International Conference on Smart Infrastructure and Construction 2019 (ICSIC):

Driving data-informed decision-making

DeJong, Schooling and Viggiani

ISBN 978-0-7277-6466-9
https://doi.org/10.1680/icsic.64669.275
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A PROPOSED APPROACH INTEGRATING DLT, BIM, IOT AND

SMART CONTRACTS: DEMONSTRATION USING A
SIMULATED INSTALLATION TASK
J. Li1*, M. Kassem1*, A.L.C. Ciribini2 and M. Bolpagni3
1
Department of Mechanical & Construction Engineering, Northumbria University, Newcastle, United Kingdom
2
School of Buildings Brescia, University of Brescia, Italy
3
Department of Architecture, Built Environment and Construction Engineering, Politecnico di Milano, Italy
* Corresponding authors

ABSTRACT The complementarity among Building Information Modelling (BIM), distributed ledger technology (DLT), smart contracts, and
the Internet of Things (IoT) is increasingly acknowledged in industry reports and major national digital transformation initiatives. However,
theoretical foundation and empirical evidence to ascertain such a prerogative are still very limited. This paper analyses the interactions between
these technologies and proposes an approach that capitalises on their complementarity by linking the physical environment; the digital
environment; agreements representing the contract; and the DLT environment. A simulated installation activity is used to verify the conceptual
interrelations included in the proposed framework as a proof-of-concept. The simulation reveals how a mini smart contract – for a limited
scope such as an installation activity work – can be executed within the proposed approach and how payments can be automated when project
delivery is coupled with machine-readable BIM requirements and contract clauses. The paper also discusses the key limitations and challenges
facing the adoption of the proposed approach and in particular the diffusion of smart contracts.

1. Introduction In an industry that has been hindered by lack of technological

advancement, construction is slowly becoming digitalised but
The construction sector is becoming more digitalised with there are many challenges to be solved before true digital
Building Information Modelling (BIM) being the main catalyst transformation is realised. The challenges begin at the
for digital transformation (Gerbert et al., 2016; Kassem and procurement stage and cascade throughout the project and asset
Succar, 2017; Chakravarty, 2018). Smart contracts is one of the lifecycles. The aim of this paper is to propose an approach for
key complementary concepts to BIM due to the increased the integration of DLT, BIM, IoT, and smart contracts in the
capabilities in expressing construction project requirements in construction industry and demonstrate how the
a computable manner, and in automation of contract clauses. complementarity of these technologies can aid in the industry’s
The potential of BIM to digitalising the whole building transformation. A proof-of-concept is demonstrated through
lifecycle through the numerous model uses and use cases simulation of a smart contract for an installation activity that
enabled by BIM creates further opportunities for integration takes performance metrics defined during procurement to
between BIM, Internet of Things (IoT), and distributed ledger automatically monitor progress of the activity resulting in an
technology (DLT) (Ye et al., 2018). Emerging DLTs are automated denial or approval of payment.
proposed to address some the key concerns hindering
collaboration in the construction industry and in particular trust Section 2 defines the terms and concepts discussed throughout
with its inherent characteristics such as transparency, this paper. Section 3 explains the proposed approach for the
immutability, pseudonymity and resilience (Atzori, 2015; integration of DLT, BIM, IoT and smart contracts. Section 4
Swan, 2015; Biswas and Muthukkumarasamy, 2016; Kounelis demonstrates one part of the proposed approach within a
et al., 2017). It has the potential to change the way businesses simulated installation activity. Section 5 discusses the findings
and organisations operate leading to better auditability and and limitations and presents the conclusions.
traceability (Atzori, 2015) encouraging more collaboration and
information sharing (Winfield, 2018). IoT applications in 2. Terms and Concepts
construction are researched in supply chain management,
construction management, and smart buildings and cities 2.1 Distributed ledger technology (DLT)
(Kassem and Li, 2017; Woodhead et al., 2018). DLTs are append-only ledgers that chain blocks of information
through a cryptographic hash function where transactions
representing anything of value are grouped into blocks and

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 International Conference on Smart Infrastructure and Construction 2019 (ICSIC)

verified and validated through a consensus mechanism such as 2.4 Internet of Things (IoT)
a Proof-of-Work protocol that uses complex mathematics to The IoT is a paradigm where everyday objects can be equipped
solve equations across a distributed, decentralised, peer-to- with identifying, sensing, networking and processing
peer network (Kypriotaki et al., 2015; Swan, 2016; Turk and capabilities that will allow them to communicate with one
Klinc, 2017). The chaining and append-only nature makes the another and with other devices and services over the internet to
system secure and the cryptography ensures privacy of the data accomplish some objective. IoT is a system of interrelated
(Hamida et al., 2017). Blockchain, the underlying technology smart devices with the ability to transfer data over a network
for cryptocurrency Bitcoin, is the most well-known DLT and without requiring human-to-human or human-to-computer
has been in use since the launch of Bitcoin in 2009. interaction (Barnaghi et al., 2012).
2.2 Smart contracts 2.5 Digitalisation of the construction industry:
Smart contracts are machine-readable pieces of code that interactions between key enablers
conform to specific behaviours and are designed to self-
It is no secret that the construction industry is going through a
execute upon pre-set obligations being met (Boucher et al.,
period of ‘digitalisation’ and ‘digital transformation’.
2017). They have the potential to transform how organisations
Digitalisation is a modernisation of processes and business
transact and have the ability to negotiate without the need for
models enabled by digital innovation (e.g. BIM, DLT, smart
human interaction. However, if smart contracts are to be
contracts, IoT). Digital transformation is an industry-wide
considered as having the ability to replace entire traditional
effort that enables digitalisation by addressing the challenges
construction contracts, due to the complexity, flexibility and
preventing the diffusion of digital innovation at macro level.
exercise of experienced judgement required in traditional
Benefits of digitalisation to the construction industry include
construction contracts, they could result in being more
boosting productivity, managing complexity, reducing project
expensive and more inefficient than traditional contracts
delays and cost overruns, and enhancing safety and quality.
(Sklaroff, 2017). For this reason, Mason (2017) suggests short-
term or instantaneous contracts are currently more suited to The key challenges facing BIM adoption include lack of trust,
smart contracts adding that full automation is not possible at poor collaboration and reluctance to share information
this time and focus should be on achieving semi-automation (Farmer, 2016; Kinnaird and Geipel, 2018). Bolpagni et al.,
for now. One of the strengths of smart contracts is that they can (2016) conducted a study on quasi-automation of requirements
act as a powerful evidentiary trail demonstrating agreements at procurement where those interviewed perceived benefits in
made by the parties (Frantz and Nowostawski, 2016; Cohn et digitalising the process. However, the authors found limited
al., 2017). platforms with the ability to manage a BIM-based process and
interviewees reported lack of readiness to adopt e-procurement
Non- and late-payment of contract terms is one of the
citing issues of “trust […], collaboration, inertia to change,
construction industry’s biggest challenges (Cardeira, 2015;
security, confidence in data, quality assurance of information,
Wang et al., 2017). Automated payments of fiat currency
share of risks and rewards” and understanding the benefits of
could be coded into smart contracts to protect contractors, sub-
such an approach as the biggest barriers (Bolpagni et al., 2016,
contractors and the supply chain against insolvency from late
p. 435).
payments (Wang et al., 2017) as well as reducing risk of
underpayments, increasing efficiency and reducing pay-out DLT has the potential to solve some of these challenges
time (Cohn et al., 2017). However, the industry requires through its ‘immutable’ ledger that is resistant to hacks and
payment reform before benefits can be truly realised (SEC changes, can be accessed and updated in real-time, and offers
Group, 2018). reliability and transparency (Winfield and Rock, 2018).
However, there are still many aspects to be addressed before
The key barriers to implementation of smart contracts include
the impact can be seen such as untested legal issues, the
maintenance of documentation, storage, interoperability,
continuing need for clear and express contract terms, and
reliability of the data, confidentiality (Mason, 2017) and the
mitigating measures that reduce the risk that parties take on
complexity of coding smart contracts given the potential
unintended obligations and disputes (Winfield and Rock,
longevity required (Frantz and Nowostawski, 2016).
2018). DLT is “effective in those systems where the full
synchronization of data and confirmation of the authorship of
2.3 Building Information Modelling (BIM)
the performed actions is required” (Klyukin et al., 2018, p. 53).
BIM is the current expression of digital innovation within the
construction sector (Succar and Kassem, 2015), a combination DLT can help overcome a number of BIM issues such as
of technologies, processes and policies (Succar, 2009). BIM is ensuring incorruptibility of information through immutability
changing the way assets are designed constructed and operated and identification of the person making changes along with
(Eastman et al., 2011). Different uses of the information details of the changes to allow better recording and tracking of
models extend over the whole asset lifecycle enabling intellectual property and copyright, hence, resulting in
designers, contractors, engineering, and facility managers to increased confidence of the parties to collaborate (Stougiannos
implement a digital approach to the design, construction and and Magneron, 2018).
operation of assets.

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 Li, Kassem, Ciribini and Bolpagni

IoT devices (e.g. sensors, cameras, scanners) can be deployed documentation and data are created and hosted in the
not only in buildings but across the whole built environment. information container throughout the life cycle of a built asset.
Once IoT is coupled with the digital asset (e.g. an information The bi-directional arrows within the proposed approach show
model) of a physical asset, they result in a digital twin that can the flow of data in a construction project where the BEP, EIR
be used for asset performance management where a digital and standards and regulations inform the development of the
twin is a virtual version of the physical asset (Woodhead et al., outputs in the digital environment supported where necessary
2018). by smart contracts.

3. Proposed approach for the integration of Figure 1 Integration of DLT, BIM, IoT and Smart
DLT, BIM, IoT and Smart Contracts Contracts – the process of checking agreements against
deliverables
The proposed approach (Figure 1) for integration of the
technologies is an extension of the work presented in Bolpagni
(2018). It is conceived within the context of the UK
construction industry but can be used in other contexts as the
terminology derives from ISO 19650-1:2018 (ISO, 2018) (e.g.
exchange information requirements, information container,
appointing party). The first step in a procurement project is to
compile the exchange information requirements (EIR)
document upon which successful procurement relies (Lea et
al., 2015). In order to integrate with DLT and smart contracts,
clauses and requirements from the currently human-readable
documentation (e.g. .doc, .pdf, .xls) need to be made machine-
readable. Although such capabilities are generally limited in
the construction industry, both academic literature and digital
technologies are increasingly focusing on this challenge. For
example, Patacas et al., (2016) proposed an approach for the
automated checking of supply chain deliverables (data and
documentation) against the requirements of the asset
information requirements (AIR) , defined in ISO 19650-1:2018
as the “information requirements […] in relation to the
operation of an asset” (ISO, 2018, p. 4). The proposed
approach acknowledges the current inadequate level in the
computerisation of project documents and their content.
However, it simultaneously assumes that these challenges are
transient given the on-going efforts of digitalisation and digital
transformation within construction across many countries.

Several tiers of contractors and specialised trades throughout The one-directional arrows are transaction-specific data that
the supply chain answer to the EIR and comply with standards are processed in the transaction processor (Turk and Klinc,
and regulations in the BIM Execution Plan (BEP). There is a 2017) then appended in blocks to the distributed ledger that
pre- and a post-contract BEP; the version referred to in Figure represents an immutable digital record of the asset. Throughout
1 is the post-contract BEP. The BEP is usually not expressed the design and construction phases, it is possible to check the
in a machine-readable format; if it were, it would enable the development of the project and its performance against
automatic verification of planned deliverables against those of requirements included in the EIR. The results of these checks
the EIR from a few standpoints (e.g. quality and schedule are verified by transactions linked to smart contracts, that allow
requirements). However, although this may be desirable, it is authorisation or denial of payments based on the outcomes.
not the most urgent automation. Indeed, it is more important to Both the digital deliverables and the transaction outcomes
automatically verify the compliance of the digital deliverables could be linked to the distributed ledger in a ‘chained’ manner
(expressed as ‘Digital Environment’ in Figure 1) with the (i.e. actual deliverables copied into the ledger) or ‘unchained’
requirements of the appointing party (i.e. EIR). manner (i.e. only fingerprints of actual deliverables copied into
the ledger, not the deliverables themselves) (Turk and Klinc,
The deliverables of a project can be digital (i.e. information 2017). In the proposed approach, the unchained method is
model, documentation and data) and physical (i.e. physical adopted and this is exemplified in Figure 1 by the direct links
asset, goods and services) with the content of the BIM between the ‘Digital Environment’ and the ‘DLT
Execution Plan (BEP) first developed digitally and then Environment’ consisting of only transaction data to be copied
physically. These are represented in Figure 1 as ‘Digital into the ledger. Other approaches may consider more direct
Environment’ and ‘Physical Environment’. In the digital links between the two environments. The approach also
environment, the information model and supporting proposes an integration between the ‘Physical Environment’

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 International Conference on Smart Infrastructure and Construction 2019 (ICSIC)

and the ‘DLT Environment’ via IoT devices that verify in an During physical delivery, each step could be automatically
automatic or automated way the outcomes (e.g. occurrence of tracked using IoT devices to validate its successful installation
events, quality, time) of site activities. The outputs of the IoT and function leading to payments being executed without the
devices can be used as an input into the smart contract which need for human intervention (Mason, 2017). However, IoT
can verify and/or deny payments. They can also be used to technology maturity, cost and observability of benefits are yet
update the digital twin in the digital environment during the to be reached before reliance on such technologies and
construction phase and to manage asset performance at the diffusion occur at a wide scale. The current approach uses
operations phase. either manual checks or a combination of manual checks and
‘BIM to field’ (Mills, 2016) mobile technologies. Regardless
The proposed approach favours the adoption of performance- of the means adopted to perform the checks, the outcomes of
based contracts where payments are activated only if the checks denoting the performance during the physical
performance requirements are met (e.g. energetic, structural, delivery could be linked to a smart contract. In the proposed
acoustic). However, payment management through smart simulated installation activity, no IoT devices were included to
contracts face key challenges highlighted by McNamara and measure the performance of the physical delivery. Instead,
Sepasgozar (2018) as: information models representing a random values within reasonable ranges were used. Future
limited percentage (i.e. up to 45%) of construction project simulations linking IoT devices and other reality capture
measurable costs, and a need for alignment between technologies (e.g. photogrammetry) to the smart contract will
information models, programmes, and cost models. Another be performed.
consideration should be given to the flexibility required in
traditional construction contracts that smart contracts do not In the simulation, there are two types of steps: checks, which
account for (Sklaroff, 2017). For example, an experienced use the smart contract to check against requirements translated
inspector would know if a wall has been constructed correctly from the BEP and EIR; and installation or application, which
and to pre-agreed specifications whereas sensors and devices is physical installation of items during the construction process
currently lack exercising of such judgement. done manually or by robotics where technology allows. The
installation process is described in the following steps detailing
4. Simulating an installation activity the role of the smart contract where applicable.

An extract of the proposed approach is demonstrated as a [1] Check the flatness of the wall is less than 6mm using
proof-of-concept by simulating a project activity. The laser scanner technology (LST): The flatness of the wall must
demonstration involves a simulated installation activity in a be less than 6mm (typically checked with a levelling bar or a
BIM-based project using a smart contract. The simulation grazing light) to ensure correct installation of the external
demonstrates the coding of the smart contract in the DLT thermal insulation panels. The if/then command reports
environment and the relationship with the BEP and EIR in the whether wall flatness meets requirements to enable the panels
digital environment. The results from checking the to be fixed to the walls. If yes, the smart contract prints
performance of the installation in the physical environment are “flatness tolerance is within limits” and the activity can
processed in a smart contract, which accordingly authorises or progress to the next step. If not, the smart contract prints
denies the payment. The smart contract was coded using “flatness tolerance is outside limits” and the activity cannot
PyCharm Community Editor 2018 (v2.4), which is free, open- proceed, the work must be re-done and the check performed
source software. The simulation was part of the PhD research again until the activity can progress to the next step. Figure 2
developed by Politecnico di Milano (Bolpagni, 2018) on the demonstrates the smart contract code for this step.
ongoing case study led by University of Brescia (DICATAM
and DII departments) in collaboration with the School of Figure 2 Check Flatness
Buildings in Brescia (ESEB), and building materials
manufacturer, Weber Saint-Gobain. The simulation shows the
functionality of automating the installation of an external
thermal insulation composite system using a smart contract.

Typically, validation of product installations is done manually.

No national or international standards exist to define
installation steps, therefore, steps to perform the simulation
were created using the manual of best practice published by the
Italian external thermal insulation committee (CORTEXA,
2017) and discussions with three professionals from Weber
Saint-Gobain. Computable values must be defined in order to
create a smart contract and to check performances against
contract requirements (Clack et al., 2016). The simulation
translates EIR into code in order to create a smart contract with
the aim of monitoring the installation process and linking the
smart contract to the distributed ledger.

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 Li, Kassem, Ciribini and Bolpagni

[2] Installation of humidity and temperature sensors on the (T or W schema) that can be recognised using image
external thermal insulation panels: No smart contract recognition technology (Figure 4). If the pattern is wrong, they
required. These IoT-enabled sensors are installed during the should be reapplied or replaced and rechecked.
construction phase for use at the operations phase of the
building to manage performance-based contracts. [3] Figure 4 Check anchor patterns, anchor positions
Application of adhesive on external thermal insulation
panels: No smart contract required. [4] Installation of the
external thermal insulation panels from bottom to top: No
smart contract required. [5] Check the panel offset is at least
25cm using photogrammetry: Can be done using image
recognition technology to confirm offset of the panel is at least
25cm to avoid vertical joints. The if/then command in the smart
contract checks the value of the offset (Figure 3) and reports
whether it is inside or outside limits.

Figure 3 Check panel offset, openings, profiles, fibre

meshes

[12] Check the position of the anchors is aligned with the

panel surface: The smart contract checks if the pattern follows
the project specifications and if the anchor position is in
compliance with requirements (Figure 4). If the position is
wrong, they should be reapplied or replaced and rechecked.
[13] Application of a base coat layer: No smart contract
required. [14] Application of reinforcing fibre mesh: No
smart contract required. [15] Check the presence of fibre
meshes from top to bottom using photogrammetry: Image
recognition technology can be used to confirm presence of
fibre meshes and that they have been applied correctly (Figure
3). [16] Check the overlap between fibre meshes is at least
10 cm using photogrammetry: It is important to control that
the fibre mesh has been installed correctly with at least an
overlap of 10 cm (Figure 4). This check can be performed
[6] Check if there are openings: image recognition using image recognition technology and the smart contract can
technology checks for openings (e.g. doors, windows) and automatically check if the value is in compliance with
reports result via the smart contract (Figure 3). [7] Installation requirements. [17] Application of a base coat: No smart
of L profiles (if required) in corners of openings: No smart contract required. [18] Check that the thickness of the base
contract required. [8] Check the presence of L profiles (if coat layer is at least 4mm: Same coding as in step 1 with
required) using photogrammetry: If there are windows or different values. [19] Application of primer: No smart
other openings within the wall, the panels must include L contract required. [20] Application of finishing layer of
profiles. Image recognition technology checks for L profiles render: No smart contract required. [21] Final Flatness
and reports the result via the smart contract (Figure 3). [9] Check: a final check is made to confirm the flatness of the wall
Check the flatness of the insulation system is less than 6mm is less than 6mm after completion of the installation task and
using LST: As this is the same coding required in Step [1], the the result reported by the smart contract (Figure 5). [21]
same code is recalled for this step (Figure 2). [10] Installation Payment Permission: The smart contract checks payment
of anchors: No smart contract required. Anchors are placed to permission (Figure 6). If all performance requirements are
fix the panels into the wall. [11] Check the anchors pattern successfully addressed the smart contract returns a value of “0”
against the project (T schema or W schema) using allowing payment to be made (Figure 7). If they are not all
photogrammetry: The anchors must follow a specific pattern addressed, the code provides the value “29” (or another random

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 International Conference on Smart Infrastructure and Construction 2019 (ICSIC)

number that is not “0” indicating an error whose details will be In the simulated scenario, the smart contract did not authorise
included in an error manual to explain the type of error (e.g. the payment as the flatness of the wall exceeded the accepted
payment not authorized), and payment is denied (Figure 8). tolerance. This scenario shows how activities at the physical
delivery can be coded into a smart contract. The performance
Figure 5 Check final flatness of wall criteria and thresholds used in the smart contact can be
extracted from an approved and published information model
within the information container.

5. Discussion and conclusions

The construction industry is facing many challenges. These
include low productivity, poor regulation and compliance, lack
of trust, inadequate collaboration and information sharing, and
poor payment practices (Farmer, 2016; Hackitt, 2018;
Figure 6 Payment Permission Woodhead et al., 2018). The digital transformation of the
industry through BIM and more recently through DLT, IoT and
Smart Contracts is currently being advanced as a solution to its
problems. However, the integration and complementarity
between these concepts and technologies is still a very novel
challenge and has lagged interrogation to date. The aim of this
paper was to address this gap by proposing a potential
integration targeted at some of these key challenges, in
particular, late payments, lack of trust and inadequate
collaboration. A use case is presented showing how DLT with
smart contracts supported by IoT device verification and BIM
data can handle contractual clauses (particularly in
performance-based contracts) could speed up the process of
Figure 7 Authorisation of Payment payment authorisation. The digitalisation eco-system
integrating these technologies included four environments:
DLT Environment including the smart contract; the
Agreement(s) exemplifying the agreements made in EIR and
BEP; the Digital Environment representing the project
deliverables in terms of information model, data and
documents; and the Physical Environment representing the
actual delivery of the physical asset, goods and services where
IoT-based verification and authentication of the performance
can occur. The use case, although small in scope, showed that
together these technologies play a complementary role and can
execute the potential contractual clauses around a construction
work (e.g. installation activity). The performance of the
delivery of the physical asset can be detected by IoT devices or
other electronic verification and authentication systems (e.g.
reality capture). The data required to verify against can come
from the information models, data and documentation
Figure 8 Denial of Payment
approved and published at the digital delivery phase. The smart
contract executes all clauses required to fulfil the contractual
requirements for the considered work (e.g. installation activity)
and accordingly authorises or denies the payment. Finally, the
record of completion is appended to the distributed ledger,
which can also record the payment events. The scenario
investigated was limited due to its focus on one simple
construction work. However, this example could be considered
as one mini-contract out of thousands of mini-contracts –
making up a master smart contract – self-executing and
transferring data as they complete and generating payment
upon successful attainment of performance. The proposed
work also shows the potential that could be achieved by
deploying such technologies in a complementary manner. It
also acknowledges the limitations and the challenges facing

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 Li, Kassem, Ciribini and Bolpagni

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