Analytical Hierarchy Process-Based Multi-Criteria Decision Analysis for Contractor Selection: A Case of Ethiopian Road Administration
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Date
2024-11
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Addis Ababa University
Abstract
Selecting a contractor is a crucial task for any client. The success of a project is likely to be compromised in the absence of an appropriate and accurate process for choosing the best contractor. This study looks at the analytical hierarchy process (AHP) as a model for decision-making while choosing a contractor. This methodology can help project management teams choose contractors based on criteria other than the lowest bid; it can help them discover contractors who are most likely to produce good results. Further, the study tests an AHP-based model on a real-world scenario whereby potential contractors are assessed. Primary and secondary data sources are both used in the research. A questionnaire was utilized by the researcher to get primary data, while document reviews and extensive literature reviews were used as secondary data to determine the contractor selection criteria to select contractors for road projects. The Analytical Hierarchy Process (AHP) was used to analyze the collected data, which involved identifying 23 sub-criteria under four major categories: financial competency, past performance competency, technical competency, and management competency. These criteria were evaluated by 87 respondents. The analysis revealed that past performance competency held the highest weight at 38.56%, with a consistency ratio of 0.0880. It was followed by technical competency, weighted at 24.16% and a consistency ratio of 0.0794. Financial competency ranked next with a weight of 20.42% and a consistency ratio of 0.07368, while management competency had the lowest weight at 16.84%, with a consistency ratio of 0.0529. Following the identification of contractor selection criteria and the assessment of each criterion's relative importance, a case study was used to test the model validity. According to the results, the candidates were ranked based on each criterion, and the candidate with the highest overall score was declared as the winner. Selecting contractors solely based on the lowest bid is common practice but may overlook other crucial factors. Incorporating a multi-criteria technique ensures a more balanced decision that considers both the bid price and additional important criteria. The findings of this study benefit owners, stakeholders, and project managers in making well-informed decisions and guaranteeing that the contractors chosen for the projects fulfil their needs and expectations.
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Keywords
Analytical Hierarchy Process, Multi Criteria Decision Making, Contractor Selection