The impact of contractor selection method on transaction costs: a review

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Lingard, H., Hughes, W. ORCID: https://orcid.org/0000-0002-0304-8136 and Chinyio, E. (1998) The impact of contractor selection method on transaction costs: a review. Journal of Construction Procurement, 4 (2). pp. 89-102. ISSN 1358-9180

Abstract/Summary

The basic premise of transaction-cost theory is that the decision to outsource, rather than to undertake work in-house, is determined by the relative costs incurred in each of these forms of economic organization. In construction the "make or buy" decision invariably leads to a contract. Reducing the costs of entering into a contractual relationship (transaction costs) raises the value of production and is therefore desirable. Commonly applied methods of contractor selection may not minimise the costs of contracting. Research evidence suggests that although competitive tendering typically results in the lowest bidder winning the contract this may not represent the lowest project cost after completion. Multi-parameter and quantitative models for contractor selection have been developed to identify the best (or least risky) among bidders. A major area in which research is still needed is in investigating the impact of different methods of contractor selection on the costs of entering into a contract and the decision to outsource.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/4289
Refereed	Yes
Divisions	Science > School of the Built Environment > Organisation, People and Technology group
Uncontrolled Keywords	bid evaluation; contractor selection; pre-qualification; transaction costs
Publisher	IPRG Ltd
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Date Deposited:	03 Nov 2011 13:31	Date item deposited into CentAUR
Last Modified:	23 Jun 2024 02:16	Date item last modified

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