Establishing a Link between Contractor Selection Strategy and Project Outcomes: Simulation Study

Perceived benefits of the best-value strategy and the problems the lowest-price strategy have caused in the construction industry have led to an increase in the use of the best-value strategy for selecting contractors. Although some research has tried to establish a direct relationship between a contractor selection strategy and project outcomes, there is hardly any empirical research that tries to establish this relationship. This paper presents a quantifiable method of assessing the risk of selecting different contractor selection strategies using educational facilities projects in the United Kingdom. A Monte Carlo-simulation study was conducted to assess how the lowest-priced contractor would have fared against the best-value contractor had the former been awarded the contract instead. It was concluded that selecting the best-value contractor in educational facilities projects is not necessary in terms of cost. Furthermore, although the results are limited to educational facilities project, the method can be adapted to other sectors.