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Blockchain in a Construction Project : A design science research towards reducing conflicts between contractor and subcontractor using a Blockchain solution

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Owner: of CoUrsE!

Version: 1.0

Last Updated: 9-2020

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The construction sector is labeled as a serial productivity underperformer compared to other sectors. Several studies have focused on the causes of low productivity in the construction industry. However, studies aimed at solving the problems from a subcontractor’s perspective are scarce. A major cause of low productivity in the construction industry from a subcontractor’s perspective is the many conflicts that arise between contractor and subcontractor. With the help of interviews, an in-depth literature study, and previous research reports, it could be confirmed that the problems surrounding payments from contractors to subcontractors are an important bottleneck for the many conflicts between them during construction projects. The aim of the research was to determine to what extent the potential of Blockchain technology can be applied to reduce the conflicts between contractors and subcontractors during construction projects. The research method used for this research is the Design Science Methodology (DSM). The main research product is a generic solution concept that can be used to address the type of field problem in question. In addition to Blockchain, a traditional database has also been studied as a possible solution for the raised field problem. Both solutions have been compared with each other. However, based on the factor of trust that Blockchain technology can offer more than a traditional database, it has been decided to work out a Blockchain solution.

With the Blockchain solution; a smart contract executed on a Blockchain, payment agreements can be irrefutably recorded and payments are made automatically after work has been carried out and approved. The contract terms and associated payments are programmed in smart contract code and can no longer be modified after signing. The solution has been validated by three experts. There is a great deal of potential to reduce the payment problems that lead to contractor-subcontractor conflicts with the use of Blockchain. However, there are also sufficient challenges such as convincing a contractor to apply the solution and other limitations of Blockchain technology. Overall, Blockchain certainly has the potential to create a major breakthrough in reducing conflicts between contractors and subcontractors during construction projects.

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