Determining Delay Accountability, Compensation, and Price Variation Using Computable Smart Contracts in Construction
Publication: Journal of Management in Engineering
Volume 40, Issue 3
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.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
Some or all data that support the findings of this study are available from the corresponding author upon reasonable request.
References
Accord Project. 2021. “Accord project.” Accessed April 22, 2023. https://www.accordproject.org/.
Ahmadisheykhsarmast, S., and R. Sonmez. 2020. “A smart contract system for security of payment of construction contracts.” Autom. Constr. 120 (Dec): 103401. https://doi.org/10.1016/j.autcon.2020.103401.
Al-fadhali, N., and R. Zainal. 2017. “A theoretical framework on factors causing delay of construction industries projects.” Soc. Sci. 12 (3): 393–399. https://doi.org/10.36478/sscience.2017.393.399.
Assaad, R., and M. A. Abdul-Malak. 2020. “Legal perspective on treatment of delay liquidated damages and penalty clauses by different jurisdictions: Comparative analysis.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 12 (2): 04520013. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000387.
Chaphalkar, N. B., and K. C. Iyer. 2014. “Factors influencing decisions on delay claims in construction contracts for Indian scenario.” Australas. J. Constr. Econ. Build. 14 (1): 32–44. https://doi.org/10.5130/AJCEB.v14i1.3766.
Chen, G., M. Liu, H. Li, S. M. Hsiang, and A. Jarvamard. 2023. “Motivating reliable collaboration for modular construction: Shapley value-based smart contract.” J. Manage. Eng. 39 (6): 04023042. https://doi.org/10.1061/JMENEA.MEENG-5428.
Ciotta, V., G. Mariniello, D. Asprone, A. Botta, and G. Manfredi. 2021. “Integration of blockchains and smart contracts into construction information flows: Proof-of-concept.” Autom. Constr. 132 (Dec): 103925. https://doi.org/10.1016/j.autcon.2021.103925.
Clack, C. D., V. A. Bakshi, and L. Braine. 2016. “Smart contract templates: Foundations, design landscape and research directions.” Preprint, submitted August 2, 2016. https://arxiv.org/abs/1608.00771.
Cummins, J., and C. D. Clack. 2022. “Transforming commercial contracts through computable contracting.” J. Strategic Contracting Negotiation 6 (1): 3–25. https://doi.org/10.1177/20555636211072560.
Doloi, H., A. Sawhney, K. C. Iyer, and S. Rentala. 2012. “Analysing factors affecting delays in Indian construction projects.” Int. J. Project Manage. 30 (4): 479–489. https://doi.org/10.1016/j.ijproman.2011.10.004.
Durdyev, S., and M. R. Hosseini. 2020. “Causes of delays on construction projects: A comprehensive list.” Int. J. Managing Projects Bus. 13 (1): 20–46. https://doi.org/10.1108/IJMPB-09-2018-0178.
Elazhary, M. 2021. “Tracking delay analysis.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 13 (3): 04521020. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000485.
Elazhary, M., and O. Hosny. 2023. “Framework for the application of blockchain technology to delay analysis.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 15 (2): 04522063. https://doi.org/10.1061/JLADAH.LADR-863.
FIDIC (Fédération Internationale des Ingénieurs-Conseils, International Federation of Consulting Engineers). 1999. “The FIDIC Suite of Contracts 1999.” Accessed February 7, 2023. https://fidic.org/books/plant-and-design-build-contract-1st-ed-1999-yellow-book.
Gupta, P., and K. N. Jha. 2022. “Integration of blockchain with emerging technologies in AEC industry: Merits and challenges.” IOP Conf. Ser. Earth Environ. Sci. 1101 (9): 092020. https://doi.org/10.1088/1755-1315/1101/9/092020.
Gupta, P., and K. N. Jha. 2023. “A decentralized and automated contracting system using a blockchain-enabled network of stakeholders in construction megaprojects.” J. Manage. Eng. 39 (4): 04023021. https://doi.org/10.1061/JMENEA.MEENG-5366.
HKA Global Ltd. 2022. “CRUX Insight 5th Annual Report—Battling the headwinds: A regional analysis of claims and dispute causation.” Accessed February 7, 2023. https://www.hka.com/download-crux-insight-fifth-edition-battling-the-headwinds/.
Hunhevicz, J. J., M. Motie, and D. M. Hall. 2022. “Digital building twins and blockchain for performance-based (smart) contracts.” Autom. Constr. 133 (Jan): 103981. https://doi.org/10.1016/j.autcon.2021.103981.
Hwang, B., J. Ngo, and J. Z. K. Teo. 2021. “Challenges and strategies for the adoption of smart technologies in the construction industry: The case of Singapore.” J. Manage. Eng. 38 (1): 05021014. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000986.
Iyer, K. C. 1996. “Identification and evaluation of dispute-prone clauses in Indian construction contracts.” Doctoral thesis, Dept. of Civil Engineering, Indian Institute of Technology.
Iyer, K. C., N. B. Chaphalkar, and G. A. Joshi. 2008. “Understanding time delay disputes in construction contracts.” Int. J. Project Manage. 26 (2): 174–184. https://doi.org/10.1016/j.ijproman.2007.05.002.
Iyer, K. C., and P. Gupta. 2021. “Blockchain technology in project management.” In Proc., PMI Research and Academic Virtual Conf. 2021, 67–76. Mumbai, India: Indian Institute of Technology.
Iyer, K. C., and K. N. Jha. 2005. “Factors affecting cost performance: Evidence from Indian construction projects.” Int. J. Project Manage. 23 (4): 283–295. https://doi.org/10.1016/j.ijproman.2004.10.003.
Iyer, K. C., and K. N. Jha. 2006. “Critical factors affecting schedule performance: Evidence from Indian construction projects.” J. Constr. Eng. Manage. 132 (6): 871–881. https://doi.org/10.1061/(ASCE)0733-9364(2006)132:8(871).
Klee, L. 2015. International construction contract law. Oxford: Wiley.
Mason, J. 2017. “Intelligent contracts and the construction industry.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 9 (3): 04517012. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000233.
NDA (Nishith Desai and Associates). 2020. “Construction disputes in India.” Accesses November 15, 2022. https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/Construction-disputes-in-india.pdf.
NDA (Nishith Desai and Associates). 2022. “Law of damages in India.” Accessed November 15, 2022. https://nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/Law_of_Damages_in_India.PDF.
Nguyen, D. A., and M. J. Garvin. 2019. “Life-cycle contract management strategies in US highway public–private partnerships: Public control or concessionaire empowerment?” J. Manage. Eng. 35 (4): 04019011. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000687.
Oxford Economics. 2021. “Future of construction. A global forecast for construction to 2030.” Accessed February 7, 2023. https://www.oxfordeconomics.com/resource/future-of-construction.
Roche, N., W. Hernandez, E. Chen, J. Sim’eon, and D. Selman. 2021. “Ergo—A programming language for Smart Legal Contracts.” Preprint, submitted December 13, 2021. https://arxiv.org/abs//2112.07064.
Saygili, M., I. E. Mert, and O. B. Tokdemir. 2021. “A decentralized structure to reduce and resolve construction disputes in a hybrid blockchain network.” Autom. Constr. 134 (Feb): 104056. https://doi.org/10.1016/j.autcon.2021.104056.
Seo, W., and Y. Kang. 2020. “Performance indicators for the claim management of general contractors.” J. Manage. Eng. 36 (6): 04020070. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000835.
Sepasgozar, S. M. E., R. Karimi, S. Shirowzhan, M. Mojtahedi, S. Ebrahimzadeh, and D. McCarthy. 2019. “Delay causes and emerging digital tools: A novel model of delay analysis, including integrated project delivery and PMBOK.” Buildings 9 (9): 191. https://doi.org/10.3390/buildings9090191.
Society of Construction Law. 2017. Delay and disruption protocol. 2nd ed. Leicestershire, UK: Society of Construction Law.
Stumpf, G. R. 2000. “Schedule delay analysis.” Cost Eng. 42 (7): 32–43.
Thomas, H. R., G. R. Smith, and D. J. Cummings. 1995. “Enforcement of liquidated damages.” J. Constr. Eng. Manage. 121 (4): 459–463. https://doi.org/10.1061/(ASCE)0733-9364(1995)121:4(459).
Tripathi, O. P., A. Hasan, K. N. Jha, and A. K. Jain. 2023. “Evaluating government contracts for delays, delay damages, and levy of compensation provisions.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 15 (1): 04522032. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000584.
Woodhead, R., P. Stephenson, and D. Morrey. 2018. “Digital construction: From point solutions to IoT ecosystem.” Autom. Constr. 93 (Oct): 35–46. https://doi.org/10.1016/j.autcon.2018.05.004.
Xu, Y., H. Y. Chong, and M. Chi. 2022. “Blockchain in the AECO industry: Current status, key topics, and future research agenda.” Autom. Constr. 134 (Feb): 104101. https://doi.org/10.1016/j.autcon.2021.104101.
Information & Authors
Information
Published In
Copyright
© 2024 American Society of Civil Engineers.
History
Received: Jul 18, 2023
Accepted: Dec 15, 2023
Published online: Feb 27, 2024
Published in print: May 1, 2024
Discussion open until: Jul 27, 2024
ASCE Technical Topics:
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.