The term SMART contract means a computer protocol.

Contract process

As the diagram shows, the three ages of contracting are:

  • plan (inception): from verification to tendering
  • make (creation): from contract choice to award/completion
  • use (operation): from contract to dispute management

SMART contracts should be able to deal with all these ages – smart contracts can be part of a mature contracting process which allows contract inception, creation and operation to be managed digitally. This would bring together current systems for creating digital contracts, digitally signing them and managing contracts once signed, as well as adding further depth to the process.

Contract planning and creation

I have spent the last 20 years planning and creating construction contracts. The terms and conditions reflected in those contracts are a very small part of the documentation that needs to be signed and agreed by the project team. A construction contract also needs:

  1. articles of agreement – the contract overview
  2. contract particulars or data – the project overview
  3. specifications, drawings and data – the details for the works, goods and services (and bills of quantities where used)
  4. pricing information including rates, analyses and so on
  5. information and BIM protocols – to help the supply chain work seamlessly together
  6. works programme(s) and schedules
  7. health & safety information eg the construction phase plan where CDM 2015 applies
  8. miscellaneous document like bonds, guarantees, procedures, related contracts.

While being able to negotiate, complete and sign the terms of the contract electronically is a huge improvement, until all documents relating to the contract, and those thousands created during the construction project can be created, stored, indexed and recovered in an on-line system, the role of paper will continue to blight the industry.

Smarter

Intelligent (or smart) contract systems can do more than act as a contract completion mechanism, such as:

  • track the negotiation of clauses (as one document and individual clauses, although with simpler contracts single changes are more visible)
  • log telephone calls, tasks, appointments, emails and correspondence relating to contract negotiations
  • automatically send contracts and contract documents to the relevant person to authorise (according to pre-set delegations and permissions)
  • allow contracts and relevant records to be signed digitally (by staff with relevant authority)
  • store and record all relevant works documents (and their approved updates) with version control and a full log of when documents are accessed
  • send, store and record changes to the project, works or tasks
  • track time and money expenditure on specific items of works
  • track programme changes and their causes
  • create audit trails for claims
  • log minutes of meetings
  • log permissions, instructions, orders, directions of the contract administrator(s)

The future of contracting is to use technology to simplify the contract process and the administration of a project, to build trust, avoid disputes and start a project quicker.

Those are also the aims of simple contracts too!

 

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