Trust in the contacting industry is earned over time, but time is costly. Blockchain brings the solution: zero knowledge proofs.
Anyone who has dealt with an unknown contractor already has some knowledge of the trust issue. Some contractors collect deposits and drag out your deadline only to enrich themselves, while some genuinely complete the work, and there are many shades in between. The elephant in the room is that many projects end poorly.
Even large firms can hardly avoid cost overruns and timeline delays by using established contractors. Construction supply traceability and accountability are lacking. Many contracts pit contractors against clients over job estimates and missed deadlines.
Supply chains suffer numerous challenges in terms of deadlines and budgeting. According to a survey conducted by IHS Markit, “Construction projects experience a 10-30% delay in meeting deadlines and up to 20% cost overruns, in some rare cases up to 50%.”
Below is an excerpt from AECROS / AC White Paper:
Previous studies have shown that mutual trust helps to smooth the construction process, allows flexibility for facing uncertainty, increases efficiency and sustains long- term relationships. In practice, formal contractual rules are always developed to legitimise behaviours and strategies at odds (Kadefors, 2004). However, current contractual relationships are mainly based on confrontational situations that reflect the level of trust (or mistrust) in the contract documents, which can be the driver to increase the total cost of a specific project (Zaghloul and Hartman, 2003).
Today’s methods of contracting and use of construction technology are inadequate. Data exchange is slow and needs a new shared space to meet market needs. Modern construction technology simply creates too much error, wasted material, time, money and loses unearned potential revenue.
The Auto Construction industry is focussed on market needs. AECROS fills the gap with a tokenized construction supply chain. Construction 2.0 now becomes fully automated with advanced technology. With a mix of BIM, blockchain, AI, digital twins, 5G, LoRa beacons, IoT for auto inventory tracking, AR/VR, RFID, fintech and more, Automated construction will rebuild contractual trust, save economic and environmental costs. Project build times can be reduced by more than 60% with blockchain enabled contract management.
Security is one of blockchain’s strengths, allowing digital information to be recorded without risk of being changed. Smart contracts are blockchain based agreements like real life contracts but in digital form. The main feature is established trust between parties through automatically executed payment for proof-of-work submitted.
A smart contract protects clients, contractors, subcontractors and suppliers against payment issues. Escrow can be held, and later released for completed milestones. This sets the precedent for trusted contracts while removing the need for middlemen.
In conclusion, trust needs to be restored in construction. Blockchain has soared in the use of smart contracts with over 7000 communities using it to foster open communication and trust.
If there is to be full trust-based accountability, reliability, and KPIs, superior technology and methods must be implemented. Trust can be achieved using blockchain technology to overcome contract issues, this saves time, money, and fosters good relationships. We can all use more good relationships.