Creating a performance management system for contractors to assess subcontractors

Linnan, Nicholas (2015) Creating a performance management system for contractors to assess subcontractors. [USQ Project]

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Abstract

Research suggests that up to 90% of works within the construction industry are subcontracted. Thus, it is important to find way of measuring performance and rewarding higher performing subcontractors. The literature review has highlighted limited work within this field of subcontractor selection and evaluation within the construction industry.

Due to this, there was a need to conduct an extensive literature review to understand what is performance management within the construction industry, how can it be applied in a contractor/subcontractor relationship and what could the benefits of such a system be in order for the performance management system to have relevance within the construction industry.

There was a need to measure performance, and have Performance Management Indicators tailored to suit individual needs of an organisation. The literature review identified 51 potential Performance Management Indicators which could potentially be used to assess subcontractors. Due to this, it was necessary to develop a methodology that could be used to create and implement a functional performance management system that could be used to identify the Performance Management Indicators suitable to an organisation as well as provide a step by step process to the performance management system for ease of implementation.

In order to test this performance management system, a case study needed to be undertaken with a contractor’s organisation. 13 of the contractors representatives partook in the case study and through the use of surveys and informal interviews, they selected the top 10 Performance Management Indicators, based on their experience and organisational culture of the contractor’s organisation. These top 10 Performance Management Indicators were then provided to a group of 5 recently used subcontractors to check the validity of the Performance Management Indicators and to establish commonalities between the two parties.

Using these top 10 Performance Management Indicators as a means of evaluation is an organisational specific requirement. However, the literature review suggests that there is a way that this information can be used to determine future performance of the subcontractor based on past performance. Chengs (2014) RPA method uses the validated set of Performance Management Indicators from the contractor to provide a future prediction of performance based on past performance evaluations. The performance management system was then used to analyse and interpret data of two subcontractors from recently completed projects.

The contractor provided performance evaluations from a series of 5 recently completed projects from two comparable subcontractors. Using the RPA method, the results suggest that Subcontractor 1 can provide future performance of 83.77-86.28% and Subcontractor 2 can provide an output of future performance of 63.55-65.39% based on a confidence level of 95%. The results suggest that quality is ranked amongst the top PMIs with both contractor and subcontractors survey participants respectively. The case study also identified that not all Performance Management Indicators are suitable in assessing subcontractors on a project specific practical completion application and further refinement of the system is recommended in future work. Subsequent feedback and statistical results of the case study suggest that this performance management system has relevance within the industry and could be adopted within the industry as a powerful tool for principle contractors to assess subcontractors within the construction industry.


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Item Type: USQ Project
Item Status: Live Archive
Additional Information: Bachelor of Construction (Management) project
Faculty / Department / School: Current - Faculty of Health, Engineering and Sciences - School of Civil Engineering and Surveying
Supervisors: Abeysekera, Vasantha
Date Deposited: 07 Jun 2016 01:23
Last Modified: 07 Jun 2016 01:23
Uncontrolled Keywords: Subcontractor, Performance Management, Principle Contractor
Fields of Research : 09 Engineering > 0905 Civil Engineering > 090502 Construction Engineering
URI: http://eprints.usq.edu.au/id/eprint/29272

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