Jcemd4 Coeng-12081

Critical Factors Influencing Adoption of
Blockchain-Enabled Smart Contracts in

Construction Projects
Ernest E. Ameyaw, Ph.D. 1; David J. Edwards, Ph.D. 2; Bimal Kumar, Ph.D., M.ASCE 3; Niraj Thurairajah, Ph.D. 4;
Downloaded from ascelibrary.org by Natl Inst. Of Cons. Mgmt & Rsrch (nicmar) on 04/09/23. Copyright ASCE. For personal use only; all rights reserved.
De-Graft Owusu-Manu, Ph.D. 5; and Goodenough D. Oppong, Ph.D. 6
Abstract: Construction projects are premised upon contractual arrangements, and contracts constitute the basis of their success. A contract
enables execution of work and transfer of payments, tracking of key performance indicators, and facilitation of collaboration among project
stakeholders. Historically, construction projects have faced critical challenges due to poor alignment between clients’ expectations, contract
terms, and contractor performance. The advent of advanced digital technologies under the concept of Industry 4.0 has the potential to benefit
construction projects through application of blockchain-enabled smart contracts. However, the adoption of smart contracts in construction
projects is in its early stages, and the factors that will influence its adoption remain unclear. Therefore, this study aimed to explore and
establish the critical factors influencing adoption of smart contracts in construction contractual arrangements. This study administered an
international questionnaire survey among experienced construction practitioners with involvement in smart contract initiatives and activities.
The results obtained from descriptive statistics and fuzzy set-based analysis show that trialability, relative advantage, competitive advantage,
and compatibility of smart contracts are the important predictors of the adoption of such contracts. The findings suggest that practitioners
share a view that technological characteristics of blockchain-enabled smart contracts are critical to their adoption, regarding the technology’s
perceived practicality in improving effectiveness and efficiency of construction projects. This study contributes to technology diffusion
research in construction and highlights drivers that require practitioners’ and industry leaders’ attention to ensure successful adoption
of smart contracts for cost-effective delivery of construction projects. DOI: 10.1061/JCEMD4.COENG-12081. © 2023 American Society
of Civil Engineers.
Author keywords: Smart contracts; Blockchain technology; Construction projects; Construction industry.
Introduction about 6% and 8% to the GDP of the UK and Australia, respectively

(Pervez 2021; Hook 2019). McKinsey (2017) estimated that around
The construction industry is a primary driver of economic growth US$10 trillion per year is expended globally on construction prod-
and social development, ensuring the delivery of critical infrastruc- ucts and services. However, the construction industry has long been
tures for other sectors, creation of jobs, and contribution to national confronted with several challenges that hinder its effective per-
gross domestic product (GDP). For example, construction contributes formance, including poor productivity (McKinsey 2017), poor
payment practices and associated cash flow difficulties and insol-
1 vencies (Peters et al. 2019; Collins 2012), contractual disputes and
Assistant Professor, Dept. of Architecture and Built Environment,
litigations (Carmichael 2002), and lack of trust and transparency
Northumbria Univ., Newcastle NE1 8ST, UK (corresponding author).
Email: ernest.ameyaw@northumbria.ac.uk (Edwards and Bowen 2003). Historically, productivity in construc-
2
Professor, School of Engineering and the Built Environment, Birmingham tion has lagged behind the manufacturing, retail, and agriculture
City Univ., Birmingham B5 5JU, UK; Distinguished Visiting Professor, industries, with an estimated global construction productivity gap
Faculty of Engineering and Built Environment, Univ. of Johannesburg, of US$1.6 trillion (McKinsey 2017). According to McKinsey Global
Johannesburg, South Africa. ORCID: https://orcid.org/0000-0001-9727 Institute, traditional contracts remain detrimental to increased pro-
-6000. Email: david.edwards@bcu.ac.uk ductivity in construction; efficient contracting practices can reduce
3
Professor, Dept. of Architecture and Built Environment, Northumbria costs by 6%–7% and raise productivity by 8%–10% (McKinsey
Univ., Newcastle NE1 8ST, UK. Email: bimal.kumar@northumbria.ac.uk
4
Associate Professor, Dept. of Architecture and Built Environment,
2017).
Northumbria Univ., Newcastle NE1 8ST, UK. ORCID: https://orcid.org Uncertainty in payments represents another well-documented
/0000-0003-3391-1663. Email: niraj.thurairajah@northumbria.ac.uk major challenge facing construction projects (Collins 2012; Peters
5
Associate Professor, Dept. of Construction Technology and Man- et al. 2019; PwC 2019). Late payment and nonpayment result from
agement, Kwame Nkrumah Univ. of Science and Technology, Kumasi, clients’ unwillingness or inability to pay, or disputes over amounts
Ghana. Email: d.owusumanu@gmail.com due (Li et al. 2019). This has adverse impacts on projects, including
6
Research Associate, Dept. of Building and Real Estate, Polytechnic cost overruns and time slippages, project failures, cash flow diffi-
Univ., 11 Yuk Choi Rd., Kowloon, Hong Kong. Email: goodenough.de culties, and mistrust (Collins 2012; Manu et al. 2015; Durdyev and
.oppong@connect.polyu.hk
Hosseini 2019). An inquiry into insolvencies in New South Wales’
Note. This manuscript was submitted on November 24, 2021; approved
on November 10, 2022; published online on January 3, 2023. Discussion (Australia) construction industry revealed nonpayments or pay-
period open until June 3, 2023; separate discussions must be submitted for ments withheld as the primary cause (Collins 2012). Also, PwC’s
individual papers. This paper is part of the Journal of Construction En- (2019) survey of small and medium-sized enterprises (SMEs) re-
gineering and Management, © ASCE, ISSN 0733-9364. vealed that 77% of companies had cash flow difficulties resulting
© ASCE 04023003-1 J. Constr. Eng. Manage.
J. Constr. Eng. Manage., 2023, 149(3): 04023003

from late payments, and had to invest substantial resources and construction progress with the advantage of managing cash flow
time to chase payments. (Hunhevicz and Hall 2020). The extent and consequences of cash
Construction disputes are widespread, with dire consequences flow problems were perhaps exemplified by the failure of UK’s
on projects and stakeholders. The industry is highly fragmented Carillion Plc. (second largest construction and facilities manage-
and characterized by adversarial, rather than collaborative, relation- ment company) in January 2018, and further highlights the need
ships (Carmichael 2002). A primary cause of construction disputes for smart contract technology. Carillion suffered late payments
has been linked to poor payment practices and the resultant cash and was in debt for £1.5 billion (Thomas 2018). Given Carillion’s
flow problems (Collins 2012; Peters et al. 2019). A report from extended 120-day payment period (Li et al. 2019), the effect of its
Arcadis (2020) observed that the global average cost of disputes collapse was felt throughout its supply chains. Blockchain holds
is estimated at US$30.7 million, and the average dispute resolution promise to solve such supply chain problems; funds are held
time is 15 months. The Middle East recorded the highest average centrally on a decentralized blockchain system and authorized fol-
cost of disputes of US$62 million, and North America saw the lowing completion and verification of work (Arup 2019). On a con-
highest average duration for dispute resolution (17.6 months). struction project, this can help to avoid or reduce intermediaries,
The report highlights collaboration among project stakeholders but also prevent clients from withholding payments to contractors
as a strategy for dispute avoidance, mitigation, and resolution. and contractors holding back payments to subcontractors, with the
Unfortunately, a collaborative culture is lacking in the construction benefit of improved cash flow (Arup 2019).
industry, which is a contributor to failed projects (De Schepper Despite the foregoing potential of, and growing interest in,
et al. 2014). blockchain-based smart contracts, there are limited applications of
As an efficient way to address the above challenges and to the technology in administering construction projects. And due to
deliver effective construction projects, digital technologies are the relative immaturity of smart contracts in construction, previous
receiving attention from researchers, practitioners, and industry scholarly work that has investigated adoption and implementation
leaders (Penzes et al. 2018; Li et al. 2019). Blockchain and its at project level remains scarce. The specific factors that will in-
innovations, such as blockchain-based smart contracts (or smart fluence smart contract adoption in construction projects remain un-
contracts), are seen as innovative technologies offering a potential clear. This gap in the current literature is a barrier to wider adoption
solution to the foregoing challenges (Hamledari and Fischer 2021; of smart contracts in construction projects and the industry. Also,
Li et al. 2019; Yang et al. 2020) by making construction projects given the construction industry’s inability and/or reluctance to em-
transparent, accountable and collaborative (Penzes et al. 2018; brace innovative technologies (Nikas et al. 2007; Merschbrock
EY 2018). Administration of smart contracts can significantly 2012), previous studies on other technologies (e.g., BIM) explored
benefit construction projects, and several opportunities exist to factors and external pressures exerting influences on their adoption
leverage this technology in the construction industry. With their (Ahuja et al. 2009; Cao et al. 2014; Pan and Pan 2020), as a means
innate characteristics of being immutable, secure, and traceable, to incentivize industry stakeholders to accept and adopt technologi-
smart contracts offer a collaborative working environment among cal innovations. Against this backdrop, it is therefore valuable
clients, contractors, subcontracts, suppliers, and consultants (EY and timely to investigate the critical factors exerting influences
2018). Such collaborative working improves trust, reduces dis- on adoption of smart contracts based on the perceptions of con-
putes, and provides alignment between contracting parties. struction practitioners. According to Cao et al. (2014), a project
Smart contract technology challenges the contractual model of constitutes the fundamental unit of construction and the decision
the highly fragmented construction industry (Arup 2019). Con- to adopt a technology is made at the project level. Therefore, this
struction projects are procured using traditional contracts, which study considers the adoption of smart contracts at the construction
are characterized by intensive documentation and information. This project level.
renders some of the contractual processes—such as preparation This research draws on international construction professio-
of interim payment applications—time-consuming, unsecure, and nals with experience and interests in smart contract initiatives.
frequently erroneous. Blockchain-based smart contracts could In this way, the study aims to provide a global perspective on
help to automate contractual transactions and eliminate paper- factors influencing smart contract adoption. This study extends
based traditional contracts (Hamledari and Fischer 2021), which the scholarly work on technology diffusion in construction and
are easy to forge and take longer to move among contracting highlights the primary drivers for greater adoption of blockchain-
parties, making the contractual processes efficient and secure enabled smart contract construction projects. It is the first empiri-
(Ream et al. 2016). cal work to explore smart contracts adoption at the construction
For construction projects, a key area of application of smart con- project level.
tracts is automation of transactions and payments (Hamledari and
Fischer 2021; Cardeira 2016). Blockchain-based smart contracts
can be designed to automate transactions among contracting parties Literature Review
and automatically effect partial or full payments to contractors, sub-
contractors, and suppliers upon completion of work. Here, contract
Blockchain Technology
conditions and schedules of payment are coded into smart contracts
upfront (Arup 2019), which execute themselves without third-party Arup (2019) noted that blockchain technology possesses unique
intermediaries through automated protocols (Hargaden et al. 2019; characteristics capable of solving many omnipresent challenges
Nawari and Ravindran 2019). Automated payment transactions plaguing the construction industry. Blockchain is a data storage
are critical to addressing the problems of late payments or nonpay- method, a shared digital ledger that enables the recording of several
ments and negative cash flow. transactions as well as tracking of tangible, intangible, and digital
Linked to payment automation is improved cash flow through assets in a network. These assets (e.g., land, house, or copyrights)
execution of blockchain-enabled smart contracts. This develop- are tracked and traded on the blockchain network at low risk and
ment is expected to be a significant step forward for the con- reduced transaction costs (Gupta 2020). Each data block stores a
struction industry, which is frequently cash poor. Smart contracts series of transactions together with a cryptographic summary of the
can be designed to run on the blockchain to manage and monitor preceding block, making the data blocks chained together and

consequently the transactions (data) immutable (Hamledari and (Lauslathi et al. 2017). Pertinent literature within the small body of
Fischer 2021). knowledge includes the work of Yang et al. (2020), who drew on
Blockchain presents an architecture that enables nodes (users) in two cases to demonstrate practical applications of public and pri-
a network to share an updated ledger via a peer-to-peer replication vate blockchain technologies in construction business processes.
during a transaction, and consensus is therefore reached in peer-to- Yang et al. (2020) demonstrated how a smart contract was imple-
peer blockchain networks (Narayanan et al. 2016). A blockchain mented for procuring high-priced equipment for an international
network introduces a censorship-resistant shared ledger of transac- construction project, and highlighted the ability of smart contracts
tions that are efficient and economical, because it avoids or min- to eliminate payment delays and disputes and enhance contract
imizes the requirement for intermediaries and duplication of effort, administration. Li et al. (2019) reviewed the state of blockchain
and it is less vulnerable because it adopts a decentralized consensus in the built environment and construction industry, and proposed
protocol to verify data (Gupta 2020). Therefore, nodes can authen- a roadmap for adoption. In appraising use cases, Li et al. (2019)
ticate and validate transactions. In the Fintech sector, a popular use emphasized two potential areas for application of blockchain
case of blockchain technology is Bitcoin (Nakamoto 2008), where technology: (1) regulation and compliance; and (2) project bank
blockchain provides a platform to record and store Bitcoin trans- accounts. With its characteristics, a smart contract is capable of
actions (Bart et al. 2017). Ethereum’s blockchain (Buterin 2014) automating current manually administered payment principles of
comes with a protocol and a built-in Turing-complete language a project bank account in public construction projects, thereby
allowing any user to create decentralized applications (DApp) and eliminating the consequences of late payments, nonpayment, and
smart contracts (Buterin 2014), which can be executed on the insolvencies in the construction industry.
Ethereum virtual machine (EVM). EVM is a decentralized world Mason (2017) described building information modeling (BIM)
computer that makes it impossible to tamper with smart contracts as the forerunner of smart contracts, where blockchain serves as the
(Hamledari and Fischer 2021). platform for running smart contracts and that semiautomation,
rather than full automation, of contracts is the possible outcome.
This assertion is informed by the current limitations of the tech-
Blockchain-Enabled Smart Contracts nology, complexity of projects with frequent variations, and the
Smart contracts are among the highly disruptive and critical block- need for human interventions in managing construction contracts
chain technology-enabled innovations (Arup 2017). The notion (Gabert and Grönlund 2018). Hence, smart contracts could be more
of a smart contract was introduced in 1994 by a legal scholar suited for simple transactional activities in construction (Mason
and a computer scientist, Nick Szabo (Szabo 1994). Szabo defined 2017). Badi et al. (2021) applied the technology–organization–
a smart contract as “a computerized transaction protocol that exe- environment (TOE) model to examine and identify factors in-
cutes the terms of a contract.” The automated transaction protocol fluencing adoption and use intention of smart contracts in the UK
seeks to achieve three broad objectives: (1) satisfy terms of contrac- construction sector. The TOE framework is useful for examining
tual agreements, (2) reduce both malevolent and accidental errors, the key influences for adopting technologies within firms, with a
and (3) reduce the requirement for intermediaries in enforcing a focus on technological, organizational, and environmental con-
contract. In other words, a smart contract is a digital computer code siderations (Oliveira and Martins 2010). Badi et al.’s (2021) study
(or a programmable contract) that eliminates trusted third parties contributes to understanding of construction organizations’ atti-
and self-executes its terms upon satisfaction of preset conditions; tudes and perceptions toward smart contracts use; its major limi-
the code is linked to digital currencies (e.g., Ether, Bitcoin) as the tation, however, is the focus on the UK’s construction sector.
representation or payment of an asset(s) (Arup 2017; Yang et al. Given the global interest in smart contracts, it is imperative to
2020). Szabo (1994) discussed some economic gains of automated explore what global influences are driving adoption and use of
contracts, which include reduced contractual arbitrations (through smart contracts.
automation), low fraud loss, and reduced cost of enforcing con- In another study, Hamledari and Fischer (2021) explored the use
tracts and transactions. of blockchain-based smart contracts in automation of interim pay-
Arup (2017) outlined the following three unique properties for ments in construction projects, as a means to resolve the inefficient
smart contracts. First, a smart contract is only recorded on or workflows and time-consuming document processing associated
enabled by blockchain. This allows a smart contract to “inherit” with traditional payment practices. Their study presented a use
properties of the blockchain technology, including censorship re- case to illustrate smart contract-based payment processes with
sistance, immutability, high security, etc. Second, the recording an unmanned aerial vehicle-based progress monitoring. As noted
and transfer of assets on a blockchain is controlled by a smart con- earlier, blockchain-based automation of progress payments will
tract. Third, a smart contract is executed by a blockchain, and this benefit project stakeholders through reduced inefficiencies, fewer
can only be changed through a consensus by users. These proper- contractual disputes, and reduced opportunity for fraud and corrupt
ties differentiate smart contracts from other computerized systems/ transactions by providing a “single source of truth for projects”
software. Today, the advent of blockchain technology and Bitcoin (Zhong-Brisbois 2019; Hamledari and Fischer 2021). Progress
(Nakamoto 2008; Arup 2017) are advancing the concept of smart payment automation could also reduce costs by minimizing or
contracts in many industries including construction. Blockchain- avoiding multiple intermediaries.
based smart contracts can enable a number of construction proc- The above literature review found that smart contract technol-
esses to be automated, improved, and made more efficient (Penzes ogy can mitigate some of the pertinent problems plaguing construc-
et al. 2018). tion projects such as inefficient payment practices, high incidence
of disputes, and poor contract administration. The literature review
also shows that potential areas of application of smart contracts in-
Previous Studies on Smart Contracts in Construction
clude regulation and compliance and project bank accounts. Also, it
There is growing interest among industry and academia in block- is clear that the smart contract has a significant role to play in pay-
chain and smart contracts in the construction industry (Li et al. ment processing and security in construction projects. The current
2019; Arup 2019). However, there is scant scholarly work on the scholarly work is limited to possible use cases and benefits of smart
subject due to the relative immaturity of smart contract technology contract technology.

Prior Studies on Adoption of Digital Technologies in awareness and understanding of the global influences affecting
Construction adoption of the technology is imperative for advocates and the
international construction industry. Yet, very few studies have in-
Construction research continues to explore adoption of various dig-
vestigated what would influence the adoption of smart contracts in
ital technologies to address the challenges plaguing construction
construction projects from the perspective of practitioners. The cur-
projects, organizations, and the industry. Nikas et al. (2007) exam-
rent study helps fill this knowledge gap by exploring the influences
ined the antecedents and drivers that influence adoption of collabo-
driving the adoption of smart contracts in projects from the perspec-
rative information technologies in the construction industry. The
tive of construction practitioners across countries. Specifically, this
results showed that senior management’s commitment to employ-
study identifies and prioritizes the critical factors influencing the
ees’ training and skills development and the increasing size of an
use of smart contracts.
organization are the primary factors affecting the intention to adopt
collaborative technologies. In studying information, communica-

tion, and technology (ICT) adoption, Ahuja et al. (2009) reported Multilevel Fuzzy Synthetic Evaluation Method
that technical, managerial, and people issues are the primary factors Fuzzy set theory (Zadeh 1965) is a mathematical logic to represent
driving adoption of ICTs in building project management in the and manipulate fuzzy terms, such as critical, very critical, and
construction industry. In a related case study of three large con- extremely critical, and uses grades of membership in sets as op-
struction organizations in Australia, Peansupap and Walker (2005) posed to the true or false membership in traditional sets. Fuzzy sets
reported that the important factors influencing adoption of ICTs are capable of representing a varying degree of truth values, and
are related to management, individual, technology, and workplace include any real number between 0 and 1, and therefore, the value
environment issues. of membership function in a fuzzy set defines the degree to which
Lee et al. (2013) proposed a BIM acceptance model from the an object belongs to the set (Tah and Carr 2000).
perspectives of individuals and organizations, and reported that per- Fuzzy synthetic evaluation (FSE) is a branch of the fuzzy set
ceived usefulness of BIM technology and behavior control (internal theory and uses fuzzy mathematics to model and quantify vague
and external pressure) directly influence the individual’s intention expressions that are present in natural language. These vague, fuzzy
to adopt and use BIM. Using institutional theory, Cao et al. (2014) expressions are called linguistic variables in a fuzzy set environ-
investigated the effects of the coercive, mimetic, and normative iso- ment (Wei et al. 2010; Xu et al. 2010). In practice, a set of factors
morphic pressures on adoption of BIM in construction projects. is frequently evaluated based on expert judgement of decision mak-
Drawing on survey data from construction projects in China, the ers (such as survey participants) using linguistic variables such as
study showed that mimetic and coercive pressures have a signifi- disagree, agree, and strongly agree. The FSE method provides a
cant effect on BIM adoption in construction projects, while norma- mathematical way to define and quantify such fuzzy expressions
tive pressure had no influence. In a similar study carried out in the (Thomas et al. 2003). Kuo and Chen (2006) noted that FSE has
UK, Howard et al. (2017) surveyed the perceptions of construction attributes for evaluating objects or factors. A comprehensive evalu-
practitioners working with BIM to determine the issues impeding ation is performed on the relevant objects to generate the overall
proliferation of the technology at the individual level. The authors evaluation. In producing an overall evaluation, not only the main
observed that performance expectancy does not impact behavioral factors (or objects) are considered, but the subfactors that define
intention to use BIM, and that individuals using BIM may not each principal factor are considered, which leads to a multilevel
necessarily anticipate job performance rewards from using it. From problem that is solved by multilevel FSE. The multilevel fuzzy
the perspective of building contractors in Hong Kong, Pan and model is the most useful and suitable method for calculating the
Pan (2020) observed that top management support is the most in- membership values from the lowest level (subfactors) to the top
fluential determinant in the adoption of construction robots. Other level (principal factors) (Wei et al. 2010; Hsiao 1998). For example,
important determinants include relative advantage, organizational in this study, the multilevel fuzzy model was used to calculate the
readiness, competitive pressure, and high costs. Prior literature overall evaluation score of each critical factor group (CFG) by first
on technology adoption has focused on ICT, BIM and/or other determining the membership values of the subcritical factors that
general digital technologies. Every technology is unique, and its define each CFG. Hence, the evaluation score of a CFG is obtained
adoption and use are influenced by different sets of factors. through deriving the membership values, and then defuzzifying the
Smart contract is a new digital technology in the construction evaluation fuzzy vector, of the CFG. There have been attempts to
industry; thus, understanding the important factors that affect its apply FSE method within construction to evaluate and prioritize
successful adoption in construction projects will enhance its adop- factors or objects. Tran et al. (2011) proposed a fuzzy set-based
tion rate and use. However, the existing literature has not fully at- methodology to rank the probability and consequences of manhole
tempted to understand the drivers for acceptance and adoption of collapses. Liu et al. (2013) used the FSE method to assess and rank
smart contracts at the construction project level. The diffusion of risks associated with construction drilling projects. Xu et al. (2010)
smart contract technology in construction projects will not grow used the FSE method to prioritize and rank-order the risks associ-
unless project stakeholders have access to a body of knowledge ated public–private partnership (PPP) projects.
providing better understanding of the primary enablers of smart
contracts. The construction industry is a laggard in embracing Research Methods
and adopting innovative technologies (Merschbrock 2012), and
therefore, advancing the adoption of new technologies has often To explore the phenomena under investigation, this research largely
required research to establish the factors influencing their adoption employed an empirical epistemological lens (Merriam 2009) to
(Cao et al. 2014; Hwang et al. 2022). This is also true for smart analyze primary quantitative data collected from a structured
contracts, and a wider acceptance and adoption of the technology questionnaire survey (Hoxley 2008). To explore and identify fac-
will depend on bottom-up efforts from stakeholders at the project tors that influence smart contract adoption, an interpretivist philo-
level. This is because the technology adoption decision is made at sophical stance (Leitch et al. 2010) was adopted in the literature
project level (Cao et al. 2014), thereby driving adoption. In addi- review sections. This enabled the factors identified from the liter-
tion, there is global attention on smart contracts, and therefore, ature (see below) to be refined and reconstructed to suit the study’s

Fig. 1. Research framework.
aim. A questionnaire survey instrument was then prepared prem- blockchain and smart contract technology applications. The ques-
ised upon the factors obtained from the literature review, thus tionnaire was initially designed based on the outcome of the
constituting a virtuous knowledge cycle on existing theories con- literature review and, subsequently, comments from experienced
tributing to new insights. The research methods and approach are researchers currently working on this subject. Specifically, these
described in the sections below. The overall research framework is researchers provided comments on the data collection instrument’s
presented in Fig. 1. design, structure, scope, appropriateness, wording, and clarity of
the constructs. The wording of the smart contract adoption factors
was informed by Badi et al. (2021), but with changes and refine-
Identifying Factors Influencing Smart Contract ment to suit the context and purpose of the present study. This ap-
Adoption proach provides an inbuilt validity to the questionnaire (Howard
The list of factors influencing adoption of smart contracts is con- et al. 2017). A questionnaire survey was used as the primary data
structed based on a review of three areas. First, related academic collection method because it is anonymous, provides reliable data
studies on blockchain and smart technologies (Yang et al. 2020; at minimal cost (Cohen et al. 2007), and captures the knowledge
Hamledari and Fischer 2021; Badi et al. 2021) were reviewed. and experiences of respondents (Hoxley 2008). Also, the question-
Given the limited scholarly work on smart contracts, relevant stud- naire survey method is widely used by researchers to investigate
ies were purposively searched on websites of top-ranked construc- factors influencing technology adoption in construction (Howard
tion journals. Next, industry reports on blockchain/smart contracts et al. 2017; Lee et al. 2013; Cao et al. 2014). The questionnaire
applications in the construction sector were reviewed, including consisted of a five-point rating scale (1 = strongly disagree and
publications by professional construction organizations, individ- 5 = strongly agree) that were used to solicit knowledge and opin-
uals (Penzes et al. 2018; Cardeira 2016; Ream et al. 2016), and ions of the survey respondents.
consulting firms (Arup 2017, 2019; EY 2018). Finally, technology Likert scales are widely used in construction management
acceptance theories and technology diffusion studies in construc- and engineering research (e.g., Li et al. 2013; Ameyaw et al.
tion (Lee et al. 2013; Cao et al. 2014) were reviewed. The outcome 2017b; Murphy et al. 2015; Howard et al. 2017; Cao et al.
of the review exercise yielded 27 factors that could potentially drive 2014; Lee et al. 2013; Gunduz and Elsherbeny 2020). Construction
smart contract adoption in construction projects. The factors were researchers use Likert scales when conducting surveys of attitudes
carefully constructed to suit the context of the current study, and are and opinions in evaluating objects or factors. Likert scales fre-
presented in Table 1. quently contain a midpoint word such as “neutral” (Allen and
Seaman 2007; Tsang 2012), as used in the questionnaire survey
for this study. The objective is to provide the respondents with
Questionnaire Survey a truly neutral opinion without missing their opinions (Tsang
The questionnaire was administered to construction practitioners 2012). The presence of a neutral midpoint can also deter respond-
with experience in and/or working on smart contract initiatives ents from choosing extreme points (responses) on the Likert scale
as well as construction academics and researchers focused on that may not truly reflect their opinions. Thus, the respondent is not

Table 1. Potential factors influencing smart contracts adoption
Factor ID Factor Statement Reference
f-01 Facilitation of payments and A smart contract facilitates (progress) payments and reduces Cardeira (2016), EY (2018),
reduction of payout time payout time by reducing delays in invoice verification process Hamledari and Fischer (2021),
and Mason and Escott (2018)
f-02 Ease of understanding A smart contract is easy to understand Chatterjee et al. (2021)
f-03 Generation of increased profits to The use of smart contracts will allow the generation of higher Nikas et al. (2007)
adopters profits to organizations
f-04 Security of payments in projects A smart contract provides secured payments in construction Hamledari and Fischer (2021)
projects
f-05 Competitive pressure to adopt smart The organization has experienced competitive pressure to adopt Nikas et al. (2007)
contracts smart contracts

f-06 Available technological support Existing technologies in the organization support smart contract Badi et al. (2021) and Lee et al.
adoptions adoption (2013)
f-07 Minimizes intermediaries and overall A smart contract reduces intermediary and overall project costs EY (2018)
project costs by highlighting inefficiencies
f-08 Maximizes transparency in project A smart contract maximizes transparency of project cost, time, EY (2018)
delivery and scope
f-09 Consistency with the existing values A smart contract is consistent with the existing values and Chatterjee et al. (2021), Badi
and beliefs of the organization beliefs of the organization et al. (2021), and Lee et al. (2013)
f-10 Intention to try out a smart contract in The organization intends to try out a smart contract in a limited Badi et al. (2021) and Moore and
a limited scope prior to adoption scope in its projects, before deciding whether to adopt it in Benbasat (1991)
practice
f-11 A trial period before smart contract A trial period before adopting a smart contract in practice will Badi et al. (2021) and Moore and
adoption reduce perceived risks Benbasat (1991)
f-12 Protection of contracting parties from A smart contract protects contracting parties from late Arup (2017, 2019)
late payments and insolvencies (progress) payments and potential insolvencies
f-13 Ability to try out a smart contract Ability to try out a smart contract is important in the Badi et al. (2021) and Moore and
organization’s decision to adopt it in future projects Benbasat (1991)
f-14 Compatibility with the existing A smart contract is easy to integrate with existing contractual Lee et al. (2013) and Moore and
contract management systems and/or processes and/or compatible with the existing contract Benbasat (1991)
contractual processes management systems in the organization
f-15 A stronger competitive advantage The use of smart contracts would offer the organization a Nikas et al. (2007) and Chatterjee
stronger competitive advantage et al. (2021)
f-16 Ease of use and manageable A smart contract is easy to use and is manageable Lee et al. (2013), Chatterjee et al.
(2021), Mason and Escott (2018),
and Badi et al. (2021)
f-17 Compatibility with the contract A smart contract is compatible with the contract management Lee et al. (2013) and Badi et al.
management needs of the needs of the organization/projects (2021)
organization/projects
f-18 Transparent and favorable Government legislation about smart contracts is transparent and EY (2018) and Neuburger (2017)
government legislation supports/favors the adoption of smart contracts
f-19 Availability of resources and The organization has adequate resources and experienced and Chatterjee et al. (2021)
experienced and skilled IT personnel skilled IT personnel to support smart contract adoption
f-20 Improved trust among contracting A smart contract improves trust among contracting parties via Hamledari and Fischer (2021)
parties automatic sharing of corrections to time and material databases
f-21 Minimizing ambiguities in the scope A well-designed and implemented smart contract minimizes EY (2018)
of work ambiguities in the scope of work, which would help in quick
resolution of change orders and claims
f-22 Understanding of positive effects of The organization has a clear understanding of the positive Moore and Benbasat (1991) and
smart contracts effects of smart contracts in construction projects Badi et al. (2021)
f-23 Increased ability to outperform the The use of smart contracts would increase the ability of the Chatterjee et al. (2021), Badi
competition organization to outperform the competition et al. (2021), and Lee et al. (2013)
f-24 Minimizing complexity resulting in A smart contract minimizes complexity, thereby facilitating EY (2018)
informed decision making informed decision making in projects
f-25 Reduced occurrence, and efficient A smart contract reduces the occurrence, and ensures efficient Hamledari and Fischer (2021)
resolution, of disputes resolution, of disputes among contracting parties
f-26 Provision of legal protection Organizations or firms are legally protected through smart Ferreira (2021) and Badi et al.
contracts (2021)
f-27 Pressured to adopt smart contracts The organization’s business partners recommend or push for Nikas et al. (2007)
(i.e., pressure) the adoption of smart contracts
compelled to commit to a particular position, thereby providing the 2020) and can be analyzed using descriptive statistics and other
benefit of minimizing response bias (Croasmun and Ostrom 2011; analytical methods such as factor analysis and correlation analysis
Tsang 2012). It is a common practice in the construction manage- (Harpe 2015; Brown 2011; Carifio and Perla 2008). In addition, the
ment literature to treat ordinal variables in Likert scales as interval use of Likert scales involves a consideration of reliability, which
variables (Ho et al. 2009; Li et al. 2013; Gunduz and Elsherbeny should be calculated using the Cronbach’s alpha reliability test

(Brown 2011). In this study, the Cronbach’s alpha value was cal- professional bodies (Murphy et al. 2015). To ensure quality and
culated based on the survey data. reliable responses, those who satisfied the above criteria were con-
The Likert scale response format was developed with the inten- sidered and invited to participate in the survey. In addition, the re-
tion to report means and standard deviations of the adoption factors. spondents hold senior level positions and have between 5 and
Therefore, the basic item-writing considerations (Busch 1993) were >20 years’ working experience in the construction industry and
observed in developing the questionnaire survey instrument using delivery of construction projects. To provide a global perspective
Likert scales. The item stems used statements on which the survey on the driving factors for smart contract adoption, the survey par-
respondents expressed their agreement with each statement accord- ticipants have industry background/experience from 20 countries
ing to their knowledge, understanding, and experience regarding (Table 2). The respondents were selected through a combination
smart contracts. Numbered scales ranging from one to five were of strategies, such as searching LinkedIn profiles, websites of con-
used because people are comfortable with and think in terms of struction organizations, and industry and academic research publi-
degrees (Brown 2011; Carifio and Perla 2008; Hwang et al. 2022; cations. A chain-referral (snowball) technique (Parker et al. 2019)
Nunnally 1978). Following the above point, the scale category was also used to increase the number of respondents; initially con-
labels (response choices) are presented to provide the survey re- tacted respondents were asked to share the survey with, or recom-
spondents with the appearance of equal intervals, using the num- mend, other knowledgeable practitioners of smart contracts who
bered scales. This is to ensure that the response choices are may be willing to participate in the survey.
uniformly ranked, avoiding ambiguity and ensuring that the re- Survey responses were secured through a web-based survey sys-
sponse choices are interpreted consistently and meaningfully tem (SurveyMonkey), with a web link to the questionnaire emailed
(Nunnally 1978; Busch 1993; Harpe 2015). Hence, Likert-type to the respondents. The survey was also shared on the Co-operative
scales are suitable for this study as they generate information (data) Network for Building Researchers (CNBR) platform and the
based on the survey respondents’ expert opinions and knowledge of professional network of the Project Management Institute (PMI).
the topic being investigated. The Likert scale enables the ranking of Overall, 61 responses were received, but 41 were deemed valid
the smart contract adoption factors, because the item stems are for analysis (Table 2). Obtaining a significant number of responses
clearly constructed, response choices are well labelled and uni- through email contact is challenging (Stern et al. 2014). Some
formly ordered, and multiple response options including a neutral of the invited respondents declined to participate due to lack of
response to enable the survey respondents to judge each item stem knowledge on smart contracts, while others failed to complete the
in terms of agreement. From the foregoing, the survey data allow survey. Some emails bounced because the individuals had joined
for the use of means and standard deviations to prioritize and de- other companies. Because of the strict participant selection criteria
termine factors exerting influence on smart contract adoption. Fi- adopted and the fact that smart contract is an emerging area, the
nally, as recommended by Blaikie (2003), the percentages of the number of responses achieved was sufficient for analysis.
survey response for each scale item are calculated. The respondents indicated a mix of professional backgrounds
and work in various roles within the construction project manage-
ment team (or as research consultants to such): 27% contractors/
Questionnaire Administration and Survey Participants subcontractors, 36% consulting firms, 27% universities and re-
The questionnaire was distributed to professional construction search institutions, 10% for “other.” Table 2 shows that the re-
managers, contract managers and administrators, quantity sur- spondents are senior construction professionals/practitioners with
veyors, project managers, and construction researchers working knowledge of and involvement in blockchain and smart contract
in public and private sectors and universities/research agencies. initiatives and developments in the construction industry. The
A robust ethical protocol governed the administration of this survey breakdown of roles is as follows 22% are quantity surveyors; 17%
instrument, which included providing participants with assurances are project and construction managers; 24% are commercial, con-
that all personal details given would remain strictly confidential tract, and program managers/directors; 24% are researchers; and
and would not be divulged nor disseminated without prior written 12% are in the “other” category.
consent; guarantees that data protection policies would oversee the
handling and management of data security; and an offer that the
Analyses and Results
results would be made freely available after publication. Cumula-
tively, these ethical and legal measures enabled informed consent to Statistical analyses were performed on the survey data using the
be secured from survey participants and protected their data pri- IBM SPSS Statistics 20 and Microsoft Excel Spreadsheet. The
vacy. Because smart contract technology is new and adoption is analyses include internal consistency reliability of the scale, de-
in its early stages (Lauslahti et al. 2017; Badi et al. 2021), the re- scriptive mean scoring, relative significance analysis, standard
spondents were targeted and purposively selected. The respondents deviation, normalization analysis, and interrater agreement analy-
were carefully and purposefully selected based on the guidelines sis. Extended analysis was performed using fuzzy set theory, which
put forward in the literature (Okoli and Pawlowski 2004; Murphy was used to evaluate and establish the most important factors influ-
et al. 2015). Selection criteria were developed to identify relevant encing smart contract adoption.
skill groups. In this study, the main skill groups targeted were
industry practitioners and academics/researchers. The individual
participants were selected based on the following selection criteria, Reliability Analysis
with a survey respondent having: (1) substantial working experi- The Cronbach’s alpha coefficient (α) was computed to determine
ence in the construction industry with a direct involvement in the internal consistency of the adopted scale. A scale’s internal
projects, (2) current and direct involvement or experience in the consistency gauges the degree to which the scale’s items “hang to-
adoption process of (new) digital technologies in construction, gether” and whether the scale items measure the same underlying
and (3) sound understanding and knowledge of blockchain-based construct (Pallant 2010). The α coefficient ranges between 0 and 1,
smart contract technology and its applications. These criteria in- with a value above 0.7 deemed acceptable in exploratory studies
clude subcriteria such as evidence of peer-reviewed publications (DeVellis 2003). In this study, the calculated α coefficient was
in academic and practitioner journals and membership in industry 0.945, which suggests an excellent internal consistency reliability

Table 2. Profile of survey respondents
Background Experience Count Percentage
Years of industry 3–5 13 31.71
experience 6–10 5 12.20
11–19 11 26.83
20þ 12 29.27
Professional category Quantity surveyor 9 21.95
Project/construction manager 7 17.07
Commercial, contract & program 10 24.39
manager/director
Academic/researcher 10 24.39
Othera 5 12.20
Professional RICS 10 24.39
membership CIOB & RICS 6 14.63
ICE 5 12.20
ASCE 4 9.76
RIBA 1 2.44
Otherb 15 36.59
Core business of your Main/subcontractor 11 26.83
organization Professional consultancy 15 36.59
University/research institution 11 26.83
Otherc 4 9.76
Construction projects General construction projects 24 58.54
involved in PFI/PPP projects 10 24.39
Mix of above 7 17.07
Countries in which Continent Country/territory
respondents practice(d) Africa South Africa, Nigeria, Somalia, Ghana,
Angola
Asia China, Hong Kong, Cambodia, Indonesia,
India, Malaysia, UAE, Jordan
Europe United Kingdom, Spain, Greece, Turkey
North America United States
Oceania Australia, New Zealand
Global Respondents with work experience across
multiple (>3) countries
a
Concession analyst, technology consultant, lawyer, PPP consultant.
b
Law Society (NSW, Australia), Technical Chamber of Greece, Association of Consulting Engineers (India), WAPPP.
c
Development institution, public institution, manufacturer/supplier; No. of countries: 20 + Global.
of the scale for the sample (Pallant 2010). In addition, the values in insignificant degree of measurement error (Shields et al. 1987). For
the interitem correlation matrix are all positive, suggesting that the example, Gunduz and Elsherbeny (2020) calculated the means and
scale’s items measured the same underlying constructs, and there- standard deviations of contract administration factors affecting con-
fore, the survey data are reliable for statistical analyses (Cohen struction projects using summative ratings from a Likert scale.
et al. 2007). Hwang et al. (2022) used means and standard deviations to priori-
tize and establish the important challenges to, and effective strat-
egies for, promoting the adoption of smart technologies in the
Critical Driving Factors for Smart Contract Adoption construction industry. Third, as reported in Table 3, the distribution
The mean scores, relative significance (importance) indices (RSI), of the participants’ responses (survey data) show that the partici-
and normalized values were calculated to establish the important pants used the full range of response categories for each scale item.
factors (Xu et al. 2010; Lee et al. 2013; Ameyaw et al. 2017b) This means that (1) the “shorter” item problem is avoided; and
for smart contract adoption. This helped to ascertain the critical (2) the descriptive analysis will produce meaningful results without
factors influencing adoption of smart contracts. These statistics missing the true message from the data (Harpe 2015; Carifio and
help to rank-order the driving factors to extract the critical factors Perla 2008). Based on the five-point Likert scale, five mean ranges
from the general list of 27 used in the questionnaire survey. relating to different thresholds are used to capture and interpret the
The use of descriptive statistics (mean and standard deviation) level of agreement among the respondents as: ≥1.50 = strongly dis-
for preliminary analysis of the survey data is consistent with the agree; 1.51–2.50 = disagree; 2.51–3.50 = neutral; 3.51–4.50 =
recommendation of Harpe (2015) that a numerical response format agree; and ≤4.51 = strongly agree. Therefore, a driving factor with
containing at least five response options can be treated as continu- a mean score of ≤3.51 is considered “critical” in this study. The
ous variables. It was argued that the use of numeric presentation (in mean scores range between 2.29 and 4.41, with 16 (59%) factors
Likert-type scales) gives the responses interval characteristic, and ranging between 3.54 and 4.41. The mean ranges and cut-off cri-
therefore, means and standard deviations can be calculated for each terion have been used by previous studies (Li et al. 2013; Ameyaw
scale item. Second, Carifio and Perla (2008) concluded that it is et al. 2017b; Gunduz and Elsherbeny 2020) to prioritize important
“perfectly appropriate to summarise the ratings generated from factors from a list. The mean scores, standard deviations, and rank-
Likert scales using means and standard deviations.” They consid- ings of the factors are reported in Table 3. In case of equal mean
ered that Likert scale data are similar to interval scale data, with an score, the factor with the lowest standard deviation is ranked higher.

Table 3. Results of factors influencing smart contract adoption
Summary of percentage of participants’ responsesa
Disagreement (%) Neutral (%) Agreement (%)
(strongly disagree + (neither agree (agree + Relative Mean Standard Normalized
Factor ID disagree) nor disagree) strongly agree) Weighted significance index score deviation value Rank
f-13 2.44 0.00 97.56 181 0.88 4.41 0.63 1.00 1
f-11 2.44 14.63 82.93 171 0.83 4.17 0.77 0.87 2
f-08 2.44 19.51 78.05 169 0.82 4.12 0.81 0.84 3
f-01 7.32 17.07 75.61 164 0.80 4.00 0.97 0.77 4
f-04 4.88 26.83 68.29 164 0.80 4.00 0.92 0.77 4
f-21 7.32 14.63 78.05 162 0.79 3.95 0.92 0.75 6

f-07 7.32 24.39 68.29 158 0.77 3.85 0.88 0.69 7
f-20 7.32 24.39 68.29 157 0.77 3.83 0.86 0.68 8
f-12 12.20 24.39 63.41 156 0.76 3.80 1.01 0.67 9
f-03 7.32 29.27 63.41 154 0.75 3.76 0.86 0.64 10
f-25 14.63 24.39 60.98 153 0.75 3.73 1.03 0.63 11
f-15 12.20 29.27 58.54 150 0.73 3.66 0.94 0.59 12
f-23 9.76 36.59 53.66 146 0.71 3.56 1.00 0.53 13
f-24 14.63 34.15 51.22 146 0.71 3.56 0.98 0.53 13
f-09 9.76 36.59 53.66 145 0.71 3.54 0.81 0.52 15
f-17 9.76 34.15 56.10 145 0.71 3.54 0.87 0.52 15
f-10 19.51 26.83 53.66 139 0.68 3.39 1.09 0.44 17
f-26 19.51 39.02 41.46 139 0.68 3.39 1.00 0.44 17
f-02 21.95 34.15 43.90 137 0.67 3.34 1.04 0.41 19
f-22 24.39 26.83 48.78 136 0.66 3.32 1.21 0.40 20
f-16 24.39 43.90 31.71 132 0.64 3.22 0.99 0.35 21
f-18 26.83 43.90 29.27 127 0.62 3.10 1.04 0.28 22
f-14 36.59 34.15 29.27 121 0.59 2.95 1.09 0.20 23
f-19 46.34 19.51 34.15 118 0.58 2.88 1.19 0.16 24
f-06 43.90 24.39 31.71 116 0.57 2.83 1.22 0.13 25
f-27 43.90 29.27 26.83 114 0.56 2.78 1.13 0.10 26
f-05 48.78 29.27 21.95 106 0.52 2.59 1.26 0.00 27
a
Participant opinions are measured using a five-point scale: 1 = Strongly Disagree; 2 = Disagree; 3 = Neither Agree nor Disagree; 4 = Agree; and
5 = Strongly Agree. The percentage in agreement is the sum of Strongly Agree and Agree responses. The percentage in disagreement is the sum of
Strongly Disagree and Disagree responses.
In addition to the mean values, the percentages of response in each decision to adopt smart contracts in construction projects. Among
category of the statements were calculated (Blaikie 2003) and sum- the 16 driving factors, the top five critical factors have mean scores
marized into disagree, neutral, and agree in Table 3. These percent- and significance indices ranging between 4.00 and 4.41 and 0.80
age responses provide the basis for building membership functions and 0.88, respectively. These factors include f-13 (x̄ ¼ 4.41), f-11
using the fuzzy set theory for modeling and ranking the critical (x̄ ¼ 4.17), f-08 (x̄ ¼ 4.12), f-01 (x̄ ¼ 4.00), and f-04 (x̄ ¼ 4.00).
factor groups influencing smart contract adoption. The first two factors (f-13 and f-11) relate to ability and opportunity
The RSI is an alternative method for extracting important factors to try out smart contracts prior to their adoption by stakeholders in
from a list (Kometa et al. 1995). The method transforms the survey construction projects. This is important, given that every new tech-
respondents’ (numerical) ratings of the factors influencing smart nology has risks that may not be well understood at early stages of
contract adoption to importance indices to establish the relative implementation. Blockchain and smart contracts are no exception.
ranking of the factors. Kometa et al. (1995) used the RSI technique Smart contract is a new technology-enabled contracting practice
to determine the relative ranking of the attributes of project delivery (Lauslahti et al. 2017) and the construction industry is trying to
success. In this study, a factor prioritization scale was adopted understand the extent of its full potential and how it can be lever-
based on the five-point rating scale, as follows: 0.00 ≤ index < aged in construction projects (Penzes et al. 2018). A trial period
0.43 (“low significance”); 0.43 ≤ index < 0.57 (“moderate signifi- will provide the opportunity to carefully analyze the match between
cance”); 0.57 ≤ index < 0.71 (“significant”); 0.71 ≤ index < 0.86 practical industry problems and smart contracts’ characteristics
(“very significant”); and 0.86 ≤ index < 1.00 (“extremely signifi- (Hamledari and Fischer 2021). This is a prerequisite for successful
cant”). The use of the factor prioritization scale is based on adoption. The third driver is about boosting transparency in con-
Ameyaw et al. (2017a). A driving factor with an index ≥ 0.71 is struction projects regarding cost, time, and score. Transparency
regarded as significant (important); this approach also yields 16 is possible because all transactions, payments, and information re-
critical factors influencing smart contract adoption (Table 3). sources are recorded and automatically shared on the blockchain
The last method for establishing the critical driving factors is network. This allows each stakeholder to follow the process and
the normalization technique (Xu et al. 2010). The calculated nor- authenticate their records.
malized values are based on the mean scores and are scaled be-
tween 0 and 1. Factors with a value ≥ 0.50 (Xu et al. 2010) are
Agreement Analysis of the Critical Factors
regarded as critical factors (Table 3).
Overall, the results of the statistical analysis yielded 16 driving The interrater agreement (IRA) method was used to measure the
factors that are perceived by the expert respondents to influence the amount of consensus by the respondents on the ratings of the

Table 4. Agreement analysis of factors and 0.91–1.00 = very strong agreement. An estimate of 0.71 and
Factor ID aWG estimate Level of consensus above suggests a high degree of consensus
f-13 0.81 Strong agreement 2 × s2x
f-11 0.78 Strong agreement aWGð1Þ ¼ 1 − ð1Þ
f-08 0.77 Strong agreement ½ðH þ LÞM − M 2 − ðH × LÞ × ½k=ðk − 1Þ
f-01 0.69 Moderate agreement
f-04 0.72 Strong agreement where M = observed mean score based on respondents’ ratings for
f-21 0.73 Strong agreement a given factor; H and L = maximum and minimum values of the
f-07 0.77 Strong agreement Likert scale (5 and 1), respectively; k = number of survey respond-
f-20 0.78 Strong agreement ents; and S2X = observed variance on M. The IRA results are re-
f-12 0.71 Strong agreement
ported in Table 4, ranging from 0.69 to 0.83, with 15 factors

f-03 0.79 Strong agreement rated as strong agreement and one factor rated as moderate agree-
ment. The results indicate that the respondents’ assessment of the
factors are not random responses (Ameyaw et al. 2017a).
Grouping the Critical Factors
After establishing the 16 critical factors (CFs) from the statistical
analyses (see Table 3), they were subject to further analysis using
fuzzy set theory (FST). However, before applying FST, the 16 CFs
16 critical factors influencing smart contract adoption established were classified into four critical factor groups (CFGs), namely:
above. The IRA method is an alternative and a popular technique (1) compatibility; (2) competitive advantage; (3) trialability; and
for assessing the strength of agreement among group respon- (4) relative advantage (see Table 5). This categorization is based on
dents (Brown and Hauenstein 2005). In this study, Brown and the attributes (characteristics) of innovations by Rogers (2003) and
Hauenstein’s (2005) IRA estimate, aWG , was used to assess the ab- the TOE framework by DePietro et al. (1990). For example, com-
solute consensus in ratings provided by the survey respondents for patibility, trialability, and relative advantage are among the five
each factor [Eq. (1)]. The aWG estimate has been used in construc- general attributes of innovations Rogers (2003) identified to con-
tion studies to measure consensus among survey respondents. For sistently influence technological innovation adoption. The innova-
example, Ameyaw et al. (2017a) used the aWG estimate to ascertain tion attributes explain 49% to 87% of the variance in the adoption
the level of agreement among practitioners on significance of rate of innovations (Rogers 2003). Similarly, competitive advantage
critical success factors in water-based PPP projects. Gunduz and is an environmental factor of the TOE framework that influences
Elsherbeny (2020) applied the aWG estimate to evaluate the strength successful adoption of technological innovations (Pan and Pan
of agreement construction contract administration factors on 2020; Lee et al. 2013; Chatterjee et al. 2021). Innovation adoption
project performance. The IRA statistic ranges between −1 and research has shown that attributes of innovation and the TOE
þ1 and captures the amount of agreement to the highest possible concept influence technological innovation adoption and have
disagreement. An estimate of 1 represents a perfect agreement been applied to investigate technology adoptions in different
among the respondents and vice versa and is interpreted as: disciplines, including construction (e.g., Pan and Pan 2020; Lee
0.00–0.30 = lack of agreement; 0.31–0.50 = weak agreement; et al. 2013). Grouping the 16 CFs into four CFGs based on well-
0.51–0.70 = moderate agreement; 0.71–0.90 = strong agreement; established technology adoption theories/frameworks provides
Table 5. Weightings and membership functions (MFs) of critical factors (CFs) and critical factor groups (CFGs)
Mean score Weighting Measurement of MFs Criticality index
CFG/CF CF CFG CF CFG MFs of CFs MFs of CFGs Index Weight Rank
Compatibility — 7.073 — 0.115 — 0.012 0.085 0.354 0.451 0.098 3.54 0.23 4
f-09 3.537 — 0.500 — 0.000 0.098 0.366 0.439 0.098 — — — —
f-17 3.537 — 0.500 — 0.024 0.073 0.341 0.463 0.098 — — — —
Competitive advantage — 10.976 — 0.179 — 0.016 0.082 0.316 0.399 0.187 3.66 0.24 3
f-15 3.659 — 0.333 — 0.000 0.122 0.293 0.390 0.195 — — — —
f-23 3.561 — 0.324 — 0.049 0.049 0.366 0.366 0.171 — — — —
f-03 3.756 — 0.342 — 0.000 0.073 0.293 0.439 0.195 — — — —
Trialability — 8.585 — 0.140 0.000 0.024 0.071 0.488 0.416 4.30 0.28 1
f-13 4.415 — 0.514 — 0.000 0.024 0.000 0.512 0.463 — — — —
f-11 4.171 — 0.486 — 0.000 0.024 0.146 0.463 0.366 — — — —
Relative advantage — 34.854 — 0.567 — 0.006 0.080 0.231 0.397 0.287 3.88 0.25 2
f-08 4.122 — 0.118 — 0.000 0.024 0.195 0.415 0.366 — — — —
f-01 4.000 — 0.115 — 0.024 0.049 0.171 0.415 0.341 — — — —
f-04 4.000 — 0.115 — 0.000 0.049 0.268 0.317 0.366 — — — —
f-21 3.951 — 0.113 — 0.024 0.049 0.146 0.512 0.268 — — — —
f-07 3.854 — 0.111 — 0.000 0.073 0.244 0.439 0.244 — — — —
f-20 3.829 — 0.110 — 0.000 0.073 0.244 0.463 0.220 — — — —
f-12 3.805 — 0.109 — 0.000 0.122 0.244 0.341 0.293 — — — —
f-24 3.561 — 0.102 — 0.000 0.146 0.341 0.317 0.195 — — — —
f-25 3.732 — 0.107 — 0.000 0.146 0.244 0.341 0.268 — — — —

inbuilt reliability to the classification without the need for a stat- respectively. Then following from Eq. (4), R is defined by the rela-
istical classification. As shown in Table 5, each CFG is measured tional matrix as follows:
and defined by a number of CFs, which together provide a measure 2 3
of that factor group. Overall, the 16 critical factors capture and ex- x11 x12 · · · x1n
6 7
plain some of the most important factors facilitating adoption of 6 x21 x22 · · · x2n 7
6 7
technology. It is worth noting that adoption of a technology will R ¼ ðxij Þmn ¼ 6 . .. .. 7 ð5Þ
6 .. . . 7
be driven by a set of factors influenced by characteristics of the 4 ··· 5
technology and industry conditions (Lee et al. 2013). In this study,
xm1 xm2 ··· xmn
the “relative advantage” group has the highest numbers of factors
(Table 5), suggesting that adoption of a new technology in con- Thus, R [in Eq. (5)] is called fuzzy relational matrix and its el-
struction is significantly influenced by the potential benefits it of- ements of are given by xij ¼ μR ðxi ; yi Þ whose memberships range
fers to adopters. The next stage of the analysis involves combing from [0,1]. Using Eq. (5), the fuzzy relational matrix for “competi-
the scores of the CFs of each CFG into one score using FST to rank tive advantage (CA)” is derived as
the CFGs.
2 3
0.000 0.122 0.293 0.390 0.195
6 7
Evaluating the Critical Factors and Critical Factor Rcompetitive advantage ¼ 4 0.049 0.049 0.366 0.366 0.171 5
Groups Using FST 0.000 0.073 0.293 0.439 0.195
Having categorized the critical factors into four factor groups
(Table 5), FST (Zadeh 1965; Hsiao 1998) was used to employed The values of the fuzzy relational matrices of all the critical fac-
to evaluate and rank the factor groups. The objective was to estab- tor groups are presented in Table 5.
lish the most important factor groups exerting influence on adop- The next step is to establish the weightings of the critical factors
tion of smart contracts. FST is useful in dealing with and and, consequently, the weighting function set of each critical factor
overcoming vagueness and subjectivity that characterize traditional group. Using the mean scores, the weightings of the individual
questionnaire survey responses using linguistic variables (Ameyaw critical factors and the critical factor group are calculated through
and Chan 2015). FST has been used in construction research to the following equation and reported in Table 5:
address practical problems, including risk allocation decision mak- M
ing (Ameyaw and Chan 2015) and risk assessment and ranking (Xu wi ¼ Pn i ð6Þ
i¼1 Mi
et al. 2010). Readers may refer to these studies for applications of
FST. Hence, this section presents the relevant definitions and theo- where wi = weighting of a driving factorP i or factor group i; Mi =
retical operations that are used to develop the analysis and ranking means score of driving factor i; and ni¼1 M i = sum of all mean
methodology outlined below. values of the driving factors of factor groups. The weighting of a
The first step in FST is the representation of fuzzy sets to derive factor reflects its importance regarding influencing smart contract
the membership functions; U constitutes a universal set and repre- adoption and ranges between 0 P and 1, with the sum of a weighting
i¼1 W i ¼ 1 (Hsiao 1998). Hence,
sents a set of objects represented generically by x, then a fuzzy set function set equals to 1, that is, m
A in U can be generated as follows: the weighting function set of the competitive advantage factor is
given by
μA ðx1 Þ μA ðx2 Þ μ ðx Þ
A¼ þ þ ··· þ A n ð2Þ
x1 x2 xn W competitive advantage ¼ f wd3 ; wd15 ; wd23 g
¼ f 0.342; 0.333; 0.324 g
where μA ðxÞ = grade membership (or membership function); and X
the expressions μA ðxi Þ=xi are not fractions but represent the rela- ¼ W¼1
tion between xi and its grade membership μA ðxi Þ, which ranges
from [0,1]. Hence, grade membership of a specific critical factor Having established the fuzzy relational matrices and the weight-
for smart contract adoption is expressed as ing function sets of the factor groups, then the fuzzy synthetic
evaluation set, Z, of a given factor group is given by
μA ðx1 Þ μ ðx Þ μA ðxn Þ
A¼ þ A 2 þ ··· þ ð3Þ Z ¼ W ∘ R ¼ f z1 ; z2 ; :::; zm g ð7Þ
strongly disagree disagree strongly agree
where Z gives grades of membership of a critical factor group;
and the grade membership of a critical factor Ai based on above
and ∘ denotes composite operation processed by various fuzzy
expression is written as
mathematical functions (Hsiao 1998). Here, the generalized
Ai ¼ ð μA ðx1 Þ; μA ðx2 Þ; ::: μA ðxi Þ Þ; and weighted mean method Mð; þ; βÞ is used to perform the com-
posite operation in Eq. (7). This method takes into consideration
X n
and preserves the effects of all the individual critical factors,
μA ðxi Þ ¼ 1 ð4Þ
i¼1
and so, the value of β ¼ 1P (Hsiao 1998). Also, in this study the
weightings are normalized ( m i¼1 W i ¼ 1), and therefore the model
For example, the membership function of critical factor f-15 is regresses to addition of real numbers. The Mð; þ; βÞ method
derived using Eq. (3) and expressed using Eq. (4), as (Hsiao 1998) is defined as
X m 1=β
Ad15 ¼ ð 0.000 0.122 0.293 0.390 0.195 Þ zj ¼ W i xβij ; j ¼ 1; 2; : : : ; n ð8Þ
i¼1
Having established the grade membership for each critical fac-
tor, the fuzzy relational matrices can be derived. Say R denotes a Using competitive advantage as an example, the member func-
fuzzy relation on X × Y, where X and Y have m and n elements, tions are obtained as follows:

Zcompetitive advantage necessity for a trial period to experiment with smart contracts be-
2 3 2 3 fore practical implementation; the testing period is valuable in iden-
0.342 0.000 0.122 0.293 0.390 0.195 tifying potential risks, bugs, and failures, and addressing them in a
6 7 6 7
¼ 4 0.333 5 × 4 0.049 0.049 0.366 0.366 0.171 5 safe and secure manner before application in practice. Blockchain
applications and smart contract systems are new technologies that
0.324 0.000 0.073 0.293 0.439 0.195
will require trial to build trust, collaboration, and confidence among
¼ ð 0.016 0.082 0.316 0.399 0.187 Þ project stakeholders (Mason and Escott 2018; Badi et al. 2021).
Although numerous studies, including this study, have observed
Now, the critical values of each factor group are computed that trialability positively influences technology adoption, Badi
through Eq. (8) using the grade memberships. This process is called et al. (2021) found no positive correlation between trialability
defuzzification, which transforms fuzzy memberships into crisp and smart contract adoption in the UK construction sector. A pos-
values (Ameyaw and Chan 2015) to ascertain their degree of influ- sible reason could be that their respondents were not engaged in
ence in adopting smart contracts. The criticality values are pre- smart contract activities and had little or no knowledge and under-
sented in column 5 of Table 5 standing of smart contracts, whereas in this study the respondents
were involved in smart contract initiatives.
Index½factor group i ¼ Zi × E ð9Þ
where E = scale options to measure criticality of the factors or Relative Advantage

groups. In this study, five scale options were used and interpreted
as e1 = not critical [1], e2 = slightly critical [2], e3 = moderately The second factor group influencing smart contracts adoption in
critical [3], e4 = critical [4], and e5 = very critical [5]. For example, construction projects is relative advantage, which is measured
the index of competitive advantage is obtained as follows: by nine critical factors (see Table 5). According to Moore and
Benbasat (1991), relative advantage refers to the extent to which
Index½competitive advantage a technological innovation is perceived as being better than its
¼ ð 0.016; 0.082; 0.316; 0.399; 0.187 Þ × ð1; 2; 3; 4; 5Þ predecessor. Relative advantage is akin to Davis (1989) perceived
usefulness characteristic and is strongly espoused as a fundamental
¼ 3.660 predictor of innovation adoption (Pan and Pan 2020; Rogers 2003;
Lee 2004). Thus, this finding agrees with previous studies that
The relative indexes of all the CFGs are above 3.51, ranging highlight relative advantage as a key driver of adoption of other
between 3.54 and 4.30 (Table 5), suggesting that they positively technologies (Lee et al. 2013; Chatterjee et al. 2021). For example,
impact the decision to adopt smart contracts in construction Lee et al. (2013) observed that relative advantage significantly af-
projects. fects an individual’s intention to accept BIM, while Chatterjee et al.
(2021) reported that relative advantage is positively associated with
adoption of artificial intelligence (AI) in the manufacturing indus-
Discussion try. The criticality index of 3.88 (Table 5) suggests that practitioners
This study sought to establish the critical factors influencing adop- regard blockchain-enabled smart contract technology as an instru-
tion of blockchain-based smart contracts in construction projects, ment to enhance job performance, and that smart contracts are
drawing on the views of construction experts and practitioners. The perceived to impact and enhance efficient delivery of construction
descriptive analyses yielded 16 critical factors believed to influence projects. From Table 3, the respondents perceive smart contracts to
smart contract adoption, which are further grouped into four critical have potential benefits, including the maximization of transparency
factor groups: (1) trialability; (2) relative advantage; (3) competitive in cost, time, and scope (78%, x̄ ¼ 4.12), facilitation of progress
advantage; and (4) compatibility. payments (76%, x̄ ¼ 4.00), providing secured payment transac-
tions (68%, x̄ ¼ 4.00), and reduction of ambiguities in project
scope (78%, x̄ ¼ 3.95). In related studies, researchers highlighted
Trialability potential benefits of smart contract adoption in construction,
Trialability is the first factor group lending support to adoption of including security of payments, automated payments, reduced dis-
smart contracts, and comprises two factors (f-11 and f-13) with a putes, and automated contract formation (Mason and Escott 2018),
relative criticality index of 4.30 (Table 5). It refers to the extent to cultivation of trust, and collaboration by design and risk mitigation
which a technological innovation can be experimented with on a (Hamledari and Fischer 2021). Overall, this finding suggests that
limited basis before adoption (Rogers and Shoemaker 1971). This working with smart contracts is rewarding for practitioners and that
finding supports previous studies that highlight the significant in- smart contract technology is capable of creating benefits in proj-
fluence of trialability in successful adoption of innovative technol- ects, awareness of which is crucial to facilitating smart contract
ogies (Lin and Chen 2012; Rogers 2003; Kendall et al. 2001). adoption.
Technological innovations that can be tried are adopted more fre-
quently and quickly than less trialable ones (Kendall et al. 2001;
Competitive Advantage
Tornatzky and Klein 1982). In this study, trialability was highly
advocated by the survey respondents, with 98% voting that they The third factor group influencing adoption of smart contracts in
would experiment with smart contracts before adoption in practice construction projects is competitive advantage, with an adoption
and 83% in favor of a trial period prior to adoption. In other words, index of 3.66. Competitive advantage of a technological innovation
trialability is the ability to try out (f-13), and opportunity to experi- is the extent to which the technology provides gains or benefits to
ment with (f-11) smart contracts on real projects before adoption. (project) organizations (Rogers 2003) and is reported to strongly
Both factors have been reported to enhance the prospect of success- influence technology adoption across sectors (Pan and Pan 2020;
ful adoption of innovations (Lin and Chen 2012). Unsurprisingly, Chatterjee et al. 2021; Badi et al. 2021). As organizations compete
both factors were rated highly by the survey respondents, with to pioneer the use of emerging (often digitalized) technologies
mean values >4.00 (Table 3). Indeed, this finding suggests the (such as those inextricably linked to the rapidly expanding Industry

4.0 concept through virtual reality, cloud computing, artificial in- Implications
telligence, etc.) to beat the competition, rival companies will need
to adopt new technologies to compete effectively. In this study, the The findings of this study have useful implications for construction
respondents agree that smart contracts will increase profit levels of practitioners and industry leaders interested in the application of
organizations on construction projects (x̄ ¼ 3.76), provide adopters blockchain-based smart contracts in projects and the future of con-
with a strong competitive advantage (x̄ ¼ 3.66), and enable adopt- tractual practices. This study contributes to the existing body of
ers to beat the competition (x̄ ¼ 3.56). This finding aligns with knowledge on digitalization/digital technologies under the concept
Tornatzky and Klein (1982), who argued for a strong positive cor- of Industry 4.0, by providing understanding of the critical issues
relation between an innovative technology’s profitability and its that require consideration in the adoption of blockchain-based
adoption in other industries. Comparatively, smart contracts offer smart contracts. A better understanding of the primary drivers will
guide decision makers to identify appropriate areas of focus when
advantages over traditional contracts that have been criticized for

being time-consuming to prepare, susceptible to forgery and errors, developing industry and policy strategies to promote wider adop-
and consequently, responsible for late payment or nonpayment tion of blockchain-based smart contracts across the construction
industry. This has the potential to contribute toward the digitaliza-
problems in the construction industry (Ream et al. 2016; Hamledari
tion and transformation of the construction industry and its supply
and Fischer 2021). The construction business environment is
chains. Also, the findings reveal that practitioners in the construc-
fiercely competitive, characterized by low margins; for example,
tion industry are reluctant to adopt new/emerging technologies un-
the average margin of contractors in the UK is around 1.5% (The
less they are convinced of the advantages such technologies bring
Construction Index 2017). Therefore, this finding emphasizes
to their business operations and practices. The findings show that
the capability of smart contracts to enhance effectiveness and
trialability and usefulness of smart contracts are perceived to be the
efficiency of projects and to automate transactions and payments, top-rated driving forces in the decision to adopt smart contracts.
resulting in time and cost effectiveness and reduction in pay- This provides opportunity for smart contract proponents to ensure
ment times, with direct benefits to construction supply chains that there are real-world project applications of smart contracts that
(Hamledari and Fischer 2021). These advantages will influence can help raise awareness of the real benefits provided by smart con-
decisions to adopt smart contracts in construction projects, as tract technology, and encourage wider uptake of the technology
adopters realize that smart contracts will give them an edge over among construction practitioners and stakeholders. Trials of smart
their competitors. contracts through case projects is also key to identifying and resolv-
ing potential problems that may arise during real-world implemen-
Compatibility tation, and even to build trust and confidence in smart contract
technology. Further, the findings are valuable to smart contract ad-
Compatibility emerged as the fourth factor group driving smart vocates, particularly smart contract designers, contract administra-
contract adoption in construction projects, with an index of 3.54. tors, and project management and legal consultancies, that will be
Rogers and Shoemaker (1971) broadly defined compatibility as the interested in providing professional services to construction clients.
extent to which an “innovation is perceived as being consistent with The relative advantage of smart contracts as a determinant for their
the existing values, past experiences, and needs of [potential adopt- adoption suggests that smart contract designers should be able to
ers].” Technology’s compatibility to potential adopters’ needs and design contracts that are practical, able to satisfy the business needs
experiences is found to be positively correlated to technology (Lee of clients and projects, and compatible with existing contract man-
et al. 2013; Moore and Benbasat 1991). Compatibility is repre- agement systems.
sented by two important variables in this study: (1) compatibility
with values and beliefs of construction practitioners/organizations;
and (2) compatibility with current contract management needs and Conclusions
practices of practitioners/organizations and projects. The first as-
Blockchain-based smart contracts are attracting greater interest
pect of compatibility of smart contracts suggests a cognitive or among construction industry leaders and practitioners. The smart
normative compatibility (Moore and Benbasat 1991), which means contract is an innovative technology to automate construction
compatibility with what practitioners think about smart contracts. contract processes, and is showing the potential to enhance the per-
Thus, smart contracts are highly likely to be adopted and imple- formance and efficiency of construction projects by ensuring trans-
mented if project stakeholders perceive that smart contracts will parency, accountability, and collaborative working. However, given
be compatible with their value and belief systems. This finding its nature, the construction industry lags in adopting innovative
is consistent with previous studies on other technologies such as technologies. The industry is resistant to change and is subject to
AI and tourism mobile payment (Chatterjee et al. 2021; Peng et al. fragmentation. This research study explored and established the
2012). The second aspect implies practical compatibility (Moore critical factors exerting influences on construction project-level
and Benbasat 1991) of smart contracts, which refers to compatibil- adoption of smart contracts. The study used an international ques-
ity with practitioners’ job functions and contract management tionnaire survey of construction practitioners. The findings re-
needs. This finding suggests that survey respondents believe that vealed 16 important factors that are perceived to drive smart
smart contracts: (1) hold the potential to support job performance contract adoption; the top five critical factors are (1) ability to try
of practitioners; (2) are compatible with values and beliefs of con- out a smart contract, (2) a trial period before smart contract adop-
struction practitioners/projects; (3) are congruent with existing con- tion, (3) maximizing transparency in project delivery, (4) facilitating
tract practices and management systems; and (4) are able to address payments and reduced payout time, and (5) security of payment in
construction project needs. Advocates argue that smart contracts projects. Agreement analysis shows strong consensus among the
are key to enhancing efficiency of project management and project survey respondents regarding the importance of the critical factors.
governance, project collaboration and transparency, accurate exe- In descending order of influence based on computed criticality
cution and monitoring of contract conditions, and solving late pay- index values, the four critical factor groups driving smart contracts
ment or nonpayment issues (Penzes et al. 2018; Cardeira 2016; adoption are trialability, relative advantage, competitive advant-
Arup 2017; Li et al. 2019). age, and compatibility. The respondents share a view that relative

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Critical Factors Influencing Adoption of

Blockchain-Enabled Smart Contracts in

De-Graft Owusu-Manu, Ph.D. 5; and Goodenough D. Oppong, Ph.D. 6

Introduction about 6% and 8% to the GDP of the UK and Australia, respectively

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collaborative technologies. In studying information, communica-

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Fig. 1. Research framework.

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contracts smart contracts

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f-21 7.32 14.63 78.05 162 0.79 3.95 0.92 0.75 6

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ported in Table 4, ranging from 0.69 to 0.83, with 15 factors

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© ASCE 04023003-11 J. Constr. Eng. Manage.

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where E = scale options to measure criticality of the factors or Relative Advantage

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advantages over traditional contracts that have been criticized for

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