Identification and evaluation of criteria for selecting contractors using a risk management approach

Abstract

Transferring all or some parts of the engineering activities or supply of goods to third persons or companies is one of the adopted methods that transfer a significant part of the likely risks to the concerned side. Out­sourcing activities are followed by many benefits, such as reducing overhead and operational costs, increasing efficiency, reducing risk, and so on; however, if this is not done carefully, not only is no benefit gained, but also new risks are imposed on the organization. Considering that waste of time and cost diversions of projects stem from the selection of inappropriate contractors, risk assessment is important in outsourcing. Using a risk-oriented approach based on software toward outsourcing, the present study aims to identify and rate the factors affecting the selection of contractors and to finally provide a method to evaluate and select the proper way for the selection of contractors. This method is not just based on the lowest price, but it also includes several factors that influence the selection of contractors, which is achieved by applying the Expert Choice software. At first, the most important risk factors in the selection of contractors were identified according to the conducted research. Then, the factors that had the greatest risk potential for achieving the project goals were chosen from among them. The opinions of experts were obtained in the next phase to determine the importance of various factors in the process of contractor selection, which was achieved by the distribution of a questionnaire. Subsequently, the most important factors chosen by the experts were specified, and their relationship with the contractor’s risk management was found.

Keywords

• contractor
• risk
• tender
• outsourcing
• contract
• analytic hierarchy process (ahp)