Each is plagued by its own unique set of circumstances — or incentives for tech opportunists. In the capital project industry, a broad term enveloping building and infrastructure projects and investments, there are three major areas of informational and transactional friction that severely hamper progress.
These inefficiencies include administrative drag, the hidden costs involved in multiple player projects and hardened mistrust between parties and project stakeholders. All three of which can be solved with technology. As a notoriously sluggish industry when it comes to adoption, we are often asked, where is the best place to start?
Smart Contracts are the Answer
The good news is that there’s an answer to these pain points: smart contracts.
Backed by blockchain technology and Industrial Internet of Things (IIoT) operating field data, smart contracts are software programs that enable project participants to capture performance metrics, ensure contract obligations are fulfilled and automate payments.
As an immutable record of truth, blockchain solves the trust issue between project participants. This central source of neutral data gives visibility into productivity, schedule and safety necessary to alleviate the administrative paper-based workflow responsible for disjointed systems. And lastly, by automating payments the transactional delays and friction associated with the layers of participants can transform, reducing friction and costs.
Looking to Implement
Varying contracting models lend themselves to smart contracts: cost-reimbursable, lump sum, performance-based and linear construction contracts to name a few. Any approach where incremental progress can be measured, automated and executed is a candidate.
The most applicable use cases for smart contracts are where parties can be defined, terms agreed upon and payments set to automatically transact.