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Understanding the role of contractor capability in risk management: a comparative case study of two similar projects

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journal contribution
posted on 11.04.2019 by K. Chandrashekhar Iyer, Ratnesh Kumar, Surya Prakash Singh

In the construction industry, contractor prequalification is used for measuring contractor capability and selecting capable contractors for the successful execution of projects. Research emphasizes that contractor capability and risk management are critical for project success and have a correlation. However, observations suggest that risks are not considered during prequalification and even prequalified contractors perform poorly causing project failures. Such observations indicate a research gap for which this research explores the role of contractor capability in risk management at the project level. The analysis uses a comparative case study of risk management in two similar ongoing projects having different contractors. It reveals that the contractor capability assessed during prequalification is an attribute of an organization; while the capability required to mitigate risks and execute work is an attribute of a project. When risks materialize, the capability of a contractor may reduce and the capability required to mitigate risks in a project may increase. This will create a deficit of resources resulting in poor performance by the contractor. Therefore, criteria for prequalification must be decided considering risks scenarios for projects and contractors to screen out marginally qualified contractors and increase chances of project success.