Due diligence in Selecting a Contractor

Introduction

Selecting a capable construction contractor is an important task for clients hoping to have successful project outcomes. This process is challenging due to the competitive nature of the construction industry. There are high risks of project failure with wrong choices, hence it is essential for project owners to choose the contractors diligently.

Challenges in Contractor Selection

The ideal selection process is to identify a contractor who can be trusted to execute the project satisfactorily. Unfortunately, the current selection methods often give more weight to the lowest bid. Research shows that this emphasis on quoted price may not be as important as it looks, suggesting fair considerations of cost, time, and quality in the final selection.

In public projects, tender price often dominates other factors in contractor selection due to suspicions of manipulations and corruption. However, evidence from history of contracting shows that the lowest bidders have sometimes failed to complete projects due to financial difficulties. They may be forced to compromise on various quality issues as well. This highlights the need for an objective approach that considers a variety of criteria, which would be more acceptable to the clients and even reduce long-term costs.

Problems with Lowest Price Selection

The acceptance of the lowest bid is identified as the main cause of project delivery issues. Contractors may quote low prices by compromising on quality, hoping to compensate through variations and additional claims. This practice is not in the best interest of the client and is shortsighted. The final selection of a contractor should involve qualitative, subjective, and imprecise data considering three criteria, time, cost, and quality.

Recommendations

Contractor selection has been a topic of debate for decades, with some clients prioritising the lowest bids from prequalified contractors. When it comes to individual clients like home owners, there is no guidance on due diligence. So quite often, the only criteria is the price. However, this approach may compromise project quality, time, and cost. The research highlights the need for a balanced selection process that considers multiple criteria. 

Inweaver handpicks the contractors after a diligent verification process, understanding of their work, quality and culture. We believe in empowering and equipping the client with the right choices and due diligence so Inweaver acts only as a facilitator. The platform offers a flexible and comprehensive model for contractor selection, with a dedicated portfolio page to present all qualified contractors within the app for ease of selection and an efficient filtering tool that can quickly narrow down the search based on customers’ choices and also makes the shortlisting process easy. Feel free to contact support@inweaver.com if you need any further assistance.