Contractor selection criteria: A cost-benefit analysis

Abstract

This paper describes an empirical study aimed at ranking prequalification criteria on the basis of perceived total cost-benefit to stakeholders. A postal questionnaire was distributed to 100 client and contractor organizations in Australia in 1997. Forty-eight responses were analyzed for scores on 38 categories of contractor information in terms of "value to client," "contractor costs," "client costs," and "value for money." The client and contractor responses for "value to client" and "client costs" of processing were found to be homogeneous. Those for "contractor costs" and "value for money" differed significantly between the clients and the contractors. A simple linear regression analysis was used to model the responses, and an index of cost-benefit was derived for each of the categories. This was found to be superior to all of the nonlinear alternatives examined. The model was also found to have greater intuitive value than the equivalent raw "value for money" responses.