Optimal Contractor Selection in Construction Industry: The Fuzzy Way

Abstract

A purely price-based approach to contractor selection has been identified as the root cause for many serious project delivery problems. Therefore, the capability of the contractor to execute the project should be evaluated using a multiple set of selection criteria including reputation, past performance, performance potential, financial soundness and other project specific criteria. An industry-wide questionnaire survey was conducted with the objective of identifying the important criteria for adoption in the selection process. In this work, a fuzzy set based model was developed for contractor prequalification/evaluation, by using effective criteria obtained from the percept of construction professionals, taking subjective judgments of decision makers also into consideration. A case study consisting of four alternatives (contractors in the present case) solicited from a public works department of Pondicherry in India, is used to illustrate the effectiveness of the proposed approach. The final selection of contractor is made based on the integrated score or Overall Evaluation Score of the decision alternative in prequalification as well as bid evaluation stages.

Appendices

Appendix: Sample Questionnaire

This questionnaire lists out several evaluation criteria, sub-criteria and their measures that are normally considered by the project owners/clients or their representatives to assess the contractors’ potential to execute the construction project under consideration. Please give your rating, by ticking appropriate one, based on your experience with contractor selection process, their relevance or level of importance in assessing the contractors’ potential to deliver the project at hand.

Scale	Meaning
IR	Particular criterion/attribute (measure) is irrelevant in assessing the contractor’s potential
VLI	It has very low importance in assessing the contractor’s potential
LI	It has low importance in assessing the contractor’s potential
MI	It has medium importance in assessing the contractor’s potential
I	It is important in assessing the contractor’s potential
VI	It is very important in assessing the contractor’s potential

Respondent Details

A	Contracting company’s attributes	IR	VLI	LI	MI	I	VI
1.	Age (experience) and registration of the contractor’s firm/company
2.	Familiarity with regulating authorities
3.	Familiarity with local working culture
4.	Company’s negotiating skill
5.	Company’s trade union record
6.	Prior business relationship
7.	Company proximity to project
8.	Health and safety record of the company
9.	Achievement of quality level (e.g., ISO: 9000:14000)
10.	Post-business attitude (e.g., claims and counter-claims)
11.	Past failures
12.	Record of firm’s social responsibility

B	Experience record	IR	VLI	LI	MI	I	VI
1.	Experience of working on similar projects
2.	Experience with owner’s organization
3.	Experience in local area
4.	Experience in similar geographical and weather conditions
5.	Type and size of projects completed in past 5 years
6.	Highest value of project executed in past 5 years

C	Past performance of the contractor	IR	VLI	LI	MI	I	VI
1.	Work quality in completed projects (i.e., third party quality certification and incentives awarded)
2.	Adherence to time schedule in past works
3.	Percentage of past works completed within the agreed contract value
4.	Percentage of works sublet in past projects
5.	Standard of sub-contractors’ works in past projects
6.	Attitude towards incomplete/correcting faulty works
7.	Cordial Relationship with past project clients/owners
8.	Relationship with sub-contractors
9.	Relationship with suppliers
10.	Relationship with regulating authorities
11.	Blacklisting in past projects
12.	Quality of service during defect liability period
13.	No. of arbitral awards or court decisions (litigation history) in past 5 years

D	Financial capability of the contractor	IR	VLI	LI	MI	I	VI
1.	Current commitments
2.	Authorized and paid-up capitals
3.	Working capital
4.	Current and fixed assets
5.	Net worth
6.	Turnover
7.	Profit generating ability of the company
8.	Liquidity status of the company
9.	Capital structure of the company (amount of debt and equity)
10.	Reference of financial institutions
11.	Balance sheet data
12.	Credit rating
13.	Financial closure (finances-arrangement) for the project

E	Performance potential of the contractor	IR	VLI	LI	MI	I	VI
1.	Qualification and experience of management staff
2.	Availability of in-house skilled labour
3.	Availability of plant and equipment resources
4.	Present work load (works on hand) and capability to support the current project
5.	Quality control and assurance program
6.	Specialized knowledge of particular construction method
7.	Availability of in-house design capacity

F	Project specific criteria	IR	VLI	LI	MI	I	VI
1.	Construction method statement
2.	Specified project time schedule
3.	Qualification and experience level of the project manager
4.	Qualification & experience of professional and technical staff
5.	Experience level of the project team on similar type of project
6.	Number of direct workers available for the project.
7.	Availability of testing equipment as quality assurance
8.	Health and safety setup for the project
9.	The Contractor’s cost and time control considerations
10.	Reputation of sub-contractors to be used for the project
11.	Type of performance bond (through bank or surety company)
12.	Payment schedule
13.	Risk sharing level of the project owner

G	Other criteria	IR	VLI	LI	MI	I	VI
1.	Bid or tender price
2.	Advance payment
3.	Quoted project duration
4.	Defect liability period