Blockchain Smart Contracts, the new rebar in the construction industry?

Abstract

Problem discussion and purpose - The blockchain technology, and its subset technology - smart contracts, has the potential to redefine the structure of future networks. Due to its underlying technology and its characteristics, there is a potential that blockchain smart contracts could provide benefits both within supply chain management as well as supply chain financing. The construction industry is associated with low digitalization, poor productivity and inefficient processes. Hence, this is an industry that could benefit greatly from new digital IT applications. Therefore, in this thesis, we gage the knowledge surrounding blockchain and smart contracts in the construction industry. Furthermore, we present where and how blockchain smart contracts can increase efficiency within supply chain management and supply chain financing. Lastly, we propose the most suitable smart contract solutions for the construction industry. Methods – The case study object for this thesis was a Swedish concrete producer where semi-structured interviews were conducted. Additionally, five major Swedish construction companies were also interviewed. Furthermore, to increase the ability to generalize, a questionnaire has been sent out to these companies as well. Additionally, semi-structured interviews within following areas of expertise has been conducted; blockchain smart contracts, supply chain financing and law. Results and Conclusion The results show that there is limited knowledge surrounding the technologies within the construction industry. Moreover, blockchain smart contract has the potential to increase the efficiency within supply chain management and supply chain financing. However, these efficiency improvements have the potential to be attained using other technological solutions. Furthermore, the low level of digital maturity and still paper-based processes makes it difficult to utilize and feed the blockchain smart contract with enough data. The complexity to secure the input data is also an aspect that all physical goods supply chains need to overcome. An area where the blockchain technology could add value is by incorporating it with the BIM technology. The results further indicate that the most suitable blockchain for the construction industry is a consortium configuration and the most suitable blockchain for a network including governmental agencies construction procurement seems to be a public permissioned configuration. To conclude, the study shows that blockchain smart contracts is not the new rebar in the construction industry at the current level of digital maturity.