Using Best-Value Procurement to Measure the Impact of Initial Risk-Management Capability on Qualitative Construction Performance

Managing project risk in construction is becoming increasingly critical for ensuring that project objectives are met effectively. Perceptions and practices related to effective risk management vary among contractors, which results in different levels of risk-management capabilities. A best-value selection method enables owners to identify, during the selection process, contractors with strong risk-management capabilities. This paper presents qualitative data from 133 construction projects in which contractors were selected through a best-value process. During the selection process, contractors completed a risk-management plan (RMP) in which they identified the major risks of prospective projects and ways to manage the risks. The RMPs were then scored by a group of reviewers, and the scores for each contractor were averaged and used within the best-value selection model. In addition, after completion of each project, a close-out survey was used to gather data on several aspects of the contractors' project performance. A contractor's average RMP score and survey data were examined with Pearson's product-moment correlation and linear regression analysis. A positive correlation was found between average RMP scores and the performance metrics assessed in the survey. Contractors with high average RMP scores also had achieved high levels in the performance metrics of quality, professionalism, risk communication, and overall customer satisfaction. An additional correlation was found between average RMP scores and project award percentage. These correlations highlight the importance of establishing and developing effective project risk- management methods and selecting vendors through a best-value approach.