Decision support for subcontractor selection and allocation to work packages in the contractor’s project portfolio

Abstract

1. Contractors engaged in a number of concurrent projects are rarely able to complete all works relying only on in-house resources. This is due to these resources’ limited availability and missing qualifications. The subcontractor selection process is time-consuming and complex, which is why it is often carried out whilst the general contractor (GC) is already executing the works. The selection of subcontractors affects the time, cost and quality of the works, and requires decision support tools that help analyse constraints of project milestones and due dates set in the main contracts. Traditional tendering procedures, even when restricted to a selected group of reliable subcontractors, do not allow for the modification of submitted bids to adapt them to the GC’s needs. The paper proposes a mathematical model to support subcontracting work packages and negotiations with subcontractors. It is intended to be used after the subcontractor pre-qualification procedure. The model allows for the analysis of alternative bids and the negotiation of discounts when awarding a larger number of packages to the same subcontractor. The proposed approach focuses on minimising the total cost of delivering work packages over a predefined period of analysis and, at the same time, ensuring high utilization levels of in-house resources (a requirement set using a minimum value of works to be delivered by in-house crews). The purpose of the proposed model is to allocate resources and to schedule packages planned for a specified planning horizon.