Critical factors influencing adoption of blockchain-enabled smart contracts in construction projects

Ameyaw, Ernest E. and Edwards, David J. and Kumar, Bimal and Thurairajah, Niraj and Owusu-Manu, De-Graft and Oppong, Goodenough D. (2023) Critical factors influencing adoption of blockchain-enabled smart contracts in construction projects. ASCE Jounral of Construction Engineering and Managment, 149 (3). 04023003. ISSN 0402-3003 (https://doi.org/10.1061/JCEMD4.COENG-12081)

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Abstract

Construction projects are premised upon contractual arrangements, and contracts constitute the basis of their success. A contract enables execution of work and transfer of payments, tracking of key performance indicators, and facilitation of collaboration among project stakeholders. Historically, construction projects have faced critical challenges due to poor alignment between clients’ expectations, contract terms, and contractor performance. The advent of advanced digital technologies under the concept of Industry 4.0 has the potential to benefit construction projects through application of blockchain-enabled smart contracts. However, the adoption of smart contracts in construction projects is in its early stages, and the factors that will influence its adoption remain unclear. Therefore, this study aimed to explore and establish the critical factors influencing adoption of smart contracts in construction contractual arrangements. This study administered an international questionnaire survey among experienced construction practitioners with involvement in smart contract initiatives and activities. The results obtained from descriptive statistics and fuzzy set-based analysis show that trialability, relative advantage, competitive advantage, and compatibility of smart contracts are the important predictors of the adoption of such contracts. The findings suggest that practitioners share a view that technological characteristics of blockchain-enabled smart contracts are critical to their adoption, regarding the technology’s perceived practicality in improving effectiveness and efficiency of construction projects. This study contributes to technology diffusion research in construction and highlights drivers that require practitioners’ and industry leaders’ attention to ensure successful adoption of smart contracts for cost-effective delivery of construction projects.

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