Do you need a blockchain in construction? Use case categories and decision framework for DLT design options (2004.04626v1)

Abstract: Blockchain and other forms of distributed ledger technology (DLT) provide an opportunity to integrate digital information, management, and contracts to increase trust and collaboration within the construction industry. DLT enables direct peer-to-peer transactions of value across a distributed network by providing an immutable and transparent record of these transactions. Furthermore, there is potential for business process optimization and automation on the transaction level, through the use of smart contracts, which are code protocols deployed on supported DLT systems. However, DLT research in the construction industry remains at a theoretical level; there have been few implementation case studies to date. One potential reason for this is a knowledge gap between use-case ideas and the DLT technical system implementation. This paper aims to reduce this gap by 1) reviewing and categorizing proposed DLT use cases in construction literature, 2) providing an overview of DLT and its design options, 3) proposing an integrated framework to match DLT design options with desired characteristics of a use case, and 4) analysing the use cases using the new framework. Together, the use case categories and proposed decision framework can guide future implementers toward more connected and structured thinking between the technological properties of DLT and use cases in construction.

Decision Framework for DLT Implementation in the Construction Industry

This paper, authored by Jens J. Hunhevicz and Daniel M. Hall, examines the applicability of Distributed Ledger Technology (DLT) within the construction industry. The work explores the utility and choice of blockchain technologies, particularly in terms of aligning them with the industry's needs for improving trust, collaboration, and automation. It presents a decision framework to ascertain the necessity and optimal design of DLT solutions for specific construction use cases.

Key Elements of the Study

The paper systematically investigates the potential application areas of DLT in construction by:

1. Reviewing existing literature to consolidate and categorize potential DLT use cases within the sector.
2. Summarizing the diverse design options available for DLT implementations.
3. Proposing a decision-support framework that guides the selection of the most suitable DLT design based on use case requirements.
4. Evaluating real-use cases through the lens of the proposed framework to identify feasible DLT design solutions.

DLT in the Construction Context

The construction sector is characterized by its fragmented and decentralized nature, where projects are carried out by cross-functional, geographically dispersed teams. This structural complexity often hinders trust and information exchange. DLT presents an opportunity to streamline processes by providing a transparent, immutable record system which can enhance transactional trust among stakeholders. The potential integration of DLT with technologies like Building Information Modelling (BIM) and the Internet of Things (IoT) is also discussed, providing the groundwork for a novel digital ecosystem that could overcome current interoperability and trust issues.

Framework for Decision Making

The paper introduces a comprehensive decision-making framework, guiding whether DLT is required for a particular case and which DLT design is optimal. The decision process involves three stages:

1. Assessing the necessity of DLT by verifying whether a traditional system suffices.
2. Determining the appropriate DLT design by evaluating trust requirements and network characteristics.
3. Considering technical constraints such as throughput, data storage, interoperability, privacy, the necessity for smart contracts, and associated costs.

Findings and Implications

Upon categorizing and analyzing use cases, the paper identifies that many applications of DLT in construction can potentially enhance current operational inefficiencies, primarily through increased transparency and automation via smart contracts. However, it is also highlighted that the adoption of DLT should be justified against its performance trade-offs and the necessity of its fundamental properties like non-repudiation, immutability, and integrity.

While DLT holds promise for transforming processes within the construction sector, its adoption is not universal across all use cases. The paper advocates for further empirical research to develop prototypes and validate the anticipated benefits of DLT applications in construction.

Future Directions

The research calls for deeper analysis and development of use cases that exploit DLT capabilities more innovatively. It emphasizes the need to move from theoretical discussion to practical implementation through pilot projects and case studies. Moreover, the understanding of trust relationships among participants in construction projects needs enhancement to refine DLT implementation strategies further. As the landscape of DLT evolves, so too must the approach toward its integration in construction processes, ensuring it meets specific project needs and constraints effectively.

In conclusion, this paper provides a pivotal framework for addressing the integration of DLT in construction, pointing out significant areas for further exploration to leverage DLT's full potential within the industry.