Development of integrated criteria for selection and monitoring of subcontractors in Malaysia

Subcontracting practice has become a norm in current construction industry. A performance of construction work is strongly dependant on subcontractors. Problems arising from subcontracting may cause vast influence to the construction project, and may affect the operation of the general contractor’s organisation. Previous studies on subcontractors focused on the single phase of subcontracting practice, either on registration, selection of subcontractors, or on monitoring of subcontractors without much integration of different phases. This study aims to fill the gap between these phases. The key criteria used by general contractors in selecting subcontractors before job-awarding, and key criteria used for monitoring of subcontractors during construction work was first identified followed by discovery of the interrelationships between the criteria used for selection of subcontractors and the monitoring of subcontractors during construction stage. The interrelationships between the criteria and effects of these criteria on the project performance were investigated simultaneously using a single model based on structural equation modelling (SEM) method. Data obtained from 162 G7 contractors in Malaysia were analysed. The final model discovered four major criteria that are essential in the selection of subcontractors, namely, ‘communication’, ‘relationship’, ‘general obligation’, and ‘resource management’ of a subcontractor. Meanwhile, the major criteria for monitoring of subcontractor are ‘workmanship’, ‘awareness of environment, health and safety’, and ‘communication and relationship’. The four criteria for selection of subcontractors were found to be interrelated among themselves and influence the criteria used to monitor subcontractors during the construction stage. The study also reveals that the criteria used to monitor subcontractor were found to influence the performance of a project. The interrelationships discovered in this study were used to develop a web-based system that allows the general contractor to select the subcontractors, monitor the subcontractors during construction stage, and predict the project performance using a single system. The gap between the criteria used for selection and monitoring of subcontractors is filled with this proposed web-based system.

[1]  A. Morrison,et al.  Resolution of disputes arising from set-off clauses between main contractors and subcontractors , 1997 .

[2]  Matthew H. Roy,et al.  An investigation of the status of the Malaysian construction industry , 2010 .

[3]  Mohan M. Kumaraswamy,et al.  Improved subcontractor selection employing partnering principles , 2000 .

[4]  J. Shimizu,et al.  SUBCONTRACTING AND COOPERATION NETWORK IN BUILDING CONSTRUCTION: A LITERATURE REVIEW , 2002 .

[5]  M. T. Birgonul,et al.  Impact of corporate strengths/weaknesses on project management competencies , 2009 .

[6]  Kamaruzaman Jusoff,et al.  Risk Management Assessment for Partnering Projects in the Malaysian Construction Industry , 2008 .

[7]  Hamimah Adnan,et al.  Partnering Project Success Criteria in Malaysia , 2009 .

[8]  Intan Rohani Endut,et al.  Factors contributing to project time and hence cost overrun in the Malaysian construction industry , 2014 .

[9]  Martin Skitmore,et al.  Developing a framework for subcontractor appraisal using a balanced scorecard , 2014 .

[10]  James B. Grace,et al.  Structural Equation Modeling and Natural Systems , 2006 .

[11]  Ajibade A. Aibinu,et al.  Using PLS-SEM technique to model construction organizations' willingness to participate in e-bidding , 2010 .

[12]  A. Bryman.  Social Research Methods , 2001 .

[13]  F Yaghmaie,et al.  Content validity and its estimation , 2003 .

[14]  I. Brace,et al.  Questionnaire Design: How to Plan, Structure and Write Survey Material for Effective Market Research , 2004 .

[15]  R. Bagozzi.  Structural equation models are modelling tools with many ambiguities: Comments acknowledging the need for caution and humility in their use , 2010 .

[16]  Martin Skitmore,et al.  Critical stressors influencing construction estimators in Hong Kong , 2005 .

[17]  S. Thomas Ng,et al.  Labour-intensive construction sub-contractors: Their critical success factors , 2010 .

[18]  Rita Awwad,et al.  Construction safety practices and challenges in a Middle Eastern developing country , 2016 .

[19]  J. Miles,et al.  Applying regression & correlation : a guide for students and researchers , 2001 .

[20]  Luis F. Alarcón,et al.  Benchmarking System for Evaluating Management Practices in the Construction Industry , 2004 .

[21]  Ashraf Elazouni,et al.  D-sub : Decision support system for subcontracting construction works , 2000 .

[22]  G. D. Holt,et al.  Applying multi-attribute analysis to contractor selection decisions , 1994 .

[23]  Ting-Ya Hsieh,et al.  Impact of Subcontracting on Site Productivity: Lessons Learned in Taiwan , 1998 .

[24]  Zakaria Harun,et al.  Future criteria for success of building projects in Malaysia , 2011 .

[25]  Richard Olsson,et al.  Subcontract coordination in construction , 1998 .

[26]  Ismail Abdul Rahman,et al.  Identifying Causes of Construction Waste - Case of Central Region of Peninsula Malaysia , 2012 .

[27]  David Arditi,et al.  Issues in Subcontracting Practice , 2005 .

[28]  Garold D. Oberlender.  Project Management for Engineering and Construction , 1993 .

[29]  Jasper Mbachu,et al.  Conceptual framework for the assessment of subcontractors' eligibility and performance in the construction industry , 2008 .

[30]  Andreas Hartmann,et al.  Relative importance of subcontractor selection criteria: evidence from Singapore , 2009 .

[31]  J Pallant,et al.  A step by step to guide to data analysis using SPSS: SPSS survival Manual. , 2007 .

[32]  TaeHoon Hong,et al.  Effect of project characteristics on project performance in construction projects based on structural equation model , 2009, Expert Syst. Appl..

[33]  Alberto Fernández,et al.  Causes of Subcontracting: Evidence from Panel Data on Construction Firms , 2000 .

[34]  Roger Atkinson,et al.  Project management: cost, time and quality, two best guesses and a phenomenon, its time to accept other success criteria , 1999 .

[35]  Asrul Nasid Masrom,et al.  Examining the influence of participant performance factors on contractor satisfaction : a structural equation model , 2013 .

[36]  M. I. Okoroh,et al.  A model for subcontractor selection in refurbishment projects , 1999 .

[37]  Sherif Ali Mohtady Mohamed,et al.  An empirical investigation of users' perceptions of web-based communication on a construction project , 2003 .

[38]  Ossi Pesämaa,et al.  Modelling procurement effects on cooperation , 2007 .

[39]  Gul Polat,et al.  Subcontractor Selection using Genetic Algorithm , 2015 .

[40]  J. B. Bonny,et al.  Handbook of construction management and organization , 1973 .

[41]  Gul Polat,et al.  Subcontractor selection using the integration of the AHP and PROMETHEE methods , 2015 .

[42]  Y. Ilker Topcu,et al.  A decision model proposal for construction contractor selection in Turkey , 2004 .

[43]  H. Randolph Thomas,et al.  Fundamental Principles of Subcontractor Management , 2011 .

[44]  Rex B. Kline,et al.  Principles and Practice of Structural Equation Modeling , 1998 .

[45]  Abang Abdullah Abang Ali,et al.  Factors affecting construction labour productivity for Malaysian residential projects , 2005 .

[46]  Min-Yuan Cheng,et al.  Evaluating sub-contractors performance using EFNIM , 2007 .

[47]  Olusegun O. Faniran,et al.  Structural equation model of project planning effectiveness , 2005 .

[48]  Sameh M. El-Sayegh,et al.  Significant factors causing delay in the UAE construction industry , 2006 .

[49]  Andy P. Field,et al.  Discovering Statistics Using Ibm Spss Statistics , 2017 .

[50]  Muhd. Zaimi Abdul Majid,et al.  The Operationalisation of Safety Culture for the Malaysian Construction Organisations , 2009 .

[51]  Anil Sawhney,et al.  Analysing factors affecting delays in Indian construction projects , 2012 .

[52]  Craig Standing,et al.  Construction industry productivity and the potential for collaborative practice , 2014 .

[53]  Wei-Chih Wang,et al.  Factor-based path analysis to support subcontractor management , 2005 .

[54]  Wayne County,et al.  ANNUAL REPORT FOR 2013 , 2013 .

[55]  Vacharapoom Benjaoran.  A cost control system development: A collaborative approach for small and medium-sized contractors , 2009 .

[56]  Seung Heon Han,et al.  Structuring the prediction model of project performance for international construction projects: A comparative analysis , 2009, Expert Syst. Appl..

[57]  Irem Dikmen,et al.  Improving sub-contractor selection process in construction projects: Web-based sub-contractor evaluation system (WEBSES) , 2008 .

[58]  D. Proverbs,et al.  Trust influencing factors in main contractor and subcontractor relationships during projects , 2015 .

[59]  Scott L. Hershberger,et al.  The Growth of Structural Equation Modeling: 1994-2001 , 2003 .

[60]  Othman Mohamed,et al.  Delay Mitigation in the Malaysian Construction Industry , 2006 .

[61]  Ravichandran Manoharan,et al.  Subcontractor selection method using analytic hierarchy process , 2005 .

[62]  M. Browne,et al.  Alternative Ways of Assessing Model Fit , 1992 .

[63]  Ting-Ya Hsieh,et al.  The economic implications of subcontracting practice on building prefabrication , 1997 .

[64]  Shiu-tong Thomas Ng,et al.  Modeling subcontractor registration decisions through case-based reasoning approach , 2008 .

[65]  Farag H. Gaith,et al.  Application and efficacy of information technology in construction industry , 2012 .

[66]  Martin Skitmore,et al.  Ten basic factors to identify suitable subcontractors for construction projects , 2003 .

[67]  Wells Jn.  Labour Subcontracting in the Construction Industries of Developing Countries : An Assessment from Two Perspectives , 2008 .

[68]  Ping Chen,et al.  Conceptual determinants of construction project management competence: A Chinese perspective , 2008 .

[69]  Chi Kwan Chau,et al.  An analysis on the HVAC maintenance contractors selection process , 2003 .

[70]  Hemanta Doloi,et al.  Relational partnerships: the importance of communication, trust and confidence and joint risk management in achieving project success , 2009 .

[71]  Sadi Assaf,et al.  Causes of delay in large construction projects , 2006 .

[72]  Martin Loosemore,et al.  Barriers to implementing OHS reforms – The experiences of small subcontractors in the Australian Construction Industry , 2007 .

[73]  C. Distefano,et al.  Understanding and Using Factor Scores: Considerations for the Applied Researcher , 2009 .

[74]  R. V. Krejcie,et al.  Determining Sample Size for Research Activities , 1970 .

[75]  Y. Chiang.  Subcontracting and its ramifications: A survey of the building industry in Hong Kong , 2009 .

[76]  Carrie Sturts Dossick,et al.  Subcontractor Schedule Control Method , 2007 .

[77]  Sid Ghosh,et al.  Identifying and assessing the critical risk factors in an underground rail project in Thailand: a factor analysis approach , 2004 .

[78]  Xiaohua Jin,et al.  Relationship‐based determinants of building project performance in China , 2007 .

[79]  S. T. Ng,et al.  Delineating the predominant criteria for subcontractor appraisal and their latent relationships , 2008 .

[80]  H. Rajaie,et al.  A new approach for subcontractor selection in the construction industry based on portfolio theory , 2016 .

[81]  Nicola Costantino,et al.  Subcontracting in commercial and residential construction: an empirical investigation , 2001 .

[82]  S. El-Sayegh.  Risk assessment and allocation in the UAE construction industry , 2008 .

[83]  H. Ping Tserng,et al.  An improved approach to the subcontracting procurement process in a lean construction setting , 2014 .

[84]  Gary David Holt,et al.  Prequalification and multi-criteria selection: a measure of contractors' opinions , 1998 .

[85]  Ernawati,et al.  The significant factors causing delay of building construction projects in Malaysia , 2007 .

[86]  Pedro Gazmuri,et al.  On-Site Subcontractor Evaluation Method Based on Lean Principles and Partnering Practices , 2007 .

[87]  D. Iacobucci.  Everything You Always Wanted to Know About SEM (Structural Equations Modeling) But Were Afraid to Ask , 2009 .

[88]  Nur Emma Mustaffa,et al.  Analysis of factors critical to construction project success in Malaysia , 2012 .

[89]  Zeynep Sözen,et al.  Secondary subcontracting in the Turkish construction industry , 1999 .

[90]  S. Thomas Ng,et al.  Delineating criteria for subcontractors registration considering divergence in skill base and scales , 2008 .

[91]  Yeng-Horng Perng,et al.  Potential benefits for collaborating formwork subcontractors based on co-operative game theory , 2005 .

[92]  Ekambaram Palaneeswaran,et al.  Recent advances and proposed improvements in contractor prequalification methodologies , 2001 .

[93]  S. T. Ng,et al.  Factors contributing to the success of equipment-intensive subcontractors in construction , 2009 .

[94]  Sabariah Mohamad,et al.  Logistics and Supply Chain in Malaysia: Issues and Challenges , 2008 .

[95]  Francis W.H. Yik,et al.  Multilayer subcontracting of specialist works in buildings in Hong Kong , 2008 .

[96]  Eddie W.L. Cheng.  Risk assessment in prospective performance prediction for subcontractors , 2016 .

[97]  Vivian W. Y Tam,et al.  Impacts of multi-layer chain subcontracting on project management performance , 2011 .

[98]  Min-Yuan Cheng,et al.  Evaluating subcontractor performance using evolutionary fuzzy hybrid neural network , 2011 .

[99]  Leandre R. Fabrigar,et al.  Some things you should know about structural equation modeling but never thought to ask , 2010 .

[100]  Xianggui Qu,et al.  Multivariate Data Analysis , 2007, Technometrics.

[101]  Vito Albino,et al.  A neural network application to subcontractor rating in construction firms , 1998 .

[102]  Robert F. Borg.  The Contractor-Subcontractor Relationship: The Subcontractor's View , 1995 .

[103]  Dan Wang,et al.  Modelling risk allocation decision in construction contracts , 2007 .

[104]  Simon Washington,et al.  Structural equation model of construction contract dispute potential , 2000 .

[105]  Jian Zuo,et al.  Evaluating Document Quality in Construction Projects – Subcontractors’ Perspective , 2013 .

[106]  E. Teijlingen,et al.  The importance of pilot studies. , 2002, Nursing standard (Royal College of Nursing (Great Britain) : 1987).

[107]  Ismail Abdul Rahman,et al.  Significant Factors Causing Cost Overruns in Large Construction Projects in Malaysia , 2013 .

[108]  Creed S. J. Eom,et al.  Subcontractor Evaluation and Management Framework for Strategic Partnering , 2008 .

[109]  Anil Sawhney,et al.  Structural equation model for assessing impacts of contractor's performance on project success , 2011 .

[110]  S. Hoe,et al.  Quantitative Methods Inquires 76 ISSUES AND PROCEDURES IN ADOPTING STRUCTURAL EQUATION MODELING TECHNIQUE , 2008 .

[111]  Hyun-Soo Lee,et al.  Transaction-Cost-Based Selection of Appropriate General Contractor-Subcontractor Relationship Type , 2009 .

[112]  Nur Emma Mustaffa,et al.  Critical success factors for Malaysian construction projects: an empirical assessment , 2013 .

[113]  Mikhail Chester,et al.  Cost Impacts, Scheduling Impacts, and the Claims Process during Construction , 2005 .

[114]  Andrew R.J. Dainty,et al.  Subcontractor perspectives on supply chain alliances , 2001 .

[115]  Hans C. Björnsson,et al.  Accounting for rater credibility when evaluating AEC subcontractors , 2003 .

[116]  Murali Sambasivan,et al.  Causes and effects of delays in Malaysian construction industry , 2007 .

[117]  Chia-Wen Liao,et al.  The examination of workers’ compensation for occupational fatalities in the construction industry , 2015 .

[118]  Mohan M. Kumaraswamy,et al.  Evaluation of factors affecting Time and Cost performance in Hong Kong Building projects , 1999 .

[119]  David. Proverbs,et al.  Mitigating the health and safety influence of subcontracting in construction: The approach of main contractors , 2013 .

[120]  Bo Xia,et al.  A critical review of structural equation modeling applications in construction research , 2015 .

[121]  Junying Liu,et al.  Interrelationships among Critical Success Factors of Construction Projects Based on the Structural Equation Model , 2012 .