Gurgun, A P and Koc, K (2022) Administrative risks challenging the adoption of smart contracts in construction projects. Engineering, Construction and Architectural Management, 29(2), pp. 989-1015. ISSN 0969-9988
Abstract
Purpose: As a remedy to usually voluminous, complicated and not easily readable construction contracts, smart contracts can be considered as an effective and alternative solution. However, the construction industry is merely known as a frontrunner for fast adoption of recent technological advancements. Numerous administrative risks challenge construction companies to implement smart contracts. To highlight this issue, this study aims to assess the administrative risks of smart contract adoption in construction projects. Design/methodology/approach: A literature survey is conducted to specify administrative risks of smart contracts followed by a pilot study to ensure that the framework is suitable to the research question. The criteria weights are calculated through the fuzzy analytical hierarchy process method, followed by a sensitivity analysis based on degree of fuzziness, which supports the robustness of the developed hierarchy and stability of the results. Then, a focus group discussion (FGD) is performed to discuss the mitigation strategies for the top-level risks in each risk category. Findings: The final framework consists of 27 sub-criteria, which are categorized under five main criteria, namely, contractual, cultural, managerial, planning and relational. The findings show that (1) regulation change, (2) lack of a driving force, (3) works not accounted in planning, (4) shortcomings of current legal arrangements and (5) lack of dispute resolution mechanism are the top five risks challenging the adoption of smart contracts in construction projects. Risk mitigation strategies based on FGD show that improvements for the semi-automated smart contract drafting are considered more practicable compared to full automation. Originality/value: The literature is limited in terms of the adoption of smart contracts, while the topic is receiving more attention recently. To support easy prevalence of smart contracts, this study attempts the most challenging aspects of smart contract adoption.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | administrative risks; automated construction process; construction contracts; fuzzy ahp; smart contracts |
| Index terms: | risk mitigation, regulation, mitigation, construction project, methodology, survey, construction company, strategy, stability, focus group, sensitivity analysis, automation, resolution, analytical hierarchy process, smart contract, construction industry, construction contract, automated construction process, drafting, dispute |
| Subjects: | conflict resolution, industry analysis, decision-making and optimization, political science, environmental hazards, structural engineering, management, research methods, production management, automation and robotics, financial risk, digital technology, technical documentation, data collection methods, organization, contract type, dispute resolution |
| Topics: | Project Management, Research Practice, Engineering Principles, Business Strategy, Cost Management, Procurement, Governance, Sustainability, Stakeholder Management, Legal Issues, Design Practice, Digital Applications |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here