The effects of cost-based contractor selection on construction project performance

Abstract

Purpose – This paper aims to present the outcome of a study conducted on the impact that cost-based contractor selection (CBCS) might have on construction project performance. Several criteria are normally used to select construction contractors, competitiveness of the quoted prices of the prospective contractors is one such important criterion. However, choosing contractors solely on the basis of the quoted price may cause poor performance in the construction project. Design/methodology/approach – A quantitative approach was adopted. A critical review of the literature was conducted to develop 50 survey questions relating to the problems that CBCS might have on construction project performance. Findings – Analysis of close data obtained from the survey of construction experts showed the nature of project performance problems associated with the CBCS to be project time delays and non-compliance with construction standards. The major reason they occurred was found to be the reduced profit margin for contractors. Research limitations/implications – The research sample size is small and restricted to construction professionals in Brunei. Practical implications – The study findings present updated information to construction professionals about the inherent impacts of choosing contractors based on cost. Furthermore, this study enhances the approach of selecting contractors within the construction industry. Originality/value – The study made strong and unique arguments about the problems associated with choosing construction contractors based on cost. This study contributes to the body of knowledge relevant to the management of construction projects.