Title:
Blockchain-enabled Smart Contract System for Creating System-based Trust in Subcontracting Process
Blockchain-enabled Smart Contract System for Creating System-based Trust in Subcontracting Process
Author(s)
Yoon, Jong Han
Advisor(s)
Pishdad-Bozorgi, Pardis
Editor(s)
Collections
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Abstract
The unethical practices of bid shopping and peddling during the subcontractor procurement process can reduce trust between the general contractor (GC) and subcontractors (Subs) and lead to low-quality work, claims and disputes, schedule delays, and cost overruns. Despite the adverse impacts of these unethical practices on construction projects, the construction industry still lacks an ethical and trustworthy subcontracting process to prevent bid shopping and peddling. Furthermore, the transactional relationships between the GC and Subs in construction projects make profit-driven pursuits tempting, thereby increasing opportunistic behaviors.
This dissertation contributes to the body of knowledge by developing a framework based on a blockchain-enabled smart contract system to address these unethical practices, thus establishing the subcontracting process grounded on system-based trust. Blockchain provides tamper-proof and decentralized data storage, and smart contracts enable an automatic contract execution by leveraging the data stored in Blockchain. The proposed framework employing the above advantages is demonstrated through a pilot test, and its feasibility and effectiveness are validated through a survey with nine professionals who had sufficient years of experience in the construction industry. The validation results show that the framework can prevent the aforementioned unethical practices and enable Subs to fairly compete for bid awards with proper budgets.
In addition to the development of a subcontracting process leveraging a blockchain-enabled smart contract system, this dissertation contributes to the body of knowledge by providing a game-theoretic framework that the GCs and Subs can use to quantify and evaluate the outcomes of their strategic behaviors (e.g., trust-driven vs profit-driven behaviors) in the subcontracting process. Game theory in the framework enables mathematically analyzing and comparing the payoffs of strategic behaviors, using Nash Equilibrium. This dissertation also contributes to the body of knowledge by empirically verifying the effects of system-based trust created by a blockchain-enabled smart contract system on GCs’ and Subs’ strategic behaviors by conducting role-playing simulations. The developed game-theoretic-framework-based analysis of the simulations demonstrates that the blockchain-enabled smart contract effectively promotes trust-driven behaviors by enhancing system-based trust, thereby leading to a win-win game for the GC and Subs in the subcontracting process.
These valuable findings establish the foundation for a transformative subcontracting process that is more ethical and grounded on system-based trust. Moreover, the findings can help the construction industry deepen its understanding of the significance of trust-driven behaviors in the subcontracting process. The findings also promote the enforcement of trust-driven behaviors by enhancing system-based trust through blockchain technology.
Sponsor
Date Issued
2023-03-27
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Resource Type
Text
Resource Subtype
Dissertation