Yu, H; Deng, X and Zhang, N (2025) To what extent can smart contracts replace traditional contracts in construction project? Engineering, Construction and Architectural Management, 32(3), pp. 1393-1410. ISSN 0969-9988
Abstract
Purpose: The smart contract provides an opportunity to improve existing contract management practices in the construction projects by replacing traditional contracts. However, translating the contracts into computer languages is considered a major challenge which has not been investigated. Thus, it is necessary to: (1) identify the obstructing clauses in real-world contracts; and (2) analyze the replacement's technical and economic feasibility. This paper aims to discuss the aforementioned objectives. Design/methodology/approach: This study identified the flexibility clauses of traditional contracts and their corresponding functions through inductive content analysis with representative standard contracts as materials. Through a speculative analysis in accordance to design science paradigm and new institutional economics, the economic and technical feasibility of existing approaches, including enumeration method, fuzzy algorithm, rough sets theory, machine learning and artificial intelligence, to transform respective clauses (functions) into executable codes are analyzed. Findings: The clauses of semantic flexibility and structural flexibility are identified from the contracts. The transformation of semantic flexibility is economically and/or technically infeasible with existing methods and materials. But with more data as materials and methods of rough sets or machine learning, the transformation can be feasible. The transformation of structural flexibility is technically possible however economically unacceptable. Practical implications: Given smart contracts' inability to provide the required flexibility for construction projects, smart contracts will be more effective in less relational contracts. For construction contracts, the combination of smart contracts and traditional contracts is recommended. In the long run, with the sharing or trading of data in the industry level and the integration of machine learning or artificial intelligence reducing relevant costs, the automation of contract management can be achieved. Originality/value: This study contributes to the understanding of the smart contract's limitations in industry scenarios and its role in construction project management.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | blockchain; construction industry; construction project management; contract management; smart contract |
| Index terms: | methodology, integration, construction project, replacement, machine learning, contract management, science, content analysis, construction project management, construction contract, paradigm, rough set, blockchain, artificial intelligence, construction industry, smart contract, automation, transformation, institutional economics |
| Subjects: | business, computing systems, data analysis and analytics, data science, artificial intelligence, education and knowledge transfer, project management theory and practice, organizational analysis, industry analysis, contract type, materials science, specialized education, digital technology, economic analysis, research methods, contract management, production management, automation and robotics |
| Topics: | Procurement, Project Management, Engineering Principles, Education, Business Strategy, Research Practice, Organizational Design, Contract Administration, Digital Applications |
| Descriptive scope: | 4 PCTA |
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