This document provides an explanation of some structural problems or inefficiencies in the current construction sector and how these can be solved through means of smart contracts. In the construction sector payments are made from party to party to another party etc., which contains great risks and therefore makes it necessary to take out different insurance policies. Usually, payment terms are (too) long which results in the bankruptcy of many subcontractors.
This passing around of money will not be necessary when smart contracts are used in the construction sector to arrange payments. The smart contract makes it possible to separate the responsibility and the payment flow.
The negative effects of a bankruptcy of the main contractor have been reduced immensely because there is no chain of payments. The main contractor has only received payments for the coordinating role. Bank guarantees and credit insurances have been made redundant.
Construction Handshake is an innovative system that combines the smart way of chain integration, with the self-evaluation of the subcontractors, and links this to a payment system. This causes a shift in the interest of the subcontractor from progress in only the assigned work, towards progress, quality, and cost-efficiency of the entire project.