Establishing a link between contractor selection strategy and project outcomes: A simulation study

Perceived benefits of the best value strategy and the problems the lowest price strategy has caused in the construction industry; has led to the increase in the use of the best value strategy in selecting contractors. Whilst there is research that have tried to establish a direct relationship between a contractor selection strategy and the project outcomes, there are 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 UK. A Monte-Carlo simulation study was conducted to assess how the lowest priced contractor would have fared against the best value contractor had it 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, though the results are limited to educational facilities projects, the method can be adapted to other sectors.