Intelligent Contracts in the Built Environment

Jim Mason looks at intelligent contracts as they might be applied in the construction sector and highlights UWE’s ongoing research in the area

A recent survey[1] showed that the take up of technology in the Architecture, Engineering and Construction (AEC) sector languishes behind other industries. The AEC sector is currently making heavy work of adopting Building Information Modelling (BIM) which is the gateway to digital design and construction. The learning curve is quite steep and requires investment to achieve BIM familiarisation. Intelligent contracts present a complimentary technology with the bonus of being easier to grasp and utilise for the AEC sector stakeholders. UWE Bristol is undertaking research projects in the area of intelligent contracts and welcomes the opportunity to collaborate with the Society of Computers and Law. This article sets out some initial thoughts on the likely trajectory of intelligent contract research and the aims of the participants.

The benefit of intelligent contracts is the built-in simplicity. The standardisation and automation of the process removes difficult decisions and not properly thought-out consequences.  The process is stripped back to the basic pay/build function of a contract. Further enquiry reveals a network of data sensors, automated ledgers and potentially even crypto-currencies.

The intelligent contract process can be described thus: the operative (whether human or robotic) inserts the brick in the wall. The presence of the brick is recorded by the sensor. The quality of the installation is checked against the desired criteria. The presence of the warranty information is verified and payment is released to the installer/supplier. The transactions can be recorded on a distributed ledger using blockchain technology. This can involve a brick by brick certification of completion if required - an ‘inchstone’ approach to building rather than the traditional milestone.

The quality-checking function can be augmented through using technologies currently being developed. In the short to medium term this is likely to require continuing human involvement.  Intelligent contracts probably require a BIM-type model on which to base its assumptions as to the fulfilment of the planned versus actual performance. Another potential route for development is to be independent of BIM and take an app-type approach to intelligent contracts. This is a semi-automated position where the certifier takes images of the work and materials for checking. The checking is performed automatically together with the cursory manual inspection of the priority areas.

Other contractual safeguards needed for the implementation of intelligent processes include lodging/checking of the warranty information. The blockchain could provide the means by which this is achieved as well as the record of the financial transactions.

Intelligent contracts could lead to huge savings in the time and resources employed in projects. Arbitrary deductions for retention and defects would be replaced with valuations based on the quality checks with a high degree of granularity. Issues would be flagged up and addressed at the time of construction/installation and payment made conditional on their resolution. The whole defect liability period with the usual reluctance of the sub-contractors to re-attend site would be removed. Research in this area therefore has at its core the desire to increase administrative efficiency, decrease the incidence of disputes and to arrive at greater security of payment for the supply chain.

The temptation to set off in a different direction to BIM ought to be resisted as far as possible. Intelligent contracts should be complimentary to the developments of the last 20 years and to build on them. The focus needs therefore to be on the incremental steps which facilitate adoption whilst addressing real and perceived barriers to implementation – foremost amongst which are the legal barriers.

Jim Mason is Programme Leader of the Masters in International Construction Law at UWE Bristol.



[1] https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/imagining-constructions-digital-future


Published: 2018-04-13T11:00:00

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