Project lifecycle approach to the perceived value of suppliers: A study of a Finnish contractor

Abstract

Systematic supplier evaluation, benchmarking, and development are parts of successful construction. However, there is a possible bias in supplier evaluations as in the early phase of projects, higher uncertainty about project success makes contractors potentially more critical of suppliers. We investigate whether contractors tend to favor suppliers of late project phases over suppliers in early phases. The analysis of 1,374 supplier evaluations revealed that in all 13 variables ranging from safety and schedule to quality the performance of the supplier was perceived lower among suppliers in the early phase compared to the late phase of the project. The evaluators recommended 92.8 % of the suppliers of late phases whereas they recommended only 86.1 % of the suppliers of early phases. When 12 other variables were taken into account, the contractor still tended to recommend more often suppliers that were active in the late phase (p<0.01). The paper contributes to the research on supplier management in projects by revealing novel insights about the effect of project phase on perceived value of suppliers. Contractors can utilize the findings by improving the objectivity of supplier evaluation systems. More research is needed to generalize the findings and to investigate the mechanisms behind the phenomenon.