Canada: BIM, Blockchain And The Smart Construction Contract

While the construction industry has traditionally been criticized for being too slow to innovate, the last several years have seen it embrace new business practices, new software and new technologies. The increased use of Building Information Modeling (BIM) is a good example of this. Developments of other technologies – at first glance unrelated to the industry – such as Blockchain and smart (or intelligent) contracts, have in the meantime continued to accelerate, with Blockchain being heralded as having a potentially transformative effect on our increasingly interconnected and online lives.

The use of BIM, Blockchain and smart contracts together could disrupt not only the way construction projects are planned, designed and executed, but also transform the construction contract itself.

BIM and the Future of Collaboration

Although, at its most basic, BIM is a software enabling the generation and management of digital 3D models of a construction project, it has the potential of encouraging collaboration between project participants. Construction projects are complicated and risky endeavours. They can be less so when parties involved in the project are well-informed of one another's activities and where collaboration is fostered. Information management, transparency and trust among project participants are therefore key to ensuring the success of a construction project. BIM can play an important role in this context.

A BIM model is intended to be far more complex than a CAD-based 3D model, enabling not only the graphical representation of construction drawings that were traditionally paper-based, but also the integration within the model of a variety of data from multiple sources. The model can for instance capture pricing information for components of a construction project: from the largest and most complex piece of equipment down to the smallest screw. It enables 4D (or time-based) analyses, allowing users to run simulations of how a project's construction is sequenced. The ability to integrate every single component of a project within the model has demonstrated a number of benefits, not least of which is the identification of conflicts among these components and more efficient construction scheduling. Once compiled, the model can be continuously updated during the execution of works and serve as a repository of project information afterwards: useful for managing everything from change order pricing to life-cycle costs. BIM can therefore serve as a "single source of truth"1 for all project participants, from initial planning and design to execution, operation and demolition.

To the extent it is used on a construction project, most organizations are currently working at the so-called BIM Levels 1 or 2. While Level 1 implies the use of both 2D and 3D models, Level 2 moves the project entirely into the 3D realm. However, project participants might not all be working within a unified model and may instead be sharing with each other models for their own particular scope of work through a common file format, which can then be merged.2

For many, BIM represents the future of construction projects. Through its data-driven approach to project delivery, its use has been shown to simplify the exchange of information and documentation among project participants, reduce costs and increase the chances that projects will be delivered on time and on budget.3 Governments have taken notice and are encouraging the use of BIM on public projects. The UK in 2016 made BIM Level 2 mandatory for all public sector projects. In Quebec, the Société Quebecoise des Infrastructures is progressively implementing a number of integrated design practices, including BIM, with a target date of 2021 for it use on their public-sector projects.

The development of BIM will continue past Level 2. At Level 3, all contractors and professionals involved in a construction project will have online access to a single project model. The ultimate vision is for each project participant – the owner, the general contractor, subcontractors and suppliers – to have access to the same model in an open and transparent manner. They will each be able to view the project as a whole and, to the extent they are permitted, make changes to the model's content.

The BIM Level 3 approach to construction design and execution should theoretically drive more trust and collaboration among project participants and increase the benefits outlined above, such as reduced costs. However, it raises a number of important issues, such as the need to ensure the incorruptibility of information stored on the model and the identity of the one making changes to it. In this regard, Blockchain may have a role to play.

Blockchain as the Foundation for BIM

Blockchain is a database technology that ensures secured exchanges and storage of any information uploaded to the database. Information is sequentially uploaded and compiled into immutable and time-stamped blocks. These blocks are then linked together (thereby creating the block-chain) and the links between the blocks of information are constantly verified on a peer-to-peer basis by other computers forming part of the same database. There is no need for a third party to verify the accuracy of the information stored in the Blockchain; the database essentially verifies itself. Effectively, once a block of information is chained, it can never be altered without database users knowing about it. It is also relatively simple to verify when a block was created, when any changes were made to the Blockchain and by whom.

At present, Blockchain technology is mainly used to enable cryptocurrency transactions (e.g. Bitcoin), given how critical it is to be able to securely and immutably store and transfer these currencies. However, thanks to increased use of and interest in the technology, its potential applications are being expanded at a remarkable rate.

As mentioned, the use of BIM will likely progress to a level where all project participants are theoretically capable of making changes to a single and unified project model. Furthermore, there is no reason why BIM software should be limited to generating 3D project models, and could serve to compile within its software all project information and documentation, such as change orders, invoices and payment information, lien waivers, etc.

If project participants are to effectively collaborate within BIM and use it to its full potential, they will need to trust the information it contains. A system will need to be put in place to securely and permanently track the evolution of the model and any other information uploaded to it. Blockchain can address issues surrounding secure access to the model and allow for a reliable audit of who made changes, when they were made, and what those changes were.

But concerns with the use of a BIM model go beyond data reliability. Having multiple project participants contribute to a unified model raises important issues surrounding ownership of information within the model and the liability of those who contribute to it. Contributors to the model will seek to maintain copyright over their contributions. Project participants (and their lawyers) will be concerned with whether a party having contributed a design element within the model can be held responsible for any defect or other issue that arises with that element during or post construction.

Attempts have been made to adapt construction contract documents to the reality of BIM, most notably by the Institute for BIM in Canada, which in 2014 published a standard contract document (the IBC 100-2014) that can be appended to consultants' services or construction contracts. However, given the dynamic nature of the BIM model and the fact that it exists entirely within the digital realm, certain compromises had to be made in this standard language. The IBC 100-2014, for instance, at Section 1.9, specifies that contributions to the model by contractors and subcontractors do not constitute design services, unless otherwise specified. The standard contract document's accompanying guide specifies in this regard that "Clauses 1.8 and 1.9 clarify the distinction between professional responsibilities for A & E's doing design, as regulated by legislation, and contractors providing shop drawings, as there is some concern with BIM that these lines can be blurred."4

If the lines are blurred now, they will only become increasingly so as the industry moves towards the use of unified models under BIM Level 3 and the ability for all project participants to contribute to such models.

By combining BIM and Blockchain, information contained in the project model could be gathered, maintained, updated and archived within an incorruptible, reliable and transparent database. Its potential to accurately record every single change made to the model could serve to "unblur" the lines within the model, leading to increased confidence in the reliability of the information it contains, better tracking of copyright and intellectual property, and increased accountability for contributors in the event something goes wrong.

While Blockchain could solve some of the issues that arise with the use of BIM, another technology on the horizon has the potential to revolutionise the relationships between construction projects and to upend longstanding contractual procedures.

The Smart Construction Contract

Smart contracts refer to computer protocols that set out the terms and conditions of a contract. The terms of the smart contract are not found on paper, but rather are compiled within source code. Contractual provisions within the smart contract can be partially or fully self-executing and self-enforcing, removing the need for intermediaries and, at least in theory, rendering unnecessary methods of encouraging or forcing parties to comply with their obligations, such as demand letters or court proceedings. In other words, traditional contractual processes that required human intervention and oversight can be partially or fully automated.

In the context of the construction contract, the potential for automation of some of the processes that traditionally rely on the interaction and decisions of multiple project participants is worth exploring.

Consider payment claim procedures. Payment delays are a long-standing and seemingly unresolvable problem in the industry. Indeed, in many jurisdictions the issue has become so significant as to require specific prompt payment legislation to be adopted to force project participants to pay one another within a reasonable period of time.

Innovation enabling prompt payment could instead come from industry through its use of automated payment processes made possible by smart contracts and supported by BIM. The payment claim procedure for any particular project could reside entirely within its associated BIM model. Once a supplier, for example, is ready to ship a component to the site, it would log this in the BIM software. The smart contract would be connected both to BIM and to a project account funded by the owner. It would verify the availability of funds to pay for the supply and confirm this with the supplier. Once delivered to the site, the project manager would confirm having received the component within BIM and, automatically, funds would be transferred from the project account to the relevant parties. The exchange of invoices and supplementary documentation in support of a payment claim (e.g. lien waivers) could also be completed automatically depending on the extent to which such functions are programmed within the smart contract.

Project participants will of course need to "trust" the smart contract and have confidence that the information it contains and the actions it takes are securely logged and unalterable.  As is the case for BIM, building the smart contract within the architecture of Blockchain could resolve these concerns, allowing smart contracts to thrive.

What Lies Over the Horizon

As we have seen, the use of BIM on construction projects is likely to significantly expand over the coming years, while at the same time moving towards Level 3 and the goal of a unified project model within which all project participants can contribute. With the advent of new technologies, construction projects are set to "go digital".

At the same time, lawyers will come under increased pressure to ensure their "paper world" of contracts, forms, waivers, invoices and the like are tailored to – and can keep up with – the digital environment in which construction projects will be planned, designed and executed.5

It is increasingly unrealistic to believe that, in ten- or twenty-years' time, project participants will continue to work together in the same manner as they have to date. It seems equally unreasonable to assume that the construction contract won't be affected in a significant way by these technological developments. New contractual methods and processes will need to be developed.

In some ways this is already happening. The use of project bank accounts (whereby a project-specific account is set up from which payments are made directly to the contractors, subcontractors and suppliers) and integrated project insurance (whereby all project participants, from the owner down to the last supplier, are insured under one policy) show signs of gaining ground in a number of jurisdictions, notably Australia and the UK. These new mechanisms are both a response to, and a tool to encourage, increased collaboration among project participants and the alignment of their interests with that of the project they are working on.

All contracts are structured on the premise that the rights, obligations and liability of one party to the contract is the flip side of the other party's. This binary architecture (if I have a right to be paid, you must pay me; if this property is yours, it's not mine; if you are professionally liable, I'm not) can be significantly disrupted by collaborative works processes such as BIM, where the contributions of project participants within the model could potentially be indistinguishable. As these participants become more and more integrated and encouraged – if not required – to collaborate closely with one another using BIM, contractual provisions that were previously based on clear lines of responsibility that were easily verifiable will become increasingly difficult to enforce.

In response to this reality, significant portions of the construction contract that were contemplated within a traditional contract can be embedded within the BIM model and secured by Blockchain. While it is perhaps unlikely that the entirety of a construction contract could be coded into software such as BIM, the "smart construction contract" would combine a traditional construction contract and reference the self-executing portions of itself that have been coded into the BIM model.

This smart construction contract could:

  • By leveraging Blockchain, resolve a variety of legal issues (liability, IP, etc.) created by its reliance on BIM;
  • Include all project participants as parties, particularly to the extent they will have access and contribute to the project's BIM model;
  • Connect to a project bank account, confirm to project participants that sufficient funds are available for them to be paid assuming they comply with their obligations, and automatically release payments to them once those obligations are met; and
  • Automatically and securely transmit data regarding the project and its progress to relevant stakeholders and third parties, such as lenders, insurers and governmental authorities.


Just a few years ago it would have been unthinkable to postulate that perhaps, thanks to the combination of BIM, Blockchain and smart contracts, construction contracts could one day exist – at least in part – within a software model whose information is stored on a completely secure and unalterable information ledger, and whose provisions self-execute. Such is the pace of technological development.

Obviously, the automation of contracts will have to be carefully considered. Can digital systems ever be trusted enough by the parties using them to allow for self-enforcing contractual provisions that require little or no human intervention? What are the archiving risks associated with using digital information and will the information even be accessible 10, 20 or 30 years after its creation given how quickly file formats change? Will courts recognize the enforceability of smart contracts? Do lawyers need to learn how to code? Answers to these questions are not immediately clear.

What is clear, however, is that construction industry stakeholders (including their lawyers) need to think about these issues and together develop the best possible tools and processes to address them.


1 D. Jellings, Is a single source of truth a prerequisite for Level 3 BIM?, February 5, 2017,

2 For more detail on BIM Levels see:

3 See also E. Poirier, BIM in Canada: moving toward a national mandate for building information modelling, December 6, 2016,

4 Our emphasis. See Institute for BIM in Canada, Guide to the use of IBC Contract Language Documents, Page 15.

5 Z. Turk and R. Klinc, Potentials of Blockchain technology for construction management, Creative Construction Conference 2017, 19-22 June 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Alexia Magneron
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions