Abstract
Delayed payment practices have plagued the construction industry since the 1960s, impacting businesses with the most immediate consequences of the contractors’ or consultants’ inability to pay employee salaries, which can lead to layoffs and even business closure. By harnessing the capabilities of blockchain technology effectively, delayed payments will be a thing of the past. The main objectives of the study were to assess payment practices used in the South African construction industry, to evaluate the drivers and barriers of utilizing blockchain technology to enhance payment processes and to explore strategies for implementing blockchain technology in the South African construction industry. In order to achieve the research objectives, a quantitative methodology was employed, adopting the questionnaires as the means of gathering data from construction professionals in the Gauteng Province. The collected data were analysed using descriptive inferential statistics, including percentage, mean item score, and factor analysis. The reliability of the questionnaire was assessed through the Cronbach alpha test. The findings from the collected data revealed that construction professionals are familiar with various payment practices in the construction industry. Notably, they prefer utilizing progress or interim payment; stage payment; final payment or payment after completion; time and materials, and retention payment over advance payment; escrow payment; lump sum (fixed price); cost plus; guaranteed maximum price; and joint checks. The findings further reveal some of the pertinent strategies for the implementation of blockchain technology for improving payment processes in the South African construction industry. The findings also outline providing training, providing educational initiatives for stakeholders, performing a cost-benefit analysis, establishing clearer regulations, standardizing blockchain technology, consulting with blockchain professionals, building trust among stakeholders, funding availability, and encouraging collaboration as part of the strategies for the implementation of blockchain technology for improving payment processes in the South African construction industry. The focus was on addressing delayed payments in the construction industry by identifying the prevalent payment practices, understanding the drivers and barriers to blockchain implementation, and formulating a strategy for the effective integration of blockchain
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technology for improving payment processes in the South African construction industry. The reviewed literature revealed a prevalent challenge of delayed payments within the South African construction industry. Subsequently, the study delved into an exploration of blockchain technology and its potential to address this issue. Upon reviewing the literature, it became apparent that delayed payment remained a prevalent concern within the South African construction industry. The research then explored blockchain technology as a potential solution to address this ongoing issue. The findings of this study reinforce the notion that blockchain technology has the potential to alleviate delayed payments in the construction industry. Some of the identified drivers of blockchain technology include automating payments, automating contracts, eliminating central control systems, enabling real-time operations, enhancing auditability, and ensuring? user confidentiality. It further promotes accountability and fraud-proof evidence.
Keywords: Blockchain technology, Smart contracts, Payments processes, Construction industry, Automation, Contracts.