Measuring Managerial Capability of Subcontractors Using a KPI Model

Abstract

In construction projects, the large portions of construction activities are carried out by subcontractor companies; hence the success of a project directly depends on the performance of the selected subcontractors. However, general contractors generally select their subcontractors on the basis of the low bid price, which may lead to work with unqualified subcontractors. This situation usually results in additional costs. Therefore, general contractors should thoroughly measure and evaluate the performances of subcontractor candidates during the selection process. In this study, a practical and systematic performance measurement framework, which is based on the key performance indicators (KPIs) model, is developed to measure the managerial capability of subcontractors. For this purpose, first, the relevant literature was reviewed, and 94 KPIs were identified to measure the managerial capability of subcontractor candidates. Then, these 94 KPIs were categorized into three main groups namely: (1) KPIs Affecting General Performance, (2) KPIs Affecting Experience and Past Relations, and (3) KPIs Affecting Communication Skills. After identifying and categorizing the KPIs, 58 indicators were eliminated considering the characteristics of the Turkish construction industry. In the next stage, a questionnaire survey was designed and delivered to large-scale 40 Turkish contractors, who predominantly do business in international markets. The reliability and ranking analyses were performed on the collected data to determine the importance levels of the identified KPIs. The findings of this study were used to develop the managerial capability performance measurement framework.