Delineating the predominant criteria for subcontractor appraisal and their latent relationships

Abstract

An industry report in Hong Kong calls for an agreed framework for appraising subcontractor performance. A set of performance appraisal criteria is developed that is agreeable to all key stakeholders in subcontracting. By examining the criteria being applied around the world and reviewing the available literature, a set of 31 subcontractor performance appraisal criteria was compiled. A questionnaire survey was conducted in Hong Kong to reveal the perception of relevant stakeholders on the most critical criteria for subcontractor appraisal. The independent samples t‐test confirmed that the main contractor and subcontractor groups had a significant agreement on the importance levels of most subcontractor performance appraisal criteria. Through factor analysis, the 15 most important subcontractor performance appraisal criteria and their underlying relationships are identified. The results indicate that the three overarching factors for subcontractor performance appraisal are ‘team interaction’, ‘accomplishment of project goals’ and ‘track record’. The identified appraisal criteria lay a solid foundation for the development of a centralized subcontractor performance appraisal system to facilitate performance reporting, data sharing and benchmarking.

Keywords:

• Subcontractor
• performance appraisal
• decision criteria
• factor analysis.

Acknowledgement

The authors are grateful for the financial support of the Research Grants Council through the Competitive Earmark Research Grant (Grant No.: 7120/04E)