Quantitative Study of Contractor Evaluation Programs and Their Impact

This paper's dual intent is to assist contract administrators in better understanding the impact of contractor failure and to aid them in establishing adequate evaluation programs prior to contract award using quantitative data. 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 the desired project objectives such as cost, schedule, and quality). This study quantitatively documents both the amount of owner evaluation performed prior to contract award and subsequent monitoring during the construction process and correlates these efforts with the actual project outcome, either failure or nonfailure. A survey used to collect data prompted responses from 82 different organizations representing both public and private owner concerns; they provided information for a total of 107 projects. Of these, 44 involved a contractor failure. Results demonstrated a significant increase in final project cost and schedule duration as a result of the contractor's failure. The practical considerations regarding contractor failure are also presented.