Project Management on the Blockchain
The future is here; blockchain tech (think Bitcoin) is revolutionizing project management.
Note: I’ve moved my newsletter to its own home @ TheStakeholderReport.com.
While the prospects of getting rich via Bitcoin still dominate the news cycle every once in a while, it’s the underlying technology that you and I should be interested in. The blockchain, that technology which crypto-currency is built upon, has technological implications from national defense to banking and down to the core of Project Management. Here’s how I see the future…
I recently stumbled upon a white paper, Blockchain and the Project Management Office (BPMO) (mirror). As a self-professed tech junkie, I was intrigued. I’ve been using crypto-currency and blockchain tech for more than five years myself, watching great projects rise and fall within the landscape (see dApps for examples). “Crypto” isn’t just for tech-geeks to become millionaires anymore- it’s changing how a business will function in the future.
If you’re not at all familure with what a blockchain is, or how it’s used, worry not. Below we’re taking a short tour of what a blockchain is, and more importantly, how it has the potential to change how project management works down to its very core. Let’s ride! 🛵
I’m getting help with this section via r3 and the above-linked document. The gist of a blockchain is simple; information is securely recorded and locked into a multitude of computers across the globe. No data is recorded on a single machine (node); it’s shared, duplicated, and agreed upon by all other nodes (oft labeled as consensus). Data is structured as a continuously growing list of records (blocks). Each piece of information is secured cryptographically with an immutable cryptographic signature called a hash. New blocks are added only after being validated by the consensus of a peer-to-peer network of participants chaining them together, hence why distributed ledgers are often called blockchains.
It, the system, enables assets (businesses, people, machines, etc.) involved in a transaction to know, with certainty, what happened, when it happened, and confirms other parties are seeing the same thing without the need for anyone directly interacting. The act of sharing/duplicating the data is essential; once the information is spread out, it becomes an immutable ledger (also called Distributed Ledger Technology (DLT)) of the what, when, where, etc.
The concept of sharing information across additional nodes is how the database becomes decentralized. No one single node is in charge- there is no central server/database. If the data is tampered with on one machine, that data is compared to the rest of the devices in the network. If it is found to be different- in any way- it’s discarded/ignored.
With the data being immutable, even mistakes are on record.
Making the leap from Bitcoin to business infrastructure
“Every agreement, every process, every task, and every payment could have a digital record and signature that could be identified, validated, stored, and shared.”
~Harvard Business Review, Marco Iansiti and Karim R. Lakhani
All of that can be done without any intervention, less that of someone with a scanner, or a phone to type yes or no. Many of the tasks that a PM/Assistant PM does can be handled by the blockchain. However, none of this can be executed without a smart contract or a contract coder.
A “smart contract” is considered smart because once it’s deployed, it is self-executing. Sure, you need to have someone code the contract, but after that, it’s hands-off through completion. The creator defines predetermined terms, monetary payments/penalties for successful/failed agreements, or implements a positive/negative reputation history log designed to keep participants on task and on time. Utilizing distributed ledgers will assist project managers in reducing the time and resources needed to provide stakeholders status reports via a real-time view of all project activities. Anyone with access can see what’s happened when it happened and any issues as defined by the contract.
As a task is completed or a part is delivered, the completer/receiver, respectively, can validate that the job has been completed via a central web-app or the scanning of a barcode with a phone. If payment were pending via completing the task, payment would be made automatically, probably before the delivery driver even gets back in their vehicle. The outcome for this task has been done with minimal intermediary involvement, just someone scanning a barcode. There have been use-cases where embedded Bluetooth chips allowed for no involvement- once the object was within the signal range of a Bluetooth reader, the contract was executed, and parties were paid. $💰$
The real Digital Project Manager
The term “digital project manager” has gained some steam over the last few months as teams have been forced to leave their office desks and into their dining rooms or home offices; I’ve set up on my children’s craft table, now dubbed “dads office.” However, future PMs will indeed be digitally bound as smart contracts and obligations are completed and captured in real-time via computers worldwide. The PM will get a notification on their phone that “task 435 has been completed,” and they’ll move on about their day.
Throughout, the project manager will remain in a central position for organizing, assigning, and approving pending contracts as many are today. However, with data funneling into a single system or dashboard, the project management team will reap the benefits of a single source of authenticity regarding most actions. In turn, the project manager spends less time on adjustment activities and more time on being the Project Manager, organizing resources, mitigating disruptions or uncertainties, and keeping the project(s) on course. While nobody wants to hear/read it, the technology will also allow for a reduction/reassignment of personnel.
…the project managers’ role becomes less administrative and more strategic, and this creates opportunities for organizations to harness their talents to boost productivity and achieve better project outcomes. (BPMO)
More specific examples noted in the BPMO cite the “[p]ioneering blockchain efforts in the construction sector; process automation to free up project managers to perform greater value-adding roles in their organizations.” They also discuss the issues caused by contract and work/re-work approvals, change requests, invoices, and payments as the leading causes of delay and headaches overall (did someone just whisper errors too?).
On the subject of construction, there’s a side note in the document stating it’s “…estimated that 95 percent of building construction data currently gets lost on handover to the first owner.” That’s crazy. Where blockchain comes to the rescue is its ability to be a secure ledger of all work that was done to create the building, a running list of people who worked on it, and even a total inventory of items placed in the new building- down the LED lightbulbs. Speaking of lightbulbs-
Build a shared incentive and reputation management system where the performance of employees, contractors, and suppliers is visible to the project ecosystem. (BPMO)
An example use-case
Thus far, we’ve discussed the infrastructure and potential project manager changes from the 40,000-foot level. To pull it all together, I’d like to offer this use case that I’ve entirely made up, yet chosen to illustrate the processes worth. While this isn’t entirely a “project management” integration example, I hope it helps show how the overall concept works.
The Car Co. hired a brilliant PM team to create a first-of-its-kind plan to implement blockchain tracking and then pull it all together to a finished product. However, only three months after being on the market, this newly created car has received several complaints of factory-installed headlight/headlamps overheating and melting their plastic covers. While nobody has been reported injured from this issue, there have been several fires reported.
Lucky for us, the company fully integrated the use of blockchain technology up and down the supply chain and within their factories. Each piece of hardware installed on and in the vehicle has been serialized and scanned, individual light bulbs included. The company investigator pulls up one of the reported vehicles by its identification number in a central database that’s been aggregated from several hundred computers around the world. The investigator can see when the car was manufactured, who added which part to the vehicle, and where/when those parts were produced.
Because this company used a total blockchain solution, the suppliers are also integrated into the system. The investigator locates the bulbs in the database that show the design specifications of parts, materials, and other pertinent information down to who was working the machine that day that created the bulb and even the raw material origin.
With this data, the investigator concluded that the manufacturer of the light bulb received the wrong diameter of the tungsten rod that’s used as the filament in the light bulbs. This is known because the manufacturer of the tungsten is also part of the blockchain integrated supply chain, and their data was added to the blockchain when the rods were created. The lot delivered to the bulb manufacturing company was scanned, and the data was placed into the blockchain. The investigator found that the smart contract that was used did not have a mechanism to verify the size of the tungsten to the specifications, only that they were delivered.
Since the company used this system, they know where each car is currently located (inventory, dealership, or customer-owned), and thus they can remedy the issue. The smart contract for future vehicles was updated to ensure this did not happen again.
All aspects of this interaction could theoretic be traced, from to the operator of the machine that mined the ore for the tungsten to the name of the owner of the new vehicle. A complete digital record of the car could follow it for the life fo the vehicle.
We are closer than you think
The future isn’t so far off. The technology is there, being used, tested, and validated through supply chains and corporate offices worldwide. Even Glassdoor has plenty of blockchain-related jobs listed. The largest obstacle of moving forward with its use will be the small businesses of the world where the financial resources needed to implement the infrastructure will be the hold-up.
However, I have a feeling major corporations will begin opening up the use of their software/hardware for use across the industries- for a price, I’m sure.
Do you have a thought on this? I’d love to discuss it further.