International Journal of Computer Applications (0975 – 8887)

Volume 179 – No.22, February 2018

Evaluation of Prequalification Decision Criteria for

Selecting Contractors in Nigeria using Analytic
Hierarchy Process

A. H. Afolayan B. A. Ojokoh S. A. Adeyinka

Department of Computer Science Department of Computer Science Department of Computer Science
Federal University of Technology, Federal University of Technology, Federal University of Technology,
Akure, Nigeria Akure, Nigeria Akure, Nigeria

ABSTRACT selection process should identify a contractor to whom the

In recent years, contractors play a major role in construction client can confidently entrust the responsibility to execute
projects of buildings, roads, or waterworks under supervision the project satisfactorily, but unfortunately this is not
of project owners or employers of these projects. Selecting the always possible. An incapable contractor causes all kinds of
most suitable contractor for a construction project is a crucial problems such as delays, cost overruns, inappropriate work,
decision for owners and project managers alike. Ranking the disputes, or other major issues.
candidate contractors has become a key challenge for firms Decision Criteria are those variables or characteristics that are
and enterprises. The study identified and assessed the existing important to the organization making the decision. They
contractors’ decision criteria and then rank the decision
should help evaluate the alternatives from which you are
criteria used for selecting contractor in Federal Universities in
choosing. When people make decisions, they base their choice
Nigeria with the aim of providing information that could
on a number of factors, some logical and some personal.
enhance contractor's selection in construction project. Data
Sometimes this is deliberately done, with careful
were collected with the aid of structured questionnaires. 60
consideration of the criteria used, but often (and even in
questionnaires were distributed to construction professionals/
'logical' situations), some other factors are subconsciously
staff of which 55 responses were returned and 50 used for
taking into consideration. [2] stated that the challenge for
analysis. Information gathered includes the major contractors’
decision-maker is finding the best way of measuring and
prequalification criteria. The collected data were analyzed and
assessing the contractors’ capabilities.
rank in order of priority using the AHP interface in Microsoft
Excel. The results showed that Technical capability of Analytic Hierarchy Process (AHP), is an effective tool for
contractors ranked the most important of the existing pre- dealing with complex decision making, and may aid the
qualification criterion followed by Management capability decision maker to set priorities and make the best decision [3].
among others. The study concluded that past performance of It uses informed judgment or expert opinion to measure the
contractors was the most important existing criterion for relative value or contribution of these attributes and
contractor pre-qualification in the study area among others synthesize a solution. It is a systematic decision making
while the most determinant factor in the choice of these method which includes both qualitative and quantitative
criteria was contractor's resources, which must be considered techniques. It is being widely used in many fields for a long
in the selection of contractors. time. Basically AHP is a method of breaking down a complex,
unstructured situation into its components parts; arranging
Keywords these parts, or variables, into a hierarchic order;
Construction projects, contractors, Analytic Hierarchy synthesize the judgments to determine which variables have
Process, prequalification criteria. the highest priority and should be acted upon to influence
the outcome of the situation.
1. INTRODUCTION
The successful execution of construction projects and keeping In Nigeria, the process of contractor selection for the public
within estimated cost and schedules depend on a right projects is regulated by [4]. Despite introducing a point
prequalification that requires sound contractor selection [1]. system to evaluate both the technical and financial offers, the
Many construction projects experience time and cost overruns Act still has some disadvantages. First, it did not mandate the
due to wrong choice of contractors. This challenge is more use of the point system for contractors’ evaluation. Second, it
evident in the government contract in which contracts are did not provide project managers and professionals with any
awarded to the lowest bidder not responsive bidder as they criteria that could be taken into consideration for evaluating
fulfilled prequalification criteria requirement – the awarding contractors’ bids both technically and financially. Third, it
strategy of the majority of public project in developing only focuses on the bid price in evaluating financial offers [5].
countries including Nigeria. The significance of this study is to provide baseline
Evaluation of the most eligible contractors is important for information to the construction clients and consultants in the
project performance and success in construction projects. Federal Universities in Nigeria, on the importance of
Contractor selection (CS) is a process which involves contractor’s prequalification selection criteria to be adopted,
investigating, screening and determining whether candidate which will eventually translate to a better decision making
contractors have the technical and financial capability to be and increase project performance. The objectives of this
accepted to formally tender for construction work. The research are as follows:

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Volume 179 – No.22, February 2018

(i) review the various criteria used for contractors pre- 2. LITERATURE REVIEW
qualification and bid evaluation as stated in the Contractor pre-qualification and bid evaluation procedures are
literature. currently used in many countries, and involve the
(ii) identify the criteria that are actually used to evaluate development and consideration of a wide range of decision
contractors’ pre-qualification and bids in Nigeria. criteria to evaluate the overall suitability of contractors. A
(iii) evaluate and analyze the relevant criteria for literature review on the decision criteria used in selecting
contractor’s selection in Nigeria. contractors suggested a combined list of criteria used by
(iv) rank the criteria in order of priority using Analytic clients when choosing main contractor ([6]; [7]; [8]; [9]; [10];
Hierarchy Process. and [11]) as shown in Table 1.

Table 1. Decision criteria for selecting main contractor from literature review
Previous Study
Main Contractor Puri and Nieto-Morote, Arazi et al., Topcu Palaneeswarn and Skitmore,
Selection Criteria Tiwari and Ruz-Vila (2011) (2004) Kumarasway, (1999)
(2014) (2012) (2001)
Financial stability √ √ √ √ √ √
Background of company √ √ √
Technical capacity √ √ √ √ √
Cost √ √ √
Past Performance √ √ √
Standard of quality √ √ √
Occupational health and safety √ √ √ √ √ √
Time performance √ √ √ √
Management capability √ √ √ √
Failed contract √
Progress of work √
Human resource management √
Level of technology √ √
Relationship with client √ √ √
Relationship with sub-contractors √
Fraudulent activity √
Competitiveness √
Reputation √
Bid Price √
Political Considerations √
Friendship √
Experience in similar projects √ √
Progress of existing projects √
No of projects at hand √

Several researches have been carried out by different questionnaire survey. The survey was conducted with a group
researchers on decision criteria. [12] ranked the main criteria of 12 experts working in the Libyan construction industry
for contractor selection procedures on major construction (LCI). The paper aims to rank contractor selection criteria
projects in Libya using the Delphi Method. This paper with specific application to make construction projects in the
evaluates the current state of knowledge in relation to Libyan context.
contractor selection process and demonstrates the findings [11] evaluated the criteria for contractors’ selection and bid
from the analysis of the data collected from the Delphi evaluation. This study identified the criteria for selection of

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Volume 179 – No.22, February 2018

contractor and bid evaluation with different emphases to suit in Nigeria when awarding a contract to contractors. In this
the requirements of clients and projects. The methodology research, [3] model was adopted. These are; structuring the
used in this research was conducted by sending a hierarchy, pair-wise comparisons (determining the weights)
questionnaire to different project managers in India and had and ranking phase (ranking of the decision criteria). Figure 1
an exceptionally high rate of response of 72%. The analysis shows the flowchart of the AHP Process.
led to some interesting findings that reflect on the current
practice. The paper also provide construction contractors
with recommendations in pursuit of better evaluation of
construction bids both technically and financially.

[13] investigated the criteria for contractors’ selection and bid

evaluation in Egypt. The paper aim at reviewing the various
criteria used for contractors pre-qualification and bid
evaluation, identifying the criteria that are actually used to
evaluate contractors’ pre-qualification and bids in Egypt, and
also introducing some recommendations for enhancing the
contractors’ selection process in Egypt.

In Nigeria, several researchers have carried out researches on

contractor’s selection. [2] studied process for selecting
contractors for construction works in Nigeria. The study only
revealed a strong relationship between contractor performance
of construction projects and technical capability. Also, [14]
observed that in Nigeria, selection of contractors for
construction projects is largely subjective.

[15] investigated the impact of contractors prequalification on

construction project delivery in Nigeria. The research
discovered success in construction project delivery
performance in terms of time and quality in the adoption of
due process, not minding cost of the project.

[16] stated that current selection methods are faced with

inherent weaknesses which adversely affect the performance Figure 1: flowchart showing the process of AHP
of the construction project. This call for an intuitive study, to Step 1: Define the decision making problem
establish the important criteria to be given at most The decision making problem is ranking the decision criteria
consideration in assessing contractors and selection of used in contractor selection using Federal Universities in
contractors in public sector in Nigeria. Nigeria as a case study.

[17] examined the determinant factors for the choice of the Step 2: Identify and state all the criteria involve in the
prequalification criteria in Niger Delta region of Nigeria with selection process.
the aim of providing information that could enhance Decision makers play an important role on the reliability and
contractor's selection in a recessed economy. Questionnaires accuracy of solving contractor selection problems, because the
were administered on the entire population, out of which 77 problem of ranking the decision criteria using AHP is
were retrieved and used for analysis. The collected data were modeled on decision maker’s judgment. This research first
analyzed using, Mean Item Score (MIS) and Factor Analysis identified the actual criteria from literature review and criteria
(FA). The results showed that past performance of contractors used by clients for the selection of contractors from current
ranked the most important of the existing pre-qualification practice in Nigeria. This was investigated through a
criterion followed by experience of the contractor and questionnaire which covers a selected sample of 60. The
evidence of incorporation. respondents were allowed to add other criteria not covered by
the questionnaire. The ranking were based on the relative
Therefore the overall motivation of this research is the need to importance of the criteria as perceived by professionals
analyze, evaluate and rank decision criteria for contractor operating in the procurement units (procurement officers) and
selection in Federal Universities in Nigeria. The research will some other professionals that were involved in the decision
provide baseline information to the construction clients and making process using their accumulated experience and
consultants on the importance of contractor’s prequalification judgment.
selection criteria to be adopted, which will eventually
translate to a better decision making and increase project The criteria used in this research were adopted from the
performance. research of [11] and [10].Table 2 consists of the main criteria
that were considered; the criteria are: Financial Stability,
3. RESEARCH METHODOLOGY Technical Capability, Past Performance, Occupational Health
An extensive review of some existing literature in the area of and Safety, Management Capability, Reputation, Experience
decision criteria and Analytic Hierarchy process were carried in similar project.
out. In this research, Federal Universities in Nigeria were
chosen as a case study. A general literature review was carried
out on different criteria that are used by Federal Universities
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Volume 179 – No.22, February 2018

Table 2. Main Technical Criteria to be evaluated industries in the world. In addition, it is well acknowledged
that the construction industry has the highest accident and
S/N Criterion Main Contractor Selection Criteria illness related records over any other branch or industry
sector. With that in mind, many thinkers have considered
1 C1 Financial Stability safety in the construction industry as a priority in the research
area. Similarly, [22] argued that around the world, health and
safety in the construction industry is a grave concern.
2 C2 Technical Capability
C5: Management Capability: The contractor must
3 C3 Past Performance demonstrate that it is capable of planning, organizing and
controlling a project. [23] reported that 8 out of 14 projects
failed because of lack of managerial experience
4 C4 Occupational Health and Safety and technical staff. Many researchers have considered
management as one of the most important factors in the
5 C5 Management Capability company’s life cycle.

C6: Reputation: [24] stated that it is important for a

6 C6 Reputation contractor to improve his/her reputation. This factor is usually
highly prioritized over others factors, as it also indicates the
7 C7 Experience in similar project capability of a contractor to complete a task with the best
quality and the lowest cost [25].

C1: Financial Stability: This indicator category signifies the C7: Experience in similar project: Contractor experience
financial credibility of a contractor with which it can handle entails the type of projects completed in respect to location,
capital crises ([18]; [19]). The client must reach an informed nature, size, scope, local and national experience, to determine
opinion regarding the overall financial position and ability of whether or not it has handled jobs of similar nature and scope.
contractor [10]. Also it demonstrates a contractor's ability to allocate and
spread its resources in an effective manner [26].
C2: Technical Capability: In this factor, the contractor must
prove that it has the technical capacity to perform all activities Step 3: Establishing hierarchical structure
required by a specific project [19]. To provide a consistently After determining the criteria, the hierarchical structure was
high quality product or service, promote successful set up. The hierarchical structure for ranking the decision
development efforts, and ensure future improvements, a firm criteria consists of three levels. Level A, the target level,
needs competent technical support from its contractors. demonstrates the final objective of the whole hierarchical
structure, which is ranking the decision criteria for Federal
C3: Past Performance: Past performance of a contractor is Universities in Nigeria. Level B contains the measurement
the measure of the body of similar work done satisfactorily by criteria that will be rank by the AHP. Level C contains the
a contractor in the past [20] resulting in a higher or lower alternatives or companies which are going to be measured and
degree of confidence in the possible contractors regarding the prioritized based on their performance. The research only
quality, time and cost control requirements [10]. consider level A and level B of the hierarchical structure. The
hierarchical structure is sketched in Figure 2.
C4: Occupational Health and Safety: According to [21], the
construction industry has been one of the most dangerous

Figure 2: AHP structure

Step 4: Construct the pair-wise comparison questionnaires, respondents were asked to rate the level of
The definition of the priority of each criterion is obtained by importance of a list of main criteria used by clients in the
conducting a questionnaire survey. In administering the selection of contractors in Federal Universities in Nigeria. The

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Volume 179 – No.22, February 2018

ratings were based on a 9-point Saaty AHP scale as shown in Table 5. Priority vector/weight
Table 3.
Table 3. Saaty AHP scale Criterion Priority
vector/Normalized
Value Scale (aij) Definition
Eigen vector
C1 (C1+C2+….+C7)/7 M
Equally Important 1 i and j are equally important
C2 (C1+C2+….+C7)/7 N
Weakly Important 2 i is weakly important than j
C3 (C1+C2+….+C7)/7 O
3 C4 (C1+C2+….+C7)/7 P
Fairly Important 4 i is fairly important than j C5 (C1+C2+….+C7)/7 Q
5 C6 (C1+C2+….+C7)/7 R
Strongly Important 6 i is strongly important than j C7 (C1+C2+….+C7)/7 S
7 The priority vector/weight is then shown in a single matrix as:
Absolutely 8 i is absolutely important than
Important j 𝑊1
𝑊2
All of the questions concerning the weighting are collected 𝑊3
from the questionnaire survey. The judgments are entered
W = 𝑊4 (2)
using the fundamental scale for pairwise comparisons. To
𝑊5
elicit pairwise comparisons performed at a given time, a
𝑊6
matrix A is created. Pairwise comparison is used, because
only two elements are involved in the comparison at a time as 𝑊7
shown in equation (1).
Step 7: Check for Consistency Ratio (CR)
a𝑖𝑗 ⋯ a𝑖𝑛 Once judgments have been entered, it is necessary to check
𝐴= ⋮ ⋱ ⋮ (1) that they are consistent. Some inconsistency is expected and
a𝑛𝑖 ⋯ a𝑛𝑛 allowed in AHP analysis. Since the numeric values are
derived from the subjective preferences of individuals, it is
1 impossible to avoid some inconsistencies in the final matrix of
where a𝑖𝑗 = 1: ∀𝑖 = 𝑗; a𝑗𝑖 = a : ∀𝑖 ≠ 𝑗, a𝑖𝑗 is the
𝑖𝑗 judgments [27]. The question is how much inconsistency is
evaluation between criterion i and criterion j of eth expert acceptable.
Step 5: Calculate and construct the normalized matrix [27] proposed what is called consistency ratio (C.R), which is
The normalized matrix is then calculated by adding together a comparison between Consistency Index (C.I) and Random
each column as shown in Table 4. index (R.I).
Table 4. Normalized matrix showing the Sum Column
𝐶.𝐼
𝐶. 𝑅. = 𝑅.𝐼 (3)

The C.R. indicates the degree to which the pairwise

judgments resemble a purely random set of pairwise
comparisons. Judgments that have a C.R. lower than 0.1 are
reasonable and higher than 0.1 should be revised or discarded
[3]. In the case of higher inconsistency, the decision makers
are advised to check for accidental mistakes and to reconsider
their pairwise comparisons, until the consistency measure is
below the threshold indicated.

[27] gave a measure of consistency, called Consistency Index

To get the normalized relative weight, each element of the (C.I.) as deviation or degree of consistency using equation (4):
𝑎
matrix will be divided by the sum of its column (𝑖. 𝑒. 𝑖𝑗 𝐴 )
𝑚𝑎𝑥 −𝑛
𝐶. 𝐼. = (4)
Step 6: Obtained the normalized Eigen vector /Deriving 𝑛−1
Priorities (Weights) for the Criteria
where n is the number of rows in the decision matrix and
The normalized principal eigen vector can be obtained by 𝑚𝑎𝑥 is the largest eigenvalue of the comparison matrix.
averaging across the rows. The normalized principal eigen
vector is also called priority vector. Equation (2) shows the
To calculate the largest eigenvalue of the comparison matrix
priority vector/ weight.
(𝑚𝑎𝑥 ), the row average is multiplied by the column total i.e.
(row average C1 X column total C1), and then the sum total
was calculated.

A random matrix is one where the judgments have been

entered randomly and therefore it is expected to be highly
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Volume 179 – No.22, February 2018

inconsistent. The average random consistency index (R.I) of In this research, seven criteria were used in ranking the
sample size 10 is shown in the Table 6 below: decision criteria for contractor selection. The criteria are
Financial Stability (C1), Technical Capability (C2), Past
Table 6. Random consistency index (R.I) Performances (C3), Occupational Health and Safety (C4),
Management Capability (C5), Reputation (C6), and
Experience (C7). After constructing the decision hierarchy
and obtaining the evaluation criteria and alternatives, the
weights of the importance criteria were calculated using AHP
method.

4.1 Construction of the Pair-wise

Step 7: Rank the criteria in order of priority
When the inconsistency is reduced to an acceptable degree,
Comparison Matrix
the criteria will be rank according to its respective priority The pairwise comparison table is shown Table 7, where each
of the criterions is plot against each other, and their column
4. RESULTS AND DISCUSSION sum is given at the bottom of each column:
Table 7. Pair-wise Comparison table for decision maker 1.

4.2 Calculation of the Normalized Weight

Then the normalized weight is then calculated by dividing the element in each cell by its respective column total:

Table 8. Division of each element in a cell by its column total

N.B  The summation of the entire column must be equal to

4.3 Checking the Consistency Ratio (CR)

The formula for calculating the consistency ratio as stated in
the research methodology is given by equation (4). The largest
eigenvalue of the comparison matrix (𝑚𝑎𝑥 ) was calculated in
table 10:

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Table 9. largest eigenvalue of the comparison matrix

(𝒎𝒂𝒙 ) Calculation Criteria Priority Graph
8
C6 C7
C4 C5
Calculation of 𝒎𝒂𝒙 7
6

C2 C3
Row Row Ave * 5
4
Average Column Total Column Total

0.155 6.1429 0.9521495

3
2 C1
1
0
0.226 5.2857 1.1945682

0.132 12.1429 1.6028628

0.022 43 0.946

0.155 6.1429 0.9521495

Figure 3: Graph showing criteria in order of priority
0.155 6.1429 0.9521495
5. CONCLUSION
0.155 6.1429 0.9521495 The research identified and assessed the existing contractors’
SUM TOTAL (𝒎𝒂𝒙 ) = 7.552029 decision criteria and then rank the decision criteria used for
selecting contractor in Federal Universities in Nigeria with the
Then the Consistency Index is calculated using the formula: aim of providing information that could enhance contractor's
selection in construction project. Data were collected with the
λ 7.552029 −1 aid of structured questionnaires. 60 questionnaires were
C.I= max −1
= = 0.925338166
𝑛−1 7−1
distributed to construction professionals/ staff of which 55
Thereafter the consistency ratio is calculated as R.I= 1.32
responses were returned and 50 used for analysis. Information
0.925338166
gathered includes the major contractors’ prequalification
𝐶. 𝑅 = 𝐶. 𝐼 𝑅. 𝐼 = = 0.701013762< 10%. criteria. The collected data were analyzed and rank in order of
1.32
priority using the AHP interface in Microsoft Excel. Here, the
usage of AHP weights makes the application more realistic
Since the CR is less than 10%, therefore we say the result is
and reliable. The results showed that technical capability of
accepted.
contractors ranked the most important of the existing pre-
qualification criterion followed by management capability
4.4 Ranking of the Criteria among others.
The ranking of the criteria in order of prioritization with their
respective weight is shown in the Table 10: Further research will be based on combining Analytic
Hierarchy Process (AHP) with Fuzzy Logic for contractor
Table 10. Vector weight for each criterion selection in Nigeria since fuzzy logic has some advantages
Criterion within uncertain, imprecise and vague contexts than AHP and
Weight other MCDM methods; it is similar to human judgments. It
Criteria Ranking can take into account quantitative and qualitative data in the
Values
multi-attribute decision making problems.

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