Determining Delay Accountability, Compensation, and Price Variation Using Computable Smart Contracts in Construction

Abstract

Several construction projects globally suffer due to time and cost overruns. These could be due to reasons attributable to the contracting parties or unforeseen external circumstances. Disputes often arise between the parties regarding which side caused the delay and the compensation terms for the delay. Thus, this study is motivated to explore a digital contractual solution for contract administrators and project managers using blockchain technology-enabled smart contracts. In this regard, the research attempts to develop smart contract clauses that (1) carefully allocate liability and delay accountability at various construction stages; (2) automatically compute the delay compensations and notify the responsible party; and (3) determine the resultant extensions of time and cost, with cost variations. The goal is to develop computable legal contracts for industry and academia focusing on the extension of time, delay compensation, and variation, which can be applied to all projects worldwide, regardless of the complexity or scale.