The College of Design congratulates Jong Han Yoon for the successful defense of their dissertation, "A Blockchain-enabled Smart Contract System for Creating System-based Trust in Subcontracting Process" on Wednesday, March 15th, 2023.

Abstract:

A Blockchain-enabled Smart Contract System for Creating System-based Trust in Subcontracting Process

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 the 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. The proposed framework is demonstrated through a pilot test, and its feasibility and effectiveness are validated through a survey with construction professionals. 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 1) 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 and 2) empirically verifying the effects of system-based trust created by a blockchain-enabled smart contract system on GCs’ and Subs’ strategic behaviors in the subcontracting process. It verifies 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.