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Blockchain Could Cut Construction Delays

September 25, 2019

Rick AmburgyCommercial real estate and construction professionals take note: The adoption of blockchain technology in the design and construction industry presents a great opportunity.

Projects come in all sizes and complexities, and involve multiple levels of participants, in multiple phases. Delays and disputes often occur when communications break down among the project parties. Issues can include change orders being performed without full agreement of the parties; the application of different definitions to contract terms; and delays incurred, but not communicated until the project is behind schedule.

The list is endless, but in almost every instance the left hand is unaware of what the right hand is doing. No other industry is in such dire need of a process upgrade. From acquisition to financing to design to construction, a successful project requires open communication and collaboration at all levels.

Blockchain technology can provide this new level of project transparency.

In layperson’s terms, blockchain is a secure database that is date-stamped and shared among a network of participants. The parties in the network initially agree to the rules of the blockchain, and the blockchain acts as an electronic record of the project. The operative documents, agreements and records are stored in a series of blocks that can be updated by any party within the network. The blockchain records the time and sequence of each amendment or update and instantly notifies all participants.

Each amended block becomes a new block that is linked to the preceding block. This forms a successive chain, which becomes the permanent record of the project. The agreements in the blockchain, or smart contracts as they are called, are designed to be self-enforcing, with the terms and conditions of the agreements connected to the flow of funds and sequencing of events during construction.

So, how can blockchain enhance communications and streamline the process? Imagine a commercial development where the progress of construction and flow of payments are completely automated and transparent. Project milestones can be verified by all parties in real time, and payments are automatically released upon completion of such milestones. Owners can track the flow of payments downstream to ensure subcontractors and suppliers are being paid. General contractors can track the approval process for payment applications, as well as funding from lenders upstream.

This transparency would reduce the likelihood of payment disputes and enable parties to identify potential issues in advance of work stoppage, allowing projects to proceed on time.

The applications for blockchain technology in the design and construction industry are endless. Project information would be universally available to every level of the project team, leaving no more excuses for breakdowns in communication. Lenders, owners, design consultants, engineers, architects, general contractors, subcontractors and suppliers would all have the ability to update the project database in real time.

The lines of communication would be wide open. Shipments could be tracked, inspections shared, workflow schedules updated, change orders processed and submittals reviewed, all in real time, and all with a complete historical record of the contractual obligations and timelines surrounding such items.

Blockchain technology is here. The industry must now educate itself and push for mainstream adoption.

Rick Amburgey is an associate with Walter Haverfield who focuses his practice on construction law, financial services and commercial real estate. He can be reached at 216-619-7843 or at

*This article also appeared in Crain’s Cleveland Business.