Evaluation of the Application of Smart Contracts in Construction Industry Management: A Systematic Review of Previous Research

Abdul  Raqib Amin; Mostafa Ghazi Moradi; Alireza  Rasekhi Sahneh

Authors

Abdul Raqib Amin Ph.D. Student, Department of Civil Engineering - Construction Engineering and Management, CT.C., Islamic Azad University, Tehran, Iran Author https://orcid.org/0009-0005-7815-1356
Mostafa Ghazi Moradi Department of Civil Engineering, CT.C., Islamic Azad University, Tehran, Iran Corresponding author https://orcid.org/0000-0002-5911-3371
Alireza Rasekhi Sahneh Department of Civil Engineering, Qe.C., Islamic Azad University, Qeshm, Iran Author https://orcid.org/0000-0002-5248-0670

Keywords:

contract, smart contracts, construction industry, blockchain, conventional contracts

Abstract

The timely preparation and delivery of contractual documents are essential to the timely and successful delivery of construction projects. However, the construction industry remains dependent on complex and time-consuming conventional contracting processes, which negatively affect the final delivery and operation of construction projects. Smart contracts have recently emerged as an innovative technology and an effective alternative to conventional contracts, which are often lengthy, complex, and, in some cases, difficult to interpret. Although smart contracts have attracted increasing attention from researchers and organizations, their application remains at an early stage. While the construction industry has lagged behind other industries to some extent in rapidly adopting recent technological advances, national and international research has created numerous opportunities for technological advancement in this industry and for integrating conventional contracts with smart contracts. Construction contracts are recognized as one of the most effective instruments for allocating risks among project parties. Consequently, numerous risks challenge stakeholder organizations and institutions in adopting and implementing smart contracts in construction projects. Smart contracts provide the infrastructure required for the independent execution of predefined and mutually agreed legal terms and conditions through network-based coding. Keeping pace with technological growth and advancement is a fundamental requirement for various industries. Further efforts are therefore needed to convince stakeholder institutions and organizations that advances in blockchain technology and smart contracts can provide valuable benefits and mechanisms for construction contract management and facilitate alignment with technological development. This study aimed to examine the conditions required for integrating conventional contracts with smart contracts in the construction industry, evaluate the concepts and benefits of smart contracts in this industry, investigate the drivers and strategies that can promote and expand their implementation, review previous research on smart contracts in the construction industry, and examine the evolution of research in this field. It also investigates the characteristics, risks, challenges, advantages, and disadvantages of smart contracts. Through a detailed review of 10 domestic and 40 international articles, the study examined the various dimensions of smart contracts from different perspectives. Given the increasing competition in the digitalization of conventional contracts, the study sought to establish an appropriate perspective for implementing smart contracts in the construction industry and to develop strategies for overcoming the identified barriers.

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