Application of analytical hierarchy process (AHP) for contractor evaluation in project management: a case study

Abstract

At present, in Bangladesh, most of the companies arc using two step evaluation methods for awarding contracts to contractors for large construction projects. In the first step of this method, screenings of contractors arc done on simple pass fail basis. They must go through this step to be eligible for the second phase. A simple kind of weighted sum model (WSM) is used here for this decision making. The choice of selection criteria and their weights are dependent on the subjective judgment of the project owner. A thresh-hold value is fixed by the owner and a simple pass-fail method is used. Those contractors crossing this threshold value are qualified for going into the second phase. This first step is also known as prequalifieation evaluation of contractors and it ensures that only fimls with adequate experience, resources, qualifications and expertise are selected to tender. The problem with this method is deciding the weight of the respective criteria, something for which AHP does provide a better solution. In the second step, pre qualified contractors from the first step are assessed of their capacity in more detail. This assessment is performed to ensure adequate, experience; resources, qualifications and expertise available exist in the selected firm. Then the lowest qualified bidder is awarded with the contract. The new challenge in the field of Project Management may be considered like dealing with the number of alternatives that have grown dramatically over the last few decades. Managers have to deal more with conflicting goals nowadays. In case of construction projects, selecting the best contractor among many contractors may be considered as one of this particular type. Analytical Hierarchy Process (AHP) is an efficient tool for dealing with these .types of multi-criteria decision making problems. AI-IP is famous for its ability to incorporate both the quantitative and qualitative factors simultaneously. In this presented paper, a case study about subcontractor prequalifieation evaluation (an evaluation problem) has been performed using the traditional approach and the Analytical Hierarchy Process (AHP). Later, sensitivity analysis was carried out by changing the comparison matrix to show the greater capability and flexibility of AI-IP over traditional approach.