Hierarchical Payment System for Construction Supply Chain
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Solution Overview
Problem
Construction projects often face delays and payment issues due to incomplete or incorrect paperwork, and counterparty payment risks, where primary contractors fail to pass on payments to subcontractors, leading to unpaid or delayed payments.
Innovation Solution
An end-to-end payment system and platform utilizing digital wallets to manage payments across a hierarchical structure of payees, where payment requests and approvals are tracked and executed in a trusted environment, ensuring timely and secure payments through a digital ledger system.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional payment methods are used in construction projects, then parties can maintain operational flexibility, but payment delays and counterparty risks occur due to incomplete paperwork and lack of enforcement mechanisms
Solution Approach 1:
The patent introduces a payment management system as an intermediary platform that sits between funding sources and payees in the construction supply chain. This system enforces contractual payment terms, tracks paperwork completeness, and automatically executes payments when conditions are met, eliminating the need for manual intervention and reducing counterparty risks while maintaining operational flexibility.
Solution Approach 2:
The system requires all contractual terms, payment schedules, and paperwork requirements to be predefined and registered before projects commence. By establishing payment rules and conditions in advance, the system can automatically enforce these pre-set terms throughout the project lifecycle, preventing payment delays caused by ad-hoc decisions or incomplete paperwork.
2Productivity
If manual payment tracking is used across the supply chain, then parties can maintain simple operational procedures, but payment processing is delayed due to incomplete or incorrect paperwork
Solution Approach 1:
The patent replaces manual, mechanical paperwork verification and payment tracking with an automated digital system. The payment management platform electronically tracks all contractual obligations, automatically validates paperwork completeness, and triggers payments based on predefined conditions, eliminating the slow, error-prone manual processes while managing complexity through centralized automation.
Solution Approach 2:
The system enables automatic self-verification of paperwork completeness and payment eligibility. By embedding validation rules and contractual terms within the platform, the system automatically checks whether payment conditions are met without requiring manual review, thereby accelerating payment processing while keeping the interface simple for users.
3Reliability
If hierarchical payment structures are implemented without digital tracking, then parties can maintain simple contractual arrangements, but payment enforcement is weak leading to unpaid subcontractors
Solution Approach 1:
The patent implements a feedback mechanism where the payment management system continuously monitors the status of contractual obligations, paperwork completion, and payment flows through the hierarchical supply chain. This real-time feedback enables the system to automatically identify and enforce payment obligations, ensuring that subcontractors are paid even when upstream parties fail to fulfill their commitments.
Solution Approach 2:
The payment management system acts as a trusted intermediary that enforces hierarchical payment structures by tracking and verifying payments at each level of the supply chain. It ensures that funds are allocated and transferred according to contractual terms, providing strong enforcement mechanisms while managing automation complexity through centralized control and predefined rules.
Data Source
AI summary
In some examples, a machine-readable storage medium encoded with instructions for executing payment in a trusted environment comprising a first party and a set of sub-parties defining a hierarchical structure of payees, whereby to cause the apparatus to receive data representing a funding instance, receive, from the first party, request data comprising a tuple defining at least one of a payment request, a payment party, and a payment amount, process the request data to parse a set of payment information for the first party and the set of sub-parties, determine, using the payment information, at least one entry in a data structure defining at least one digital wallet and comprising an approved funding source of the payment request, execute a payment order to at least the first party and the set of sub-parties, and modify at least one entry of the data structure to reflect execution of the payment order.