistrust. Nobody trusts anybody else. Well, those are all direct products of the legal agreements that we sign.

You get exactly what you contract for and we contract for silos, adversarial conduct and mistrust. We're shocked. Put your shock face on. We get more of it. That is so true.

I have been doing a number of podcasts around obviously the topic of blockchain because I see a lot of what you are seeing and the capability of intersecting blockchain with contracts obviously because of the smart contract capability of many of the distributed ledger technologies that are out there. But there are a couple and I wanted to just ask you what DLTs do you think right now are available that could potentially help us with this problem? I guess the first thing we should do is sort of lay the groundwork for why distributed ledger technology would be so powerful in the built environment.

And it goes back to that issue of transparency of the information that flows through the environment. Over in the UK, they've mandated the use of Belm on all projects worth more than five million pounds. And that mandate came down in 2016. And one of the things that accompanied the mandate was a request that the industry identify the common data environment within which projects were delivered. I really kind of fixated on that idea of a common data environment because that resonates so strongly with me with respect to my mantra about knowing what your risks are and being able to turn the cards on the table face up.

And this is also something that Kimono Numa has been a huge advocate of over the last number of years. And the tools and processes that he uses in the Numa planning system really do a great job of hoovering up data that flows through the built environment and putting it in a useful format in the Numa planning system. So that, I think, is the first thing that we need to kind of acknowledge is that you probably heard the phrase, data is the new oil. That is very true in the built environment.

There's an ocean of data out there and a very large percentage of that ocean is going to flow through the built environment. And if it is a common data environment where all that data is easily searchable and easily transacted, then we can write all kinds of interesting apps that can mine that data and leverage it to our advantage. But our existing set of BIM tools and processes are not designed that way. They're designed as secret sauce and everybody wants to get you on their platform. And that's what we see with tech giants as well.

Facebook wants you on their platform. Google wants you on their platform. LinkedIn wants you on their platform. The beauty of blockchain is that it's going to put us back in charge of our own data, put us in charge of our own privacy. And in the built environment, it's going to cause the common data environment to have data flowing through it that can be mined and utilized by blockchain as a service type tools on an as needed basis.

And I just find that terribly exciting. And I do too. I think that's something that in general projects we need to be more aware of. I want to really dig into the specific DLTs. I've talked with a couple of blockchain protocol founders to this point, and it seems like there's a lot of opportunity.

But from your legal perspective, what are your thoughts? Being able to write a smart contract on the blockchain is very intriguing. In fact, that was the very first task we undertook when I became the chair of the Cincinnati Chapter of the International Blockchain Real Estate Association. Our very first meeting, we set the audacious goal of writing a smart contract on a blockchain to sell a pencil. And since none of us could write code on the blockchain, we failed miserably.

But the idea that we are going to have the ability to provide some really careful parameters for the duties, rights and responsibilities of parties in a blockchain environment lends itself to the crafting of a legally integrated agreement. Because clarity with respect to rights, duties and responsibilities in the legal realm is one of the keys to good contracts. And people will say in the context of neighbors and neighborly relations, good fences make good neighbors. Well, good contracts make good projects. Good projects make good teammates because you know what's expected of you.

And I like that about the blockchain environment and where we're headed with that. That all being said, I think there are huge challenges ahead of us to bridge the gap between the blockchain and our physical world. It's one thing to contract for some digital assets, storage space on the web or, you know, P3 and pay for it with a cryptocurrency and consummate that exchange all in the digital world where code and software control the entire realm. But the real physical world is a lot messier than that.

Physical failures in the real world, especially in the construction realm. And you can't expect the same level of precision with respect to contracts that are executed in the built environment that reach out and touch that physical world, as you can expect with smart contracts that are written on a blockchain and executed purely by the code. So I think there's some challenges there, but I also think that they're going to be overcome and we're going to see some amazing results of marrying the blockchain and that immutable, secure, transparent record of who owns what, where, when to our legal framework and what's going on in the real world.

I can see, for instance, at this point, we will have released the podcast about flurring DB and the database approach, similar to how we track a lot of database information. From a legal perspective, what are your thoughts about that particular DLT? And I know that we also spoke about Sweetbridge as well. From your perspective, where do you see these DLTs fitting in? The idea of leveraging graph-oriented databases that act much more like neural networks and go retrieve data, kind of the way we retrieve memories in our mind, is absolutely fascinating to me.

I think from a legal perspective, the ability to have a graph-style database that enables time travel, which is what flurry DB, which you mentioned, does, that flurry DB database stack that they're working on purports to allow you to set a time clock in the upper right-hand corner of your screen and go back in time to the state of the database at a given moment in time. Now, let's just think about that for a moment in light of what I was saying earlier about turning all 52 cards face up on the table in a litigation scenario.

So if we can go back in time through a database that has all of the data associated with a particular project held in it, and let's further assume that we are doing full-blown, sophisticated, what I call integrated BIM and not federated BIM, which is really Frankenstein BIM. If we have an integrated BIM that is being recorded in a flurry DB-style database so that we can go back to the week in question and we can download everything associated with that project at that moment in time, then we will resolve differences with lightning speed compared to the way we do it now.

Today, you typically write a $100,000 budget for all six or seven players involved in a major construction dispute, and you spend about 18 months to two years in the discovery phase. That's also interspersed with some fighting among the insurance companies who sue their own insureds trying to get out of coverage and then sue each other over whose coverage is called on first. At the end of three or four years of litigation and several million dollars in attorney's fees, cases get resolved. Something like a flurry DB database that allows you to travel back in time and select that exact week that is in dispute, it would be an incredible resource from just a litigation perspective.

I'm keenly interested in seeing what we can do with that data if we all then begin to share that data in a low-cost manner with PhD students at the Center for Integrated Facilities Engineering out of Stanford or the ones involved in integrated project delivery at Penn State University or people over at Middlesex University where they have a very strong BIM strategy program. There are opportunities here to provide students and professors and the industry with access that's going to allow us to do data projects of all stripes.

The way the flurry DB data stack is contemplated as I understand it from listening to Philip Filipowski and Brian Platts describe it, I think it's an incredible tool. Yeah, I really agree with the perspective of being able to use the data. It goes back to that open source comment that you made before, but it also can help us to identify standards of approach. What it does is it allows, like you said, those institutions who are able to do the research and analysis and identify some really awesome findings on how things can be iterated in a better way to make improvements.

Yeah, I mean, from an industry perspective, as an industry research tool, that's something that the built environment generally has not done well and construction has dropped the ball further and harder than even the rest of the built environment has on R&D. There is no research and development in construction. We are firefighters. We race from one failed project to the next. And the stars, the all stars with any general contracting firm or even with lots of trades and subs and suppliers, the all stars are the people who can go solve a problem.

And that's what the built industry does. We solve problems because we procure and deliver built assets under one of the most antiquated procurement models on earth, design, bid, build. We're guaranteed to have lots of problems. And so everybody is constantly fighting fires. You could put an average fifth grader in an ono circle on any construction project in the country and they could identify a thousand problems a day for somebody to solve.

But we don't need to solve more problems in the built environment. We need a system fix. We need a new legal and regulatory framework that allows us to procure, plan, design, construct, operate and maintain smart built assets intelligently over time. You talked about containing assets. We talked with Sweetbridge about asset management and liquidity.

That was a really fun conversation with Scott Nelson. But I also wanted to hear your perspective on that as well. What are your thoughts about how that could be integrated into contracts and how could that impact the different parties that are involved? If Sweetbridge accomplishes even a tiny portion of what they have set as their audacious goal, which is to put the $54 trillion global supply chain on the blockchain, it will be incredible. When I use the term bridging, this is exactly what I was thinking about is how do we take smart contracts that are written on the blockchain and connect those to real world assets?

Sweetbridge has a very elegant and simple solution to that problem. They just stand up the assets on the blockchain, connect those physical world assets to the blockchain and allow the owners of those assets to borrow against their own assets at no interest. Interest free lending on a global scale based on existing assets. That's an incredible idea. Now, I think where Sweetbridge is going to encounter significant difficulties is when it comes time to foreclose on those assets and seize them and sell them.

Their blockchain process needs to have legal teeth. I think they get that. You can see that they're standing up enterprises in all the key states and they're entering into relationships, alliances with law firms in those states. They're taking that issue very seriously and I think it won't be pretty or be a pretty messy process, but I think they're going to get that figured out. When they do, it's going to be Katie bar the door on the whole entire universe of everything.

It's going to blow up every paradigm we've thought about in the past. What I want to do with Sweetbridge is give them title to my $700 Ford Bestiva. I want to borrow the money against it and pay it back and then I want to borrow the money against it and then not pay it back. Challenge them to come and repossess it in Kentucky. If you can come take my Bestiva and sell title to it on the Sweetbridge platform, then you're golden, man.

What year is that Bestiva, James? I mean, come on. It's a little older. I might throw the Toyota Echo up there. It's only got about 280,000 miles on it.

I'm not quite at 200 with my Honda Civic, but it's getting up there. Hey, I might do the same thing and test it out when I can. That would be quite a fun project. I think what they are working towards is a huge endeavor and it can really change how people utilize their assets right now to be able to invest in future capital projects, existing renovations, things like that. And even from the general contractor perspective, I mean, you can borrow against owned equipment, things like that, in order to actually invest in the future.

Things like that in order to actually invest into the beginning portion of your project. If you need any upfront work, cover overhead, things like that in a pinch where you know you're going to get payments to be covered. You know, they're not talking about ripping the system out by the roots and throwing away another certain aspects of our regulatory environment that puts the bootjack of government regulation on the neck of the golden goose of innovation. I feel need to be ripped out by the roots, but they're very conciliatory towards existing regulation and existing law.

And they're simply saying, hey, we have a better mousetrap here and everybody's going to like it. You just need to come alongside us and test it. And as a governmental entity, you're going to like it. As a private entity, you're going to like it. And we're going to come up with the required enforcement mechanisms to satisfy the concerns that have heretofore existed with respect to the inability to foreclose on assets in the digital realm.

I totally agree. Any other thoughts about different DLTs that we haven't discussed thus far and how they could potentially be integrated into contracts? Well, I think that existing blockchain platforms have run up against two big constraints. So both Bitcoin and Ethereum have run up against these two constraints, and neither one of them have solved the problem yet. And that is throughput is just too slow to compete with something like Visa that processes hundreds of thousands of transactions per second.

And the cost of reaching consensus is just too high. And that in turn drives your storage costs through the roof. And I think that FlurryDB is well on their way to solving the storage problem. And then another distributed ledger technology that's been stood up that I think has some real potential value, especially in the private blockchain arena. I know that my anarchist and libertarian friends want everything to be a public blockchain and keep it all completely public.

I don't think that's realistic. I think that, yeah, you're always going to have Bitcoin. You're always going to have something like Ethereum that is, you know, that someone who lives in a brutal regime where they are trying to escape with some assets, can put some assets. But I think that blockchain as a service is the future. And what we're going to see is technology stacks that enable much more nimble databases like FlurryDB and others.

They may not get it right. They may fall on their face for all I know. But somebody's going to get that right. Somebody's going to get the hash-oriented databases right. And the other entity to keep an eye on, I think, is swirls.com.

It's short for Shared Worlds. And it's hashgraph is the other piece of the puzzle. Lehman Baird is the math mind behind the hashgraph technology that they're proposing. And hashgraph, what it does, there are several of these, what they call distributed asynchronous graphs that purport to solve the consensus problem in a much more effective way than proof of work or proof of stake has done to date. And the problem, of course, with the hashgraph approach is that your hashgraph pretty quickly can get way too wide and become very inefficient.

But there's kind of a Goldilocks range there where it's not too wide and not too narrow. And it's secure enough. And I'll say this for Ethereum, Bitcoin, Dash, Hashgraph, any of these blockchain environments, they're 9,000 times more secure than the yahoos of the world who puke up our data all the time to hackers. Are some of these blockchains subject to hacks? Of course they are.

I mean, nothing is unhackable. But a lot of these blockchains have something. If it's not Byzantine fault tolerant or BAFT, Byzantine asynchronous fault tolerant, if they're not fully there, they're pretty darn close. They're very, very secure compared to what we have now. Now, are they going to withstand quantum computing efforts in the future to hack them or 9,000 IBM Watson turned on them at once?

Maybe not. But again, it's way better than what we've got. And I think these DAGs, these distributed asynchronous graphs, are a step in the right direction. And the other piece of the puzzle that Hashgraph brings is this Swirlds idea, the shared worlds. They've stood up a very interesting blockchain platform where they intend to share worlds and allow the participants to create chats online and have online worlds.

And I can see project specific worlds created on that platform that lean on or leverage the database technology that somebody like FlurryDB is coming up with. And then they all write smart contracts on the Sweetbridge platform. I can see those three tools coming together to form a very powerful shared blockchain as a service oriented environment on the web that allows us to stand up a project specific team and put $100 million in an escrow, convert that into a cryptocurrency or a token that's project specific. And then we can track immutably, securely, and transparently all of our transactions in that environment as a team.

We can have smart contracts that are tied to equipment. We can have smart contracts that enable real liens in the real world by trades and suppliers who deliver goods and services and don't get paid. You have all the teeth of the real legal framework at your disposal. But because you're operating in this immutable, transparent, and secure environment and everybody's entered into integrated agreements where we've aligned our interests much more effectively, I just see that kind of an environment working really, really well for the creation and delivery of built assets in the future.

I'm just dancing over here. I see the opportunity. I love how your brain works. Putting all the pieces together there. I think it's an exciting time.

To transition a little bit, I mentioned you are the executive director of the American Subcontractor Association. And I wanted to learn about what you're doing there. What are your goals? And how does blockchain tie into that, I guess? Just curious.

When you're trying to get some of your people in the built environment to give up their fax machines and move to email, it's daunting to then suggest that they jump on the blockchain. But my philosophy on all that is that we have the opportunity in the built environment to make a strategic and grand leap forward in much the way that the African countries have made a really dynamic leap forward in their banking practices because they're not shackled to a bunch of old school processes. In this particular instance, I think that the built industries, recalcitrants, may actually serve them well.

There is an opportunity to leap straight over a whole bunch of less than perfect software tools and processes and land in the deep end of the blockchain pool if anybody wants to. What I'm doing with the American Subcontractor Association, our message to our members is that, look, we're here to advocate that you get paid on time and that you get treated fairly by the general contracting community and by the owners who are paying for the built assets that you're delivering. You know, each one of these trades or subcontractors is delivering a specific scope of work on a major project.

And if you really want to have leverage as subcontractors and suppliers, those are primarily our members, then don't abdicate your place at the table in an integrated project delivery environment. Seize the opportunity to get to the table and participate substantively in that process. And so, in addition to our traditional advocacy efforts, you know, to try and get the lien laws improved and to get pay when paid clauses eliminated or at least ameliorated in contracts and all those kinds of things which are to the benefit of the trade contractors and the suppliers.

We're also looking to introduce our members to the benefits of integrated project delivery, encourage some of our smaller trades to adopt or at least learn how to play in the BIM sandbox. A lot of the big MEP contractors and steel contractors already do a lot of good BIM, but they all do it kind of the way general contractors do, sort of back behind the curtain for their own benefit. There's a lot of recreating the wheel. People take existing BIM or existing 2D models or 2D drawings and convert them back behind the curtain for their own benefit rather than coming together as an integrated team and creating that integrated BIM.

You know, I think I mentioned earlier there's way too much Frankenstein BIM. Then there's a lot of Humpty Dumpty BIM that we toss over the wall to owners and it breaks into a thousand pieces and the owner can't really use the digital asset that got delivered because they don't have all the software packages. They don't have a Revit license or a Bentley license or a Tecla license. So my goal is to have my members understand how BIM and IPD work and be prepared to play in that sandbox and compete in the digital construction environment.

I mean, even clients that I'm working with, they are asking for both AutoCAD and Revit files, even if they don't have the Revit software yet, just in case, in order for them to have the as-built so that they can go into the software and check where things are located in their built environment. If ever they have to go and service something in particular, they want to have access to it. I think it's really important what you're doing to bring awareness to the different requirements, but from their perspective, how it can benefit them in the long run, I'm sure how it can keep them marketable as well.

Well, I think too many people in the built industry are building sandcastles on the beach and the tsunami of change is building and coming and they're going to be sitting there with sandcastles on the beach when the tsunami hits the beach. I don't want my members at ASA to be in that beach. I want them in a boat paddling out towards the tsunami instead of sitting on the beach. That's the only way to survive a tsunami is to get far enough out into the ocean to have it pass under you as a swell instead of being a wave that crashes into your world.

That's a great way to put it. Thank anyone who's working to build that awareness in whatever segment of the industry that they can speak to. Those are the things that are going to actually allow us to move forward. One more thing about the contracts. I mentioned that you get what you contract for.

And so if you want integrated teams that are collaborative and trust-based, you should contract for that. If owners want useful data that they can use to operate and maintain and manage their facilities, their built assets, then they ought to contract for that. They ought to work closely with their general contractors, their trades, the suppliers, and the design professionals and say to them, this is the universe of data that I really need in order to be able to operate and maintain my built asset intelligently and efficiently.

As milestones are reached and as this data comes in, please provide that data to my operations and maintenance personnel so they can do their job better. Owners don't need the whole bill. They don't need all of that. Who cares about the steel connections and all that? That's never going to be an issue unless somebody made a terrible mistake and it collapses.

And we can go back and look at that data separately. But the owner needs to know dimensions. The owner needs to know life expectancies of major systems and components. There's other data that the owner needs, some of which may come from manufacturers. And maybe we need to read all the way back through with that delivery contract.

What's your BIM deliverable? BIM deliverable might be from the manufacturer that comes all the way to the owner. And nobody in between really cares about that, but the owner does. And that's the beauty of the common data environment in the blockchain is that we will be able to have a much more, the way the guys at Sweetbridge describe it as a frictionless environment in which we facilitate these exchanges of information. We've been talking for a long time about utilizing BIM in order to support the life cycle of the building.

Say if there are any maintenance schedules, walk up to a piece of equipment within your augmented reality. If it's on your laptop, have a headset on or whatever the case might be, you can just literally scroll down and look at that particular device and know exactly what and when and how to deal with that. So I mean, I think that owners are looking for that capability. And you hit it right on the money. To have that integrated into the contractual language way up front is super valuable.

And it's helpful to communicate that all the way through. As an owner, your built asset is only a part of your business enterprise. Sometimes it's an absolutely critical part. If you're Toyota or Proctor Gamble or GE or Boeing, the manufacturing facility in which you produce your product is a core element of your business model. Other businesses, a law firm or an accounting firm or a sales group, they do not typically treat their office space as a core part of their business model because they don't view that built asset as being particularly critical to the delivery of their product or their service.

In certain instances, that can be even far less important to your enterprise. The business purpose of the built asset is something that is of critical importance. And the owner needs to understand that. And they need to work closely with the integrated team that's going to plan, design, construct and deliver that built asset to that owner. We need to have an understanding of what the business purpose of that built asset is.

I tell my hospital clients, you know, the purpose of the built asset is to not kill people. That would have been one of your big goals, not to kill your patients. So don't build a hospital that can get infected with mold or catch Legionnaires disease. The business operations people in the hospital and healthcare realm get that. The business purpose of a casino is to separate your clients from their money.

They've got that business model down to an art. Well, and keep them there as long as you possibly can in order for you to take as much money as you possibly can. There are actual disputes and kind of a clashing between the operators of the casinos and the fire department because fire departments want you to be able to see the exit. The casino operator doesn't want you to be able to find the exit at any time of day or night. So the business purpose of the asset is a really critical piece of the puzzle from the owner's perspective.

We often overlook that. Well, and I think that's something that we talk about quite a bit just because the Constructor Podcast is focused on the owner's perspective and helping them get the best benefit out of their built environment for the purposes of their business. Whoever the end user is in their space to be as functional as possible. So I know you hit the nail on the head. I do have one last question for you as it relates to ASA.

I wanted to find out if you had heard about RISO, the Real Estate Standards Organization. It's actually sharing industry standards in a common data environment. And they're planning on doing that through the blockchain. I'm curious as to your thought process on that. I actually spoke with the NAR about that.

Wanted to pick your brain on how that could be applied here in the built environment. I'm going to present in Naples, Florida on behalf of Cottrell Title. We're going to conduct the event in the local Real Estate Association office space. The topic is construction and the blockchain and how the real estate industry, what they can do to facilitate the use of blockchain platforms in order to help all of the stakeholders involved in real estate transactions. Not only transfer title to real property on the blockchain, which is a focus of the International Blockchain Real Estate Association, but also to stand up the initial component piece of the creation of a built asset.

Because when you sell a raw piece of land, one of the most important things about construction is build the built asset in the right place. We've all had cases in our careers where somebody built it in the wrong place and you end up having to beg for an easement or tear down a part of what had been built in the wrong place. So the real estate industry has a vested interest in figuring out how to leverage blockchain as a service for title companies, for real estate agents, for all their clients, and then ultimately for the developers and that they work with municipalities and government entities.

Everybody touches real estate one way or another. By the time we release it, if you guys have a YouTube video or something like that, we'd love to link that to this podcast just so that people continue to build that awareness there. Yeah, I'll let the guys know that there's an opportunity to link back to this podcast. The Kotrol title is a member of the blockchain real estate association and they're keenly interested in figuring all this stuff out. I wanted to give you an opportunity to share what are the best ways to contact you and for people to learn more about what you're up to.

The best thing is just to shoot me an email or give me a call. My email address is [email address removed]. All one word, just [email address removed]. Salmon's spelled like the fish. Salmon.

My phone number. Heck, I'll just give everybody my cell number. I can remember that one. [phone number removed]. I don't have enough haters in the world yet.

Now with that, James, this has been awesome. This has been a great discussion. It's always fun talking with you and you really get my wheels turning. And I love all the Texas-isms that you come up with. Thanks for being on the podcast with me today.

Thank you, Brittany. Been fun. I'll reach you next time I'm in Chicago. Thanks for listening to this interview with James Salmon. Find out more about what James is up to at constructor.com slash ep 75.

If you learned something valuable in this episode, share it with your friends and colleagues. You can also let me know if you enjoyed the discussion by connecting with me on Twitter at Brittany underscore CT or find me on LinkedIn. Or you can just email me at Brittany at constructor.com. That's BRITT. Next week, we will be speaking with Thomas Cox, a lean leadership coach and practitioner who found himself really interested in blockchain.

He has focused his efforts in the governance aspect of blockchain because of the influence that it has in relationships, resources, and collaboration. Ironically, he ran for governor and he has a unique view on leadership lean and blockchain. He brought in a lot of people to the blockchain community. And he has a unique view on leadership lean and blockchain. He brings experience in these three areas.

He sees the intersection of these components working together so that an organizational culture can be created and sustained. I look forward to sharing this interview with you guys next week. If you haven't already subscribed to the podcast, you can do so at your preferred podcast player. Please leave a review to show your support and let me know you're enjoying the podcast. I look forward to talking with you guys next week.

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