Abstract
The traditional procurement system in the construction industry
has been plagued by inefficiencies, often serving as a significant obstacle to
project delivery. Thus, this study examines the dynamics of adopting smart
contracts for project procurement for optimal project success and delivery, with
insights and recommendations from the South African Construction Industry.
Method: The study employed a quantitative research approach utilizing
descriptive and inferential statistics of Mean Item Score (MIS) and Exploratory
Factor Analysis (EFA) for data analysis, based on a purposive sampling technique.
Results: The MIS results for the benefit, legal & regulatory constraints, and best
practices of smart contracts range between 3.73 - 4.41 values, while the Kaiser-
Meyer-Olkin (KMO) values were higher than the recommended 0.6 value for the
EFA and Cronbach's Alpha value of 0.969 across the indicators.
Discussion: The study's findings revealed two categorized benefits of
adopting smart contracts: administrative and operational efficiency of project
procurement and procurement optimization; two components of legal and
regulatory constraints: Transactional and legal encumbrance to smart contract
implementation and legal gaps and ambiguity and two best practices:
smart contract reliability practices for project procurement and consistent
stakeholders’ engagement for smart contract protocol standardization. The
study concludes that Smart contracts can transform global project procurement
within the construction industry. The study recommends the development of a
green paper on smart contract adoption and integrating smart contracts into
standard forms of construction contracts.