A blockchain-based bid management system for construction contracts

Abstract

The effective management of the construction tendering process plays a significant role in ensuring that the contract is awarded to an eligible contractor, which fosters project success. However, construction tendering procedures have frequently been associated with issues of transparency along with lengthy, and complex procedures, often leading to potential unethical practices and inefficiencies. Traditional tendering methods are notorious for their reliance on manual processes, which are prone to errors, corruption, and a lack of trust. While web -based etendering solutions have been proposed to improve the process, they pose vulnerabilities to manipulations and biased favouritism due to their centralised nature. Given these concerns, this dissertation proposes a decentralised bid management system f or construction contracts. Through the Design Science Research method, this research developed a novel blockchain-based bid management system (BCBBMS) to offer a secure, transparent, and efficient bidding process and evaluated its feasibility and applicability by eight industry professionals. The proposed system includes three main components: 1) a blockchain network to provide transparent, traceable, and tamper-proof records of the bidding transactions; 2) a smart contract to automate the process, including proposal evaluations and contract awards, fostering accurate and fair evaluations; and 3) a decentralised document storage system, InterPlanetary File System (IPFS), to provide secure and unalterable storage of the tender documents.

The results demonstrated that the automation of the bidding process in the blockchain environment not only refines the tendering procedure but also offers a tangible countermeasure to challenges like opacity and mistrust inherent in traditional processes. Every bid and transa ction becomes traceable and unalterable, reducing opportunities for unethical practices. The interview findings validated the feasibility of the proposed system in overcoming these issues as well as its applicability and usability in a real-world construction tender.