How trustworthy is your building?

This article first appeared in the AFR on June 24, 2021, written by Michael Bleby.

In a global first, KPMG and Mirvac are teaming up to track the provenance of buildings – mimicking plate-to-field verification in the beef industry – with a blockchain-based platform that will let insurers, investors and owners rate and compare the trustworthiness of different buildings.

Records of materials used, construction methods followed and even subcontractors involved in the lengthy design, procurement, construction and certification process will all be stored in a platform KPMG is now developing for the NSW government, but which also has global scope.

Building the future: KPMG’s Head of Blockchain Laszlo Peter and Partner for KPMG Origins with Mirvac’s Chief Digital Officer William Payne.  Louise Kennerley

In a world reeling from the disasters of combustible cladding and defects, hitting consumers with crippling rectification bills and rendering parts of construction uninsurable, the system offers a way to rate buildings beyond basic building code compliance and give information to all about what lies behind the walls.

“You could have two buildings, both safe to live in and compliant, that might have completely different ratings due to the materials and the participants who did the work and the checks done,” said Laszlo Peter, KPMG’s head of blockchain services.

A working model of the platform, developed under the contract KPMG won from the NSW Building Commissioner, is due to be functioning within six months so it can be road-tested on existing buildings undergoing cladding rectification as well as on a new build Mirvac will start next year.

It will consider all inputs and value each building on a trustworthiness index, allowing like-for-like comparisons of very different buildings.

“The Building Assurance Solution is world-leading, transformative technology that will be a game changer for the building industry,” said Kevin Anderson, NSW’s Minister for Better Regulation.

The more insight you have into what has gone into a building, the more confidence that all parties will have in the quality of the building. — Mirvac’s William Payne

As the experience of Sydney’s Opal and Mascot towers has shown, apartment owners need to be able to know more about a building before buying into it.

“The more insight you have into what has gone into a building and understanding not just the physical materials but also who has been involved in installing them and so on, the more confidence that all parties will have in the quality of the building,” said William Payne, developer Mirvac’s chief digital officer.

Insurers are also keen for a tool to more accurately assess the risks around a building.

“The Insurance Council of Australia is looking forward to understanding the working details of the BAS system and supporting a system that improves quality through compliance and enforcement of building practices across the entire supply chain for the benefit of consumers across the NSW construction industry,” a spokeswoman said.

It still has to be created, however. The last digital platform the NSW building commissioner procured and promoted – a ratings tool of developers, builders and certifiers created by data company Equifax – ended up on the cutting room floor.

Mr Chandler said it failed because it hinged too much on being a service for government, rather than one with a wider commercial application. Equifax said it was changing its model and there was still demand for ratings services provided by credible agencies.

“Since the government tender last year, we have accelerated our plans to support an industry-funded model,” Equifax head of product and ratings services Bradley Walters said.

The new platform is even more ambitious. A central repository of all documentation created during the life cycle of a building, it differs from a digital twin, the 3D collaborative model focussed on the design, construction and ongoing management of an asset.

The use of blockchain allows for data to be kept immutably. In addition, in contrast to traditional databases owned and managed by one party, this will be managed for platform owner KPMG by ASX Ltd and will allow different parties – designers, builders, developers, certifiers – to keep commercial control of the data they own and sell through the platform.

The platform also includes traceability developed by KPMG for the cattle industry.

This will allow future features such as the storing of certificates measuring a completed building’s embedded carbon; it could store provenance details of materials such as the origin of gravel used in concrete; it will even track differences such as whether an apartment building’s bathrooms were built on site or off-site and craned into position.

This is the first of what I call multi-jurisdictional solutions that are going to have to come to the building industry in the next 5 years. — NSW Building Commissioner David Chandler

Regulators will, however, need to play an ongoing role in governance of the platform, to ensure it keeps its role as a public good, NSW building commissioner David Chandler said.

”This is the first of what I call multi-jurisdictional solutions that are going to have to come to the building industry in the next five years,” Mr Chandler said.

“We’ve left ourselves up there with a very high level of ability to look at the thing from a data governance point of view and make sure it doesn’t become the exclusive captive of KPMG.”