𝗘𝗻𝗵𝗮𝗻𝗰𝗶𝗻𝗴 𝗖𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁𝗶𝗼𝗻 𝗘𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆 𝘄𝗶𝘁𝗵 𝗦𝗺𝗮𝗿𝘁 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀
𝗔 𝗖𝗮𝘀𝗲 𝗦𝘁𝘂𝗱𝘆 𝗶𝗻 𝗲𝘅𝗰𝗮𝘃𝗮𝘁𝗶𝗼𝗻
A steel producing company embarked on a large-scale greenfield facility project, subcontracting various units for execution, including earthworks. The need for timely earthworks completion before other stages posed challenges, with slow work certification leading to invoice verification delays.
Significant delays arose due to slow work certification, with the PMC taking an average of 10 days to certify subcontractors’ progress each month. This delay caused invoicing complexities, as subcontractors billed for both certified work and work in progress at month-end.
Smart Contract Use Case:
Leveraging smart contracts for earthworks streamlines invoice verification. Two smart contracts play a pivotal role:
- Smart Contract 1: An e-catalogue with pricing streamlines the procurement process by generating purchase and sales orders efficiently.
- Smart Contract 2: Facilitates seamless execution of earthworks, issuance of work certifications, and real-time payments to subcontractors.
The “procure to pay” process optimization underscores the benefits of smart contract integration, leading to more efficient construction operations.
Integrating smart contracts in the construction process offers numerous advantages, including:
- Real-time execution of transactions, eliminating intermediaries like banks, thus
reducing transaction and working capital costs.
- Privacy and transparency ensured through a private, distributed ledger,
thereby reducing arbitration and enforcement expenses.
- Verified identities of construction companies and contractors mitigate the risk
of fraudulent activities, enhancing security.
By implementing smart contracts, the steel producing company can expedite its earthworks payment process, minimizing delays, and fostering a more streamlined construction journey.