Transcript: How to Reduce Risk by Leveraging an Engineering Cooperative

It's really interesting that Jackie Hinman, who was the CEO of CH2M, mentioned something very interesting two years ago at an innovation meeting that I attended. She pointed out that the biggest existential threats to CH2M and to any AAC incumbent is that it might be disrupted by some way of reorganizing engineering and architectural talent that decentralizes it. And of course, everybody was watching what Uber was doing with the taxi industry at that time. Of all the technologies that have the potential for disruption in the AAC, EPC space, we don't pay a lot of attention to blockchain because we think of it as just data management technology, which is partly true.

There's no question about that. The transparency, the open data structure, the consolidation of data is going to be a big boon for supply chain management of all kinds, not just consumer goods, but construction materials, intermodal transfer, and even human resources as well. You can apply supply chain to skill sets in a novel way using blockchain technology. As I mentioned, we usually think of AI, virtual reality, drones. They're going to make us more efficient, but they're not going to have the power to reorient the very stuff that we are made of, which is people.

Jacobs Engineering and AECOM and WSP, Arup, they are all professional services organizations. They rely on people to the extent that talent is difficult to get. That's one of the biggest issues among design firms and the industry as a whole is the shortage of the right skill sets and qualified staff. So you have to look at the power of blockchain. It's not really about technology.

It's about the incentivization of behavior changes in a gig economy. It may have more to do with management science and how people work just because of the way it reorients trust and payment. If you talk about it like a strategist, really as a futurist, you got to get away just from this talk of consolidation as being your strategy. Yes, it's important, but that's really a ground level strategy. A higher level strategy is to understand that in an exponentially changing world, especially one in which blockchain is present and has the power to incentivize people to work in a different way, you got to look at it.

Blockchain has the potential to reorganize engineering resources in a shared, disintermediated, distributed and decentralized way. Our most precious resource, our human capital, will be able to cross new thresholds which identify how they get paid and how they interact economically. Hello and welcome to the Constructor Podcast, the best way to build it, episode number 88. I'm your host, Brittany Campbell-Turner, and 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.

For the last five weeks, we've been talking about how to disrupt ourselves in the built environment. We've spoken with a couple of software companies, technology companies, startup companies, some blockchain based, some not, but we talked about how they found a frustration, they found a pain, they found a solution in order to impact the built environment. A couple of the topics that we covered were making offers in real estate more quickly and tracking that more effectively. We talked about ecological sustainability and how that impacts the built environment, doing a more effective approach to maintaining as-built records, digitizing the last planner method, and last but not least, integrating BIM or design in a marketplace.

If you haven't heard from these disrupting companies yet, learn about them at constructor.com slash ep83 to constructor.com slash ep87. This week, I've invited Thomas Wendling. He is an advisor to the Integrated Engineering Blockchain Consortium. He's a professional systems engineer at Jacobs Engineering and a co-founder at Co-Engineers, a blockchain engineering platform cooperative. We actually spoke with Dan Robles from the Integrated Engineering Blockchain Consortium back in March.

You can check out that episode at constructor.com slash ep66. He's the one who actually birthed the idea of having an engineering resume of sorts that promotes further training to fill the skill gap and reduce the risk on engineering design. So I've actually met Thomas through the IEBC, which Dan speaks extensively about, and we're actually working together to contribute to Co-Engineers, a blockchain engineering platform cooperative. In this episode, Thomas and I actually discussed what Co-Engineers is meant to do and how it is meant to really be a network to measure that intrinsic value of a person, of an engineer, thus reducing risk for engineering solutions and building a network of reliable engineers.

We also talk about the economic value model that can help reduce risk by understanding the intrinsic value of a person who has a skill regardless of their background. Before we dig into Co-Engineers or Co-Eng for short, Thomas and I talk about what he's been doing in his career with Jacobs, the current state of infrastructure and the notion of obsolescence in physical or capital property or assets. We talk about what happens when a property exists for longer than its intended life and less maintenance than ideal. So lots of interesting things to get into.

So with that, let's get into the interview. So today we are speaking with Thomas Wenling from Jacobs Engineering and an advisor to the Integrated Engineering Blockchain Consortium. Welcome to the Constructor Podcast, Thomas. Hi, Brittany. Thank you so much for having me on your show.

Yeah, I'm happy to have you on. I'd like you to share a little bit about yourself and your engineering journey and a little bit about how you've gotten to this point. Well, a little bit about myself. I came actually to the engineering profession kind of late. I started engineering and got my PE license already when I was in my 30s.

And I'm a physicist originally, and I've also dabbled in actuarial science as well. Done a variety of things over my career. I've been an international sales manager. I've been a systems engineer. Now I'm working toward Jacobs Engineering.

We can really kind of jump right into what you're doing at Jacobs Engineering. I mean, you deal with infrastructure or asset management, if you will. And please correct me, but how does that quite work? I'm working in the O&M platform, which is operations and maintenance of facilities, wastewater treatment plants, military utilities. It's a pretty interesting activity.

Normally when you think of engineering firms and the AEC space, you think of design, you think of construction, think of some unique offerings like program management and design build and DBO and different delivery methods. My part of it that I've specialized in at Jacobs has been in O&M. So that's the background that I come from. And a lot of that is, as you said, asset management. When you're taking over a facility or a whole complex, a military base, for example, you have thousands of miles of underground piping for sewage, water, fiber optic.

You can have water treatment plants, standby generators, all kinds of facilities that you need to maintain, but you also need to understand when they have to be replaced. Sometimes contracts that can last five decades. I can't imagine five decades. I mean, that's a turnover of how many people. I know, right?

Yeah. Yeah, on that contract. And that information transfer has to really be understood well about what the asset really looks like, what functionality it has. And that's really interesting. So could you give us the current state of our infrastructure, at least here in the US?

I mean, globally, this is another story, but let's go ahead and start with that. It's a tough question to answer because it's actually a very political question, the state of our infrastructure. And I can give you my unique perspective, which I'm alone qualified to give because it comes from my experiences. Internationally, I've traveled and worked a lot in Latin America and Asia and in the Middle East. And it's pretty obvious that in the United States, we have a pretty well-developed state of our infrastructure.

I mean, we hear a lot about crumbling infrastructure, but the truth of the matter is we give the proper amount of attention to maintenance of our infrastructure, even though we do have occasional examples of old infrastructure causing loss costs. What I think is really interesting about infrastructure globally, not just in the US, is this whole idea that we may not be replacing it at a high enough frequency. We tend to look at capital equipment and structures, and we don't replace them frequently enough. We extend the lifespan mostly simply by holding on to things and maintaining it even in the face of technological obsolescence for decades.

So that's one thing that I've noticed, again, uniquely from my experience to comment on our infrastructure. So what do you mean by technical obsolescence? Okay, well, this is an interesting segue into a subject that something we tried at Jacobs a few years ago was to actually treat the mortality of capital equipment and structures and physical assets in general as a kind of insurable event. Investigated this pretty thoroughly with Marsh Capital Solutions and looking at the possibility of actually having a kind of an insurance offering, an insurance company that underwrites life insurance policies on physical assets like gas turbines, like bridges, IT equipment.

It's interesting that over the last century, there have been a few really great mathematical breakthroughs in industry. I mean, supply chain management is pretty much the old paradigm of optimizing inventories using queuing theory. It's operations research and industrial engineering that saw enormous success during the Second World War. And of course, today we're seeing it revisited in an information age with Amazon, with Walmart, and now with blockchain as well, opening up the whole world of supply chain again. There are other mathematical breakthroughs like, for example, route optimization is a big one that's happened over the last 15 years.

And there are other ways of looking at something called the replacement problem, which is an age old operations research problem that's never really been solved. And you also have economists who refer to this as vintage capital. That's Robert Solow's term. And the whole idea is you don't know really when to replace something, a complex physical asset like a wind turbine or gas turbine. There are ways to approach that, which are very similar to life insurance using the law of large numbers, the insurance principle, to optimize that turnover, to synchronize the mortality of capital assets with their natural mortality in a way that can free up an enormous amount of operational savings as well as the replacement capex savings.

So we're talking about a mathematical approach in new technology to actually optimize the balance of capex replacement capex versus the opportunity costs due to technological obsolescence. You may have a newer and better assets out there that uses less energy, that uses less labor, that uses less consumable materials. And you can approach this on a portfolio level, at least in theory you can, some exciting new technological developments, especially blockchain technology, which might enable this technology, this mathematical approach for the first time. Let me ask you this question in the interim, because we're definitely going to dig into the blockchain potentialities.

But let me ask you, the life insurance ideal that assets are being looked at is really interesting. I mean, before talking to you, I had no idea that the way that we approach life insurance with people could at all be approached the same way with assets. But you also said something very interesting about capital expenditure, trying to determine whether that's operational costs or whether it's something that's going to be a new investment and trying to find that timing that's right for something that has such a long life cycle.

You know, the assessment of that life cycle, it's really challenging to approach that. I'd like to understand how bad is it really, I guess. Yeah, no, that's actually, yeah, we want to know what the severity of the problem is that we claim to be addressing with this technology and with this new mathematical approach. I mean, people, they'll look at something, let's say you have a light rail transportation system, and you look at a rail car, or it could be a gas turbine at a power plant, it could be a clarifier mechanism in a water treatment plant.

They'll look at it and they'll perform ad hoc analysis. Somebody will whip out their excel and they'll create some kind of a performa and they'll do this kind of cash flow analysis and try to account for everything they possibly can. It's easy to explain to management, but it doesn't capture the portfolio effects of the rising opportunity costs of not replacing that physical asset that I just described. So when something's brand new and it's the best and the latest and greatest, it has everything, all the bells and whistles, and it's the fastest and the coolest.

It's going to have zero opportunity cost associated with it initially because it's brand new and there's nothing better out there for your buck. However, Moore's Law takes into effect. It's already becoming obsolete because somebody else came out with another product. Moore's Law, which the idea that hardware, I think, specifically is becoming obsolete at a certain pace, it's the same about anything. You can talk about high-speed blowers, industrial fans, locomotives, whatever, and including static structures too, like buildings and at the same time, capital equipment, because it's more complex as a system, tends to become obsolete far faster, especially instrumentation and control.

How long does a PLC really remain relevant? Within a decade, you've made it obsolete simply because of new stuff coming. And there, you've got opportunity costs that can be quantified by engineers, by technical experts who understand the market and those technologies very well. And these are rising costs that clock the age of something. Computer equipment ages more quickly until it reaches mortality than an emergency standby generator, a big diesel caterpillar generator.

If you maintain it, people last a long time, or a submersible bronze cast iron pump will last much longer. It doesn't really have to be replaced. It can last 50 or 60 years. And it's fully economically justified to do that. What I'm proposing and what Jacobs has been investigating, which we had to abandon the project a few years ago, but we're looking at it again because of blockchain technology, is this idea of treating it, the replacement problem or the vintage capital problem, as a portfolio problem and gathering data from similar assets, homogeneously grouped into classes that span across not just across companies, but across industry and can be approached with actuarial science much in the same way as the mortality of human lives and life tables and things like that.

Only here you can optimize the replacement decision using an open data structure that again, you can achieve through blockchain, through data that engineers generate, engineers in all the respective industries that are close to the ground, so to speak. They're almost like human sensors in a vast IoT network in a way, vectorizing data on assets, putting it into a central system and creating almost a third-party statistical survey similar to what people use in the insurance industry. Insurance companies together sharing data. And that's what this would achieve to, again, address the mortality of physical assets using a life insurance approach and balancing the capex and the opex.

What people are doing today is ad hoc looking at individual assets in isolation when in fact the math clearly shows that it's a portfolio problem that needs data combined to work. What I'm hearing from you is that we're looking at things in isolation and we're not taking the broader approach of looking at all the data and understanding even the trending that's taking place and doing that actuary analysis to really figure out the math and say, okay, well on a broader scale based upon all of these different homogeneous groups of this particular type of asset, why not approach it this way?

Because mathematically it makes sense so that you have a more collective understanding as to how you should be really managing your assets. Did I understand that clearly? Yeah, pretty much. And it is math, so it's not easy to market and to make potential users aware of it. But it takes time.

And this is also where I think blockchain comes in. It can actually make this mathematical approach, which is no different than the math behind supply chain management, no different than the math behind life insurance and things like route optimization. It can actually free up, I believe, trillions of dollars in wasted OPEX and CAPEX costs in the maintenance of aging infrastructure. And when I say maintenance, I simply mean the upkeep of it. I mean holding it, just having it.

We waste a lot in not achieving that balance perfectly. And it's a big data sort of project. It's hard to get multiple actors to work together because nobody wants to do something that only benefits the commons. It's got to benefit their personal bottom line. And I think again, blockchain will help to achieve that.

You've put out a number of articles and have been talking about this phenomenon of really applying blockchain to assets. I'd love for you to share a little bit about where people can find that information. Well, the idea was pretty much invented by actuaries. And it's a portfolio approach. I think the most traumatic thing that you can do to a physical asset in its lifespan is to replace it with another one.

The biggest thing you can do to impact its operational costs. Costs a lot. It's an expensive decision to make. That whole concept is something that if you want to really go dig deeply into the actuarial science and the mathematical principle behind it, Variance Journal, which is flagship peer-reviewed journal of the Casualty Actuarial Society, has two articles that I wrote that really describe it and show all the derivations in the most rigorous algebra that you could possibly imagine. It is actually step-by-step.

Decide yourself if you want to go into that level or not. On LinkedIn, I do publish some articles from time to time to try to describe this at a more user-friendly higher level that doesn't get into all the actuarial math. It's an idea which I'm excited about and several people at the Casualty Actuarial Society have also championed. But it's not well known yet and it's something I'm going to keep promoting and pushing. Again, I believe through blockchain, we're actually going to be able to achieve the data generation, the incentivized data generation, the open data generation necessary to actually do this.

Again, trillions of dollars in an OPEX plus replacement CAPEX savings that can be quantified. You can actually see them happening on a display in front of your eyes on a blockchain if you follow this math. Math has always had a place in our infrastructure, especially in O&M. It's a little bit different. Normally you think of asset management as balancing preventive and corrective maintenance, whereas here actually balancing the OPEX versus the replacement CAPEX, which is something that really has never been done before.

That's so interesting and I'll make sure to put the links to those articles that you've written in the show notes to those who want to get into the nitty-gritty of the math and the details there. Transitioning then into the blockchain discussion then. So Jacobs is working on this problem right now. Am I understanding that correctly? We are, but pretty much in a strategic sense.

I don't think we're really working towards any particular technological solution. We're learning as much as we can about the technology that's out there. Let me talk about Jacobs just a little bit. So Jacobs is of course a large AEC firm. It's a design engineering firm, also does construction as well.

So over the years, the strategy in the AEC EPC space has been mostly consolidation, as you well know. So we've got so many different areas from aerospace, environmental, nuclear, transportation, transport. We do O&M, as I mentioned, buildings, infrastructure, water, wastewater, oil, gas. It's a huge company, 77,000 employees. The problem with our industry, the AEC industry, as you well know, is that we were pretty much founded in a pre-war mentality that the technology that was available was blueprint machines and drafting tables.

So much has happened since the birth of our industry. And the only thing we've been doing up until now is consolidating and trying to sell the company's store to large clients, federal government, for example. We want to be as big as possible because it really is beneficial for us to get bigger and bigger. In light of the technology that's emerging, there are going to be some interesting changes. And you've got to be a strategist and you've got to be a futurist too.

So Jacobs also has an initiative called Jacobs Connected Enterprise, which is cross-cutting all these entities within the enterprise to sort of accelerate strategies around digital technology for both ourselves and on behalf of our clients. There's so much stuff coming out. I mean, there are drones, there's point cloud technology, there's virtual reality, augmented reality, BIM, and there's blockchain, which is sort of like the neglected stepchild of the whole chain of siblings that I just described. So are you the one driving the discussion, Thomas, within Jacobs about blockchain?

Pretty much. I think I've sort of gotten the mandate from JCE to have a laser focus on blockchain to explain to the company what it means, help plan our strategies around it. And the only reason I've been in this position is because of my involvement in the Integrated Engineering Blockchain Consortium, as well as this new initiative called Co-Engineers. It's been kind of like, I guess you could call it an open innovation exchange where Silicon Valley is doing this. They're inviting lots of C-suite people from major non-tech companies to come and share office space with startups, incubators, accelerators, and just soak themselves in the culture of technological innovation and creativity.

Now, blockchain is not in the world of big tech at all. It's really a bleeding, cutting edge. It's way out there. It's kind of like Palo Alto and Silicon Valley was in 1970, where people were meeting up, having hangouts, having Saturday night sort of discussions about how to build a PC and how it's going to impact the world. That's what blockchain, that's where the true innovation and brainstorming and creative juices are in blockchain.

And there hangouts on Discord, on Slack. That's where all the thinking is going on right now. I'm trying to bring that culture and also sort of a knowledge of where strategically blockchain is going to be going in the AEC, EPC space over the next five years. It's really helpful to hear that you're the one spearheading it and really socializing it at Jacobs in order for them to let you run with it, if you will, from the research standpoint and doing a little bit more building of awareness internally of the company for myself.

And also, I'm sure a lot of people listening to the podcast over the past few months, it's something that is being considered like, how do I do this? How do I communicate this? How do I make sure that people understand that this is something that is important for us to pay attention to, much less start building? So I guess I'm curious as to how you approached it. I know you said that you've been part of the Integrated Engineering Blockchain Consortium.

As am I, and we interviewed Dan Robles. I think the podcast was released a few months back. I'll put the reference in the show notes of that episode. That community is definitely growing. Just want to know what the steps were that you took within Jacobs.

I mean, it's something that those of us who are in a position to influence the status quo in our industry that wants to innovate and that has innovated in the past. They've come up with new delivery methods, new service offerings for infrastructure owners time and again. So this is another step, I think, in that direction towards greater productivity for the AAC industry, towards the ability to win more work and to help our infrastructure owning clients all the more. So how can you get an AAC firm, a conservative, risk averse, traditional institution like an AAC, EPC firm?

That's who we are. And that's part of our stability and our engineering ethics and all of that. It's served us well for over a century. But it's really interesting that Jackie Hinman, who was the CEO of CH2M, mentioned something very interesting two years ago at an innovation meeting that I attended. She pointed out that the biggest existential threats to CH2M and to any AAC incumbent is that it might be disrupted by some way of reorganizing engineering and architectural talent that decentralizes it.

And of course, everybody was watching what Uber was doing with the taxi industry at that time. And you've got Airbnb, you've got Alibaba, you've got Facebook. These are all decentralized models that share resources as well. They're not disintermediated, they're decentralized. But of all the technologies that have the potential for disruption in the AAC, EPC space, we don't pay a lot of attention to blockchain because we think of it as just data management technology, which is partly true.

There's no question about that. The transparency, the open data structure, the consolidation of data is going to be a big boon for supply chain management of all kinds, not just consumer goods, but construction materials, intermodal transfer, and even human resources as well. Skill sets. You can apply supply chain to skill sets in a novel way using blockchain technology. So this kind of technology, though, doesn't really arrive with the scariness to disrupt or transform.

So, you know, as I mentioned, we usually think of AI, virtual reality, drones, they're going to make us more efficient, but they're not going to have the power to reorient the very stuff that we are made of, which is people. Jacobs Engineering and AECOM and WSP, Arup, they are all professional services organizations. They rely on people, you know, to the extent that talent is difficult to get. And this is a problem. That's one of the biggest issues among design firms and the industry as a whole is the shortage of the right skill sets and qualified staff.

So you have to look at the power of blockchain. It's not really about technology. It's about the incentivization of behavior changes in a gig economy. It may have more to do with management science and how people work just because of the way it reorients trust and payment. The one big use case, the one big app that has impressed everyone in blockchain is Bitcoin.

I mean, it's proven that people will work very hard for tokens or cryptocurrency, and they'll spend a lot of time and energy just to earn it. So that is the phenomenon. It's got everyone excited. And again, it's a people phenomenon. It's a human phenomenon.

So if you talk about it like a strategist, as a really as a futurist, you got to get away just from this talk of consolidation as being your strategy. Yes, it's important, but that's really a ground level strategy. A higher level strategy is to understand that in an exponentially changing world, especially one in which blockchain is present and has the power to incentivize people to work in a different way, you got to look at it. There is disruption potentially on the horizon because blockchain has the potential to reorganize engineering resources in a shared, disintermediated, distributed and decentralized way.

Our most precious resource, our human capital, will be able to cross new thresholds which identify how they get paid and how they interact economically. It's a strategic point that you want to raise with management. We've spoken with Dan, who you and I know fairly well, about essentially doing what you described, valuing the skill set, valuing the engineers who are able to come to the table or be part of said network. And you're able to take on the value of their engineering skill set and do that in a decentralized way.

One that's not specific to where they're located or anything like that. It's more based upon their actual work that they've accomplished and a validation approach based upon the engineers who are also part of that network. You talked about this visioning experience, whereby we know that we could potentially be disrupted by this decentralized approach in AEC and EPC firms. I wonder if from a management standpoint, is it because of fear that people will respond or is it because of the potentiality that people will respond? I'm curious as to what the responses could be from your perspective.

I think there's an opportunity that if you focus on, you can be proactive and I forget who it was who said it, Tom Peters maybe, that the only way you can predict the future is by inventing it. So if you invent it proactively and constructively, you don't even have to worry about fear. It could be a real boon to productivity to find a way to harness the gig economy. Growing really at an amazing rate. Just read an article in Fortune magazine recently, 34% of the U.S.

workforce, independent contractors in some sense, as opposed to traditional nine to five workers. It's supposed to double within the next three years and that's an enormous workforce that's out there. If you think about engineering too as a potentially underutilized resource, let's talk a little bit about the opportunity of correcting bias in hiring. Bias is something that's very prevalent in STEM. Let me segue to that and then come back to this intermediation distribution is a threat or it's an opportunity.

So bias in STEM, for example, let's just segue that for a second. It's a well-known fact. I mean, if you just take women in engineering as an example, there was an interesting podcast by Ira Flatow, Science Friday, not too long ago, a few months ago, but you can search for it on the NPR, where a study in Princeton was done where they took children to look at pictures of four people, two of them were males and two of them were female, and they were either children or adults.

They would ask the children, they'd say, one of the people in these photos is extremely brilliant, very smart, and, you know, list a long resume of all the accomplishments the person did without any hint of the person's gender. And then they asked the child, boys and girls, to identify the person of the four in the photo. And when the children were like five or six, the girls and boys would with equal probability choose either the male figure or the female figure. But once the girls got around seven, eight years of age and beyond, there was a statistical bias of the girls to pick the male figure in the photo of the four people, which kind of shows that girls were kind of losing sight of their own brilliance.

They were starting to identify more with male figures as being the super intelligent, brilliant, creative, capable of doing lots of math and computers and that sort of thing. So there is a bias that begins very early, you know, a gender bias that we've identified, very real. It's a complex fact of human behavior, and it's hard to correct because it's mostly unconscious. Blockchain, if you actually have this concept of a platform cooperative of, say, engineers and architects working together, if you can have some hiring system that uses blockchain and AI to identify skill sets and talents to eliminate all the irrelevant data and provide a better way of assessing value in individuals through a percentile search engine to find talent.

That's the only meaningful indicator of suitability to perform a task. And there's a lot of underutilized engineering talent. For example, something like the sight of women engineers, something like 20% of all university engineering students are women, and only 11% of engineers in the workforce are women. So if you do the math, it's about three or four hundred thousand people out there who spent tens of thousands of hours to get their bachelor's degree, to take the fundamentals of engineering exam, who have enormous talent, yet they're not using it.

And that underutilized resource is just typical of what's going on with minorities, veterans, gender. The bias exists, and who can say why? But it exists, and there's an enormous untapped reservoir of underutilized engineering talent out there that could be used. And again, I think technology to harness this through the gig economy will be an enormous resource for AEC firms, EPC firms. It's a way to harness something, increase efficiency and productivity of what we do.

You had a lot of great points there, and I just, I don't want to disacknowledge any of them. The fact that there is an unconscious bias that many of us have, I think it's hugely important for companies to understand the fact that they're not tapping into this reservoir of potential. And if there's a way to then tap into that, whether we're all moving to, you know, be contractors in some way, shape, or form, I think it's something to look at because everybody's looking for the best people in the talent pool, you know, because that essentially is going to really be the reason why their companies are progressing versus others.

If you have the capability of tapping into the people who actually have the skill set and can do the work really well and can watch that sort of metric. The real impact that technology is going to have is again, it's unsourcing of human labor, it's unsourcing of skill sets. You know, I think blockchain's true calling might actually be that it can create communities fueled by their own currencies that are sandwiched between two layers of technology. So you've got the blockchain underneath, which provides the immutable record of how people work together.

It also provides tokens that fuel the behavior. And then above it, you can have AI, especially like deep learning, which can micro target and micro tasks and work assignments and match skill sets with micro tasks through like predictive scoring of how people have worked in the past. And we're beginning to work this out mostly at IEBC and co-engineers exactly how this would work. And you can organize and structure very high quality engineering work on a blockchain using smart contracts. Virtually anything that you would do, certainly very discreet kinds of problem solving.

For example, when somebody takes the fundamentals of engineering exam, they're very discreet sort of problems that are asked for. You can really break down engineering at its most fundamental level as a series of calculations, peer review estimates, and whole systems even, whole groups can coalesce together in this kind of atmosphere. Again, amplified, augmented through AI and smart contracts working in conjunction on a community which sits on a blockchain foundation. And I don't want to get into the technical details because it probably bore most people in the audience, but it can be done.

Some gaps in especially if you have very proprietary technology that you wouldn't want on an open data public ledger. But a lot of engineering work is very routine and can be turned into something that's very fun like a game. It can be done at a much lower cost. You can bring together, for example, 180 different individuals into maybe 0.2 FTEs of work. So by doing that, you're not necessarily paying benefits to 180 individuals that you have around.

And you can microtask, microtarget all this kind of work and have it worked on simultaneously by many people. It's not too much different from what Elon Musk is already doing with Hyperloop and Tesla and SpaceX and now with Boring Company. It's professionals have the ability to work together in a distributed way, a very productive way. We have these models to look at, like you said, with Elon Musk. And we have other models outside of the engineering space that are showing us that this is possible.

Why not look at the possibility here and essentially gamify it so that people are incentivized to work within this model? I'm glad you mentioned games because everything we do is a game and game theory is a respected branch of mathematics and economics and a lot of microeconomics involved in all of what we're discussing here. Even if you look at these massively multiplayer online games, it really involves thousands of people working together as a team and simulated economies, battles, and even military analysts have been amazed at the level of operational excellence that they see in these games.

And I read a paper recently that was released by WikiLeaks about how the Pentagon was studying massively multiplayer online games for training purposes. And if you can actually organize that kind of activity, but with real world objective functions in infrastructure, I'm a believer that we're going in that direction. Again, you got to be a futurist to think stuff like that, but take the cue from the Pentagon. They know where they need to be looking. I had no idea about that, that WikiLeaks report.

So yeah, I might have to check that out. And there are many other papers out there now and articles saying pretty much the same thing, that the military has been looking for the last 10 years really hard at these NMO games. I had the opportunity to interview Yuhkai Chow, who wrote a book about gamification. And we talked extensively about intrinsic and extrinsic motivation. One of the wonderful things I think about blockchain is that this can certainly be incorporated to incentivize people to validate other people's work, enable training, enable just the growth of that community.

And I think that co-engineers is working towards that. Absolutely. Imagine you have a problem where you want to, for example, estimate the kilowatt hours used in a year, a blower system at a wastewater treatment plant, but you don't know the best way to go about doing it. And it's not your expertise. You can send it out to an engineering platform cooperative as a query.

And all of a sudden, you'll have people lining up to answer it and provide calculations, maybe in PDF files they can store on the cloud that are linked to the blockchain. And basically, there's a process of peer review where engineers, some of them qualified, some of them not, but they're all kind of led by people who are qualified because they're all learning from each other and they're all following the ethics of the engineering profession. And they begin to create calculations and presentations. And you may already have a team of four or five people aggregating to each other's work and filling in the gaps that they identify.

And they're all voting each other's contribution together as a team. So right there, you have a team. You've just sourced maybe five people in like 0.01 FTEs of work and you've just achieved something. And they've basically awarded each other tokens. But at the same time, if you want to incentivize this kind of engineering activity that's out there, you're going to buy these tokens.

You're going to buy up and bid up the value of the tokens to whatever the value is to you as an infrastructure owner, as an engineering firm, as a manufacturer. And I've just described an ecosystem for engineering that uses blockchain. This is something you can maintain it in a distributed, disintermediated way. Estimates too. If you have four or five people competing and then you have a smart contract that selects the mean value of the four or five estimates and that the mean value generator wins a purse of tokens, you've just used peer review.

You've used engineering expertise. You've harnessed it all in a smart contract. You've gotten the value you needed. You've maybe had to buy up a few tokens to pay the engineers who created this work, but they're not your employees. You don't have to pay benefits.

You don't have to keep them around in a cubicle all year round. The engineers have achieved a gig. They did like Frank Lloyd Wright did 120 years ago when he designed a lot of beautiful homes on his own in Oak Park, unbeknownst to his employer. But at the same time, the employer can harness that as well. And you can actually create the 21st century modern engineering firm by leavening the usual hierarchical structure with these disintermediated, even cloud source, a lot of stuff and make more efficient use of the white space on your org chart.

Again, you become more productive as a professional services company and you'll be able to win more work as well. Let me ask you this, Thomas. What spurred your involvement with the IABC and what made you committed to doing that? It's an easy answer. Two years ago, I never even heard the word blockchain.

A friend of mine at Marsh that I actually worked with when we were trying to develop this insurance product or life insurance for capital equipment and physical assets referred me to IABC and introduced me to them. Ever since then, I feel like I've been trapped in a tornado. It's really different. Most insurgent community, kind of like Steve Jobs and Steve Wozniak were in 1970. You are learning about all kinds of stuff that the rest of the world is going to hear about three or four years from now.

And that in itself is exciting that you can have an influence on this process. We think we know everything about blockchain and cryptocurrency because we hear about it all the time. But the truth is it's only gone to sort of a popular culture level and now it's coming down again. The real work has already started like eight, nine, ten years ago and it's going to continue. The hype has helped the global blockchain developer community to raise a lot of capital and now they got to move on that capital and invest in ideas.

They can't sit on it. Venture capital has been largely bypassed because of these ICOs. The SEC is going to regulate them, but the money has been raised and now it's going to be invested in real stuff. It's been a great experience. So what are you looking forward to?

I mean, we talked a lot about the co-engineers model, different ecosystem mapped onto the engineering space. What are the next steps for co-engineers? Could you share a little bit about that? In full disclosure, I'm the co-founder and the stakeholder of co-engineers. I'd like to see it come out, be one of the first engineering platform cooperatives but we're sort of racing against the clock because we're forming consortia and alliances with similar initiatives such as the construction blockchain consortium such as ECP24 and many others.

Government blockchain association is another example. You know, all the blockchain brothers and sisters kind of have to stick together to see this technology move forward. So co-engineers within that society, within that community is probably going to be one of the first actual implementations of the technology that can harness the game theory and the way people work together. A big objective of co-engineers with that peer review process that we described earlier is not just to perform calculations and design notes and that sort of thing, but also to come up with use cases within engineering by engineers and again have them peer reviewed and voted on.

And it almost becomes sort of an innovation contest where some of the more fit ideas sort of percolate to the top and can be selected and exposed just by the voting process, the peer review voting process to some of this crypto capital that I was talking to you about earlier. As the idea sort of percolated to the surface, in co-engineers to this voting mechanism that's all supported through smart contracts and awarded by tokens, the good ideas will come to the top. They will get exposure to the clouds so to speak.

They'll get exposure to all this capital that has been raised over the last 12 months. So we are in a sense planning on being sort of an incubator and accelerator, bringing together the great ideas that all of the engineer members are going to have with the capital that can then move the developer talent, which is also part of the same community. So it's a complete community. It's got the ideas, it's got the developers for the technology, it's got the engineering talent, and it's got the capital all in one place.

What are your recommendations for learning more about co-engineers potentially getting involved? The best way to learn about co-engineers engineering blockchain platform cooperative is to visit the website co-engineers.io. You can also visit the integrated engineering blockchain consortium, the iebc.co. Those two websites provide a lot of information and they also have links to the actual discord channel where a lot of this development work is going on. If you're an engineer either working for a large engineering firm or a manufacturer or for a government, we could use your brain power to help us develop the next generation of collaborative effort to use our skills in a way that has never been organized before and that will I believe benefit the incumbent engineering industry as well as society in general.

And you guys will find me there from time to time in the discord chat offering up some suggestions on how people can get involved. It's a fun group to be part of and like Thomas said, you know, if you want to be part of something that is going to really transform the way we're working currently as engineers, I think it's certainly something that you should be looking into. Well with that, thanks again Thomas. This has really been a good time. What are the best ways for people to get in contact with you and learn more about what you're doing with Jacobs?

Thomas.wendling.com Thomas, thank you so much. This has been fun. It's always fun talking with you. Thank you very much, Brittany. If you want to learn more about Thomas Wendling, check out the show notes at constructor.com.

If you've learned something valuable in this episode, share it with your friends and colleagues. You can also let me know you enjoyed our 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 B R I T T A N I E at construct double R.com. Next week, we'll be speaking with Ephraim Feig. He is an IEEE life fellow and has a PhD in mathematics.

He was the manager of signal processing and coding at IBM's Watson Research Center. He's an inventor of 33 US patents and author on over 100 research publications and a plethora of topics, including blockchain. So I've invited Ephraim on the podcast to talk with me about the enterprise use of blockchain solutions. We talk about trusting relationships between people who are on a blockchain and how that changes the way a blockchain should work and would work. We talk about how and why we should be more critical of what is typically described as a blockchain solution, the difference between Bitcoin blockchain and get.

And all of this discussion is really to support the idea of like, how do you really promote more collaboration and influence more trusting relationships and to use blockchain only if it is useful. So I'm looking to sharing that interview with you next week. If you haven't already subscribed to this 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 next week.

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