⛓️ Fintech Frontier: Crypto and Smart Contracts

Monday 24th May 2021

The Digital Ledger Arrives: How Blockchain Could End Construction’s Late Payment Curse!

On May 24, 2021, news broke that a forward-thinking UK contractor had become one of the first in the country to accept major cryptocurrencies as payment for construction projects. This move, while symbolic, highlighted a critical shift in attitude: the traditionally cautious construction sector is beginning to explore the practical use of financial technology (Fintech) to solve operational issues.

We here at Robbins Construction Ltd are watching this emerging technology very closely. We understand that for many high-net-worth clients, payment flexibility is a benefit, but for us, the real innovation isn't the currency itself—it's the underlying infrastructure of the Blockchain and Smart Contracts.

The construction industry is notorious for poor cash flow, lengthy payment delays, and costly disputes over project milestones and retention. The average small-to-medium builder can spend weeks chasing overdue invoices. This is where this digital technology shines:

Automation of Payment Terms: Our current practice involves a fair, staged payment plan based on project milestones (as detailed in your Payment Schedule). Smart contracts, which are self-executing digital agreements, could automate this. For example, once an independent surveyor (or an IoT sensor on-site) verifies that the steel frame is complete, the smart contract could automatically release the agreed-upon stage payment to us, providing instantaneous and secure settlement.

Immutable Records: Every change order, every material delivery, and every safety sign-off could be logged on a blockchain ledger. This creates an immutable 'single source of truth' for the project. This increased transparency can significantly simplify and reduce the cost of dispute resolution, offering immense benefit to both our clients and ourselves.

Our View: While we are not yet accepting cryptocurrency directly due to its volatility and the current lack of clear regulation in the UK construction sphere, we are actively exploring partnerships and technologies related to Smart Contracts.

Our Commitment to Clients: Our goal is to adopt these tools when we fully understand how they can provide tangible benefits to our clients and us. This means adopting the technology that guarantees faster, more secure payment processing, reduces administrative time, and cuts down on the likelihood of contractual disputes. When the technology moves from novelty to robust operational efficiency, Robbins Construction Ltd will be at the forefront of implementation.

Debate Point: Should industry standard bodies fast-track the creation of template Smart Contract clauses compatible with UK Construction Law to facilitate the automation of payment and retention, providing a major cash-flow boost to SMEs across the sector?