Risk Analysis Approach to Selection of Contractor Evaluation Method
Publication: Journal of Construction Engineering and Management
Volume 118, Issue 4
Abstract
Every project owner is faced with the contract administration decision of what evaluation method to select to adequately establish and ensure the qualification of candidate construction contractors. The evaluation methods available include (1) owner-contractor prequalification, (2) surety bonding, or (3) owner-contractor prequalification along with surety bonding. This paper describes an investigation into these evaluation methods and their impact on project outcome: (1) failure or (2) nonfailure. Failure is defined in this study as a significant breach of the contractor's legal responsibilities to the owner (for example, bankruptcy or material breach of contract related to meeting desired project objectives such as cost, schedule, and quality). Data were collected using a questionnaire survey and personal interviews. With regard to the questionnaire survey, 85 different organizations responsed and provided a total of 120 projects; 47 involved a contractor failure. Twenty industry experts provided probabilities associated with the various project outcomes. Expected value theory is used to determine expected outcomes of relevant project performance parameters. Results demonstrate that better owner-contractor evaluation leads to enhanced project performance.
Get full access to this article
View all available purchase options and get full access to this article.
References
1.
Ashley, D. B. (1980). “Coordinated insurance for major construction projects.” J. Constr. Engrg. and Mgmt., ASCE, 106(3), 307–313.
2.
de Neufville, R. (1990). Applied systems analysis engineering planning and technology planning. McGraw‐Hill Publishing House, New York, N.Y., 297–320.
3.
Mendenhall, W., and Reinmuth, J. E. (1982). Statistics for management and economics, 4th ed., Duxbury Press, Boston, Mass.
4.
Russell, J. S., and Skibniewski, M. J. (1988). “Decision criteria in contractor prequalification.” J. Mgmt. in Engrg., ASCE, 4(2), 148–164.
5.
Russell, J. S. (1990a). “Surety industry: Overview.” J. Mgmt. in Engrg., ASCE, 6(3), 323–341.
6.
Russell, J. S. (1990b). “Surety bonding and owner‐contractor prequalification: Comparison.” J. Prof. Issues Engrg., ASCE, 116(4), 360–374.
7.
Russell, J. S. (1991a). “Contractor failure: Analysis.” J. Perf. Constr. Fac., ASCE, 5(3), 163–180.
8.
Russell, J. S., and Radtke, M. W. (1991b). “Subcontractor failure: Case history.” Proc. 35th Annual Conf., B. Humphreys, S. Pritchart, and K. K. Humphreys, eds., American Asociation of Cost Engineers (AACE), Morgantown, W. Va., E.2.1–E.2.6.
9.
Russell, J. S. (1991c). “Construction contract bonds.” J. Mgmt. in Engrg., ASCE, 7(3), 299–313.
10.
Russell, J. S., and Jaselskis, E. J. (1992). “Quantitativestudyof contractor evaluation programs and their impact on project outcome.” J. Constr. Engrg. and Mgmt., ASCE, 118(3), 612–624.
11.
Russell, J. S. (1992). “Underwriting process for construction contract bonds.” J. Mgmt. in Engrg., ASCE, 8(1), 63–80.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 118 • Issue 4 • December 1992
Pages: 814 - 821
Copyright
Copyright © 1992 ASCE.
History
Published online: Dec 1, 1992
Published in print: Dec 1992
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.