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Development of a Web-Based System to Enhance the Management of

Supplier's Performance in Construction Projects

Conference Paper · December 2012

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Management in Construction Research Association (MiCRA)
Postgraduate Conference

DEVELOPMENT OF A WEB-BASED SYSTEM TO ENHANCE THE

MANAGEMENT OF SUPPLIER'S PERFORMANCE IN CONSTRUCTION
PROJECTS

Zi Qian Li1,a*, Hai Chen Tan2,b, Chimay Anumba3,c and Fah Choy Chia4,d,
Universiti Tunku Abdul Rahman/Department of Built Environment, Kuala Lumpur, Malaysia. aEmail:
1,2,4
lqiani@1utar.my, bEmail: tanhc@utar.edu.my, dEmail: chiafc@utar.edu.my
c
3 The Pennsylvania State University/Department of Architectural Engineering, PA, USA. Email: anumba@engr.psu.edu

Abstract-Suppliers play an important role in the success of
construction project. Suppliers (i.e. the contractor,
consultants, material suppliers and subcontractors) are the
ones who carry out the actual construction work and
complete the project by supplying their skills and knowledge
(i.e. service) or material. As the "suppliers" have basically
included all the parties directly and indirectly engaged by
the client, the importance of careful selection of the right
supplier for the right job is vital. Therefore, custom-
designed information systems have been increasingly used
for the selection and management of the performance of
suppliers in the construction industry. However, there is no
evidence that mechanisms are available in such systems to
feedback to the suppliers their performance to allow them to
improve themselves and also for knowledge sharing. This
paper presents the findings from existing literature on the
current practice on the supplier selection and the
shortcomings. It then introduces the framework of a Web-
based system that provides an efficient means for managing
suppliers' performance, convenient but secured access
through the Internet and facilitates the leveraging of
suppliers' knowledge for the benefit of the on-going projects.
Keywords-Suppliers; Supplier Selection; Suppliers'
Performance Management; Web-based System.
I. INTRODUCTION
The development of construction projects involves
several stages during which a number of parties with
different expertise interact and cooperate to accomplish
the various project tasks. The client or developer who
owns a project normally is not directly involved in the
construction work of the project. Instead, the project is
very often procured through appointing consultants to
prepare the design and then subsequently awarding the
contract to a contractor to deliver the project based on the
design. The contractor frequently acts only as
construction management agent in construction projects
and sub-contracts a large volume of the work to the
subcontractors. Contractors, consultants, subcontractors
and material suppliers can all be rightly considered as
"suppliers" as they all are engaged for supplying their
skills and knowledge (i.e. service) or other resources into
the construction project. Getting the right suppliers for
the right job is highly critical to the overall project
performance as they are the ones to carry out the actual
construction works. To meet the requirements of the
increasingly more demanding clients, innovations which
may help to provide added value, reduce the construction
cost or increase construction speed are highly essential.
As such, the suppliers' capability to contribute to
innovative solutions and knowledge to enhance project
performance should be given more attention. Thus, there
is an apparent need for a system to manage the
performance of suppliers for the purpose of contract
awards and facilitate knowledge sharing throughout the
duration of the project.
This paper starts with a review on the importance of
managing suppliers' performance and the existing
research in the area. It then introduces a Web-based
supplier's performance management system which
capable to manage the performance, the selection of
suppliers and the capturing of useful knowledge from the
suppliers across projects for the benefit of on-going
projects, where the supplier's contribution will be
recognised in the evaluation of their performance.
II. IMPORTANCE OF MANAGING SUPPLIER
PERFORMANCE
According to Prahinski and Benton [1], supplier's
performance is an operational measure of key competitive
success factors of how well a supplier utilises his
available resources to achieve the specific goals so that
their ability and suitability to the project are truly
reflected. Engaging the right suppliers can significantly
reduce the purchasing cost and help to introduce
improvement in competitiveness (Saen [2], Xia and Wu
[3]). It is also critical for just-in-time delivery to reduce
unnecessary waste (Dainty and Brooke [4], Ragatz et al
[5]). Conversely, engaging suppliers with poor
performance is enough to deteriorate the whole supply
chain's financial and operational position (Araz and
Ozkarahan [6]), contribute to poor customer service and
lead to in delays (Chan and Kumar [7]). The importance
of managing supplier's performance is even more obvious
in the local construction industry where a big proportion
of construction works are normally subcontracted to
subcontractors.
Male and Mitrovic [8] observe that a systematic approach
for managing suppliers can help to build the closeness
and long-term relationship between the clients and
suppliers which are essential for establishing trust. This
will lead to increased production efficiency, service
Management in Construction Research Association (MiCRA)
Postgraduate Conference
performance, product design quality,and the ability to
respond rapidly to customer needs (Sarkis and Talluri [9]).
Periodical evaluation of suppliers' performance may also
enable suppliers' weaknesses that require improvements
to be identified (Humphreys et al [10]). Ultimately,
having an effective system for managing supplier
performance will strengthen a company's
competitiveness in order to meet the requirements of the
ever demanding clients (Sanayei et al [11]).
II. EXISTING RESEARCH
A number of research projects that look into the selection
of suppliers in the construction industry have been
initiated or conducted, which are characterised by the use
of information and communication technology. For
instance, Arslan et al [12] have developed a Web-Based
Sub-Contractor Evaluation System (WEBSES) that
allows sub-contractors to be evaluated online based on a
set of combined criteria. The system enables the user to
access it through the Internet. It aims to minimise the
problems that may occur in the traditional selection
process such as the difficulties in adopting new
technologies, lengthy negotiation process and the
inefficiencies of supplier selection. The system eliminates
the over-emphasis on the lowest bid by taking also other
criteria into consideration. Each of the main criteria is
broken-down into sub-criteria, which will then be given a
weight according to the characteristics of a project. The
system enables the general contractor to select the most
suitable sub-contractors for their relevant sub-works,
helps to speed up the selection process and leads to cost
savings during the bidding process.
Ng et al [13] propose a conceptual framework for an e-
Reporting system that enables performance related data
of contractors at project level to be submitted, checked,
compiled and subsequently disseminated to relevant users
in the industry for contractor selection purpose. The
system allows the contractors to update their company
profiles and provide information relevant to the
performance appraisal which include their latest financial
status, workload, claims records, etc. The evaluators will
evaluate and monitor the contractors' performance based
on a set of key performance criteria. Each of the key
performance criteria is further broken down into more
specific sub-criteria to ensure that the appraisal is
conducted objectively. To reflect the specific
requirements of the client or project, the appraisers are
allowed to alter the weightage assigned to each criterion
or sub-criterion. In addition, the contractors with high
performance scores in the most recent period will be
checked for their prevailing workloads. Only those with
good recent performance and adequate available
capacities will be then invited to submit tenders.
There are also attempts to use computing technology such
as Case-Based Reasoning (CBR), Mathematical
Programming, Analytical Hierarchy Process (AHP),
Analytic Network Process (ANP) and Fuzzy Set Theory
(FST) to assist in the selection of the best supplier. This
list is not exhaustive and only a few main ones are
discussed in this paper. Mathematical Programming
optimises the interactions and trade-offs among different
factors of interest by considering constraints and different
issues (Sanayei et al [14]). Ng [15] develops a weighted
linear program to address the multi-criteria supplier
selection problem based on MP. The user is required to
rank the criteria's importance in a sequence rather than
specifying the exact weight values. The scores of the
suppliers are then compared to identify the most suitable
supplier.
AHP is a theory of measurement through pair-wise
comparisons that relies on the judgements of experts to
derive priority scales (Saaty [16]). It is a robust technique
that allows managers to determine preferences of criteria
for selection purposes, quantify those preferences, and
then aggregate them (Sarkis and Talluri [9]). Hou and Su
[17] develop a Web Services-Oriented Multi-Possibility
Supplier Selection (WMPSS) system based on AHP to
help manufactures to identify suitable suppliers for the
components, materials and services required for product
design. In their research, Xia and Wu [3] apply AHP in
calculating the rating of each of the suppliers by making
the trade-off between tangible (e.g. product quality or
defects) and intangible factors (e.g. supplier's services).
They use three-point scale and rough set theory in their
model to take into account qualitative judgment, which
makes the comparison more intuitionists besides reducing
bias in the comparison process. They manage the supplier
performance by specifying the constraint of the criteria so
that only the qualified suppliers are selected. Other
similar research based on AHP are Liu and Hai [18] and
Akarte et al [19].
Analytic Network Process is a generalised and less
sophisticated version of AHP (Sarkis and Talluri [9]). The
main is difference is that AHP only considers one-way
hierarchical relationships among the factors, whereas
ANP considers also the many possible relationships
among the groups of factors or those within them (Saaty
[20]). Bayazit's supplier selection model [21] based on
ANP allows both qualitative and quantitative criteria to
be incorporated in the selection of suppliers. Sarkis and
Talluri's [9] ANP model for the selection of supplier
includes also the organisational factors (such as culture,
technology and relationship) in addition to the supplier's
performance. Each of the criteria in organisational factors
and supplier performance groups are examined
simultaneously to determine the relative importance
ratings and the most influential criterion. The supplier
with the highest score is regarded as the recommended
supplier.
Choy and Lee [22] introduce a generic model using the
CBR technique to deal with the supplier selection
problem. The three main criteria used to form the
backbone of the generic supplier selection model are
technical capability, quality system and organisational
profile. The model functions by capturing the past
Management in Construction Research Association (MiCRA)
Postgraduate Conference
experience and past cases of the supplier and then
matching the aforementioned attributes to the existing
problem. According to Kahraman et al [23], Fuzzy Set
Theory (FST) is specifically designed to mathematically
represent uncertainty and vagueness, and to provide
formalised tools to deal with the imprecision intrinsic to
many problems.
They combine FST and AHP to handle the natural
language expressions about the importance of each of the
performance attributes, since AHP itself cannot reflect the
human thinking correctly. They integrate FST to perform
pair-wise criteria comparison to obtain the scores on each
attribute. The supplier is selected based on the overall
score and the relative goal. This model allows the
integration of the qualitative data in the selection of the
best supplier. FST is also used to quantify some
qualitative criteria for the purpose of the evaluation and
selection of suppliers (Amin and Razmi [24]).
III. CRITERIA FOR SUPPLIER SELECTION AND
EVALUATION
Various criteria have been introduced for the evaluation
and selection of suppliers. Some of the more relevant
ones are depicted in Table 1. The criteria identified are
very much different from the conventional approach that
focuses mainly on the speed and price (Ting and Cho
[25]). Dickson's [26] research conducted in 1960s is
among the initial research done in the area and is widely
cited. Dickson's [26] survey involves about 300
commercial organisations and identifies 23 important
factors for supplier selection. These include quality,
delivery, performance history, warranties and claim's
policies, production facilities and capacity, price,
technical capability, financial position, procedural
compliance, communication system and others (Dickson,
[26]).
Later, however, it is revealed by Cheraghi et al's [27]
study that there are significant changes in the criteria for
supplier selection in the literatures published between
1966 to1990 and 1990 to 2001. Some criteria have
become less significant, such as operating controls,
packaging ability, training aids, desire for business,
amount of past business, warranties and claim's policies.
Cheraghi et al [27] propose a new set of top 10 supplier
selection criteria, which includes quality, delivery, price,
repair service, technical capability, production facilities
and capacity, financial position, management and
organisation, reliability and flexibility. Subsequently,
Watt et al [28] conduct a similar study involving
respondents mainly from the construction industry, which
makes their criteria more relevant to this research. These
include organisation experience, capacity, project
management expertise, past project performance,
company standing, client and supplier relations, technical
expertise and solution methods.
There are also other relevant criteria, which include
responsiveness (Liu and Hai [18]), client acceptance
(Pinto [29]), ability to learn (Luo et al [30]), company
culture (Choy et al [31]) and risk factor (Chan and Kumar
[7]). Palaneeswaran and Kumaraswamy [32] propose a
universal model for contractor prequalification based on
the practice of public project owners in Hong Kong,
United States, Australia, Sri Lanka, Singapore and
Canada. The prequalification criteria proposed include
responsiveness (promptness, realism, and completeness),
responsibility (conformity, performance, quality, safety,
environment and partnering) and competency (resources,
experience, constraints, management and organisation).
In a nutshell, there is no consensus observed on the
criteria for supplier selection as this is dependent on the
type of tasks, nature of project, unique requirements of
clients, and other factors.
IV. SHORTCOMINGS OF EXISTING RESEARCH
The current approaches are mainly focused on utilising
the information on suppliers' performance for the
selection purpose. For instance, how the suppliers
perform in terms of the delivery of the end product on
time, within the budget and according to the
specifications. Not to mention that to some extent, those
approaches are black-box models where the logics
adopted are shielded from the suppliers (Seydel [33]).
There is also no mechanism available to integrate
suppliers into the system that manages their performance.
Without this, the suppliers do not have an opportunity to
clarify and defend themselves should the information that
is used for the evaluation is inaccurate or out-dated. If
two-way communication is facilitated through such
systems, the suppliers will also have the opportunity to
understand better their performance from the perspective
of the clients and then improve themselves. In addition,
the selection and evaluation of suppliers' performance
appear to concentrate more on that prior to their
appointment rather than throughout the course of a
project. The better approach is to capture the performance
of the suppliers for all the projects awarded to them
continuously, which will provide a more reliable source
of information for their performance evaluation.
Advancement in Web-based technology and proliferation
of high speed Internet have led to increasing number of
Web-based project management systems being developed
for managing various aspects of construction projects.
Related to this, Li et al's [34] research reveals that a Web-
based system can lead to more systematic and efficient
organisation, storage and retrieval of the project
performance information of the suppliers. Furthermore, it
can also provide access to the users from different
organisations at geographically dispersed locations, and
hence facilitate the necessary two-way communication
between the clients and suppliers.
Management in Construction Research Association (MiCRA)
Postgraduate Conference
Another concern is the importance of capturing the
learning from a project while it is being executed so that
it can be reused during and after the project as pointed out
by Kamara et al [35]. This may enable the client and
suppliers to benefit from the enriched knowledge about
the development and construction of their assets, which
will in turn contribute to the more effective management
of facilities and other new projects. However, this has
hitherto been overlooked in the current approach for
managing suppliers' performance. The supplier's
performance management system can in fact be designed
to capture this useful knowledge from the suppliers, with
a mechanism to evaluate the impacts in order to reward
them accordingly. Furthermore, the ability to contribute
useful knowledge to improve existing projects can be
incorporated as one of the criteria for assessing the
supplier's performance. In this regard, Web-based
technology is a very suitable platform for developing
such system as it allows custom-designed modules for
capturing suppliers' knowledge and managing the
suppliers' performance to be developed and integrated
easily. A Web-based system for the purpose is introduced
in the following sections.
V. METHODOLOGY FOR MANAGING
SUPPLIERS' PERFORMANCE AND KNOWLEDGE
SHARING
The proposed methodology allows two ways
communication (client and suppliers), provides better
transparency and able to capture the knowledge
contributed by suppliers. It also eases the supplier
selection process and monitoring of their performance
throughout the course of a project. The methodology
comprises:
- A Web-based information system - This is where
all the knowledge captured from a project and
also the suppliers' relevant information are
stored. The information system will run in the
project extranet environment where only
designated users from organisations
collaborating in a project can gain access into
the system.
- Experts - This is a role, normally charged to the
experts or very experienced personnel, to verify
and to rate the knowledge contributed.
- Project Administrators (PA) - This is a role,
normally charged to a project manager, project
director, director or other designated person, to
select the most suitable supplier for a
project/work and to evaluate their performance.
- System Administrators (SA) - This is a role,
normally assigned to Information Technology
Specialist or other designated persons. They can
add new project, insert project details, add new
suppliers or users, and assign role to various
users. They can update the details and delete the
existing suppliers or projects as instructed. They
are granted for full access into the system.
The details of the "methodology for managing supplier
performance and knowledge sharing", and how the PE,
SA and information system interact with each other, are
depicted in Figure 1.
I. Block A: System Administrators to register users
The System Administrators first need to register the users
(i.e. log in username, password, and email) either as
consultant supplier, Experts or Project Administrators (PA)
and enter details of the project (e.g. project title, duration,
location and construction team members) into the system.
The different user groups would mean having different
accessible level to the web page. For instance, project
details (e.g. project title, duration, location and
construction team members) can only be inserted and
edited by System Administrators.
I. Block A1: Contribution of knowledge by suppliers
All the suppliers involved in the project will be assigned
a log-in name and password to access the system. This
allows them to update their particulars and to enter their
knowledge into the system once the knowledge is created
or identified, or at any time which is convenient to them.
I. Block A2: Knowledge validation by Experts
Validation is essentially the review of the knowledge
captured to ensure the accuracy of knowledge entered and
to recognise the contribution by supplier. To validate the
knowledge contributed, the Experts will evaluate the time
and cost saving brought about, and then to rate and
comment on the contributed knowledge. In order to
reduce the risk of "gaming", where rating given can be
biased one way or another and offensive comment may
be given, the users will be notified that such actions are
unacceptable and they may be barred from using the
system consequently.
I. Block A3: Dissemination of knowledge
To facilitate sharing of reusable project knowledge,
knowledge contributed will be made available for access
through the Web-based system once it is submitted. The
users can have an overview of all the knowledge captured
and to access the full details. The details of knowledge
captured include the background information of the
project, knowledge contributor, knowledge subject and
details, relevant documents, verification status and the
rating given. All the users are allowed to give
constructive comment and to rate the knowledge
submitted; however, the final and conclusive rating will
be given by the Experts. To nurture knowledge sharing
culture, knowledge contribution is made one of the
criteria for supplier selection.
Management in Construction Research Association (MiCRA)
Postgraduate Conference
I. Block B1: Supplier selection
This process is about selecting the most suitable supplier
for a project/task during bidding process. All the suppliers
will be requested to complete and update their company
profile at predetermined intervals. For the purpose, the
shortlisted suppliers' company profile, past project
performance, technical capability, financial strength,
project in hand can be accessed and compared.
Knowledge contribution score will be taken into
consideration to encourage knowledge sharing. The
Project Administrators can evaluate suppliers in a
systematic way, which may lead to time, cost and paper
saving. All the supplier's information and relevant
document are recorded in the system.
I. Block B2: Evaluation of suppliers' performance
Different types of suppliers are involved in a typical
project, which logically requires different set of criteria
for selection and performance evaluation purpose.
Therefore, these sets of criteria must be customisable
based on individual company's requirements. Due to time
constraint, however, only the criteria for the selection of
sub-contractors are formulated and incorporated into the
prototype application as proof of concept for the purpose
of this research. For the evaluation of the respective
supplier's performance, it will be only carried out after
the project/work is finished. The criteria used include
whether or not the project/work is completed on time and
within budget, as well as the workmanship.
PA can provide some suggestions as to how the suppliers
can improve their performance. The result of the project
performance evaluation will be accessible to the suppliers
also to facilitate transparent and fair evaluation.
I. Block B3: Communication of the performance with
the suppliers
Having good communication may foster learning,
develop greater confidence in one another, and display
cooperative and trusting behaviours that are crucial to
success. Yet, there is no a mechanism is available in
current approaches to feedback to the suppliers their
performance. Hence, the methodology is developed in
such a way that it allows the suppliers to access their own
performance records. This also allows the suppliers the
opportunity to clarify or defend themselves should the
information that is used for the evaluation is inaccurate,
or the issues that have given them a low score have been
addressed albeit yet to be updated in the system.
VI. LIMITATIONS
As aforementioned, due to time and other constraints only
the module for the contractor to manage the performance
of subcontractors and the criteria for the selection of
subcontractors are developed at this stage. Additional
work will be needed for the development of other
modules for the management of the performance of
consultants and others. Furthermore, the methodology
still needs long-term validation in real construction firms.
VII. CONCLUSIONS
The importance of managing supplier performance and
knowledge sharing in construction project has been
discussed. The shortcomings of current approaches for
supplier selection, the criteria used for the selection and
evaluation of suppliers' performance and a conceptual
Web-based framework for managing the selection and
performance of suppliers in the construction industry
have also been presented. The Web-based suppliers'
performance management system will facilitate:
A) The capture of the information on the
performance of, and knowledge about,
suppliers in a Web-based system to prevent
information loss;
B) Fast retrieval of information and knowledge
represented in a user friendly format to
facilitate reuse;
C) Informed decision making on the selection of
the most suitable suppliers based on records
captured in the system;
D) Prevention of suppliers with poor track record
and insufficient capacity to be selected due to
inefficient information management;
E) Enhancement of performance and ultimately
more successful projects due to the time and
money saved by avoiding the potential
problems caused by poor supplier.
F) Provision of useful first-hand
information for the senior management on the
performance and issues at site or project level.
G) Continuous improvement to the project at
different stages by allowing suppliers to share
their knowledge as to how improvements can
be made.
Further research will involve detailed testing and
validation of the software prototype, which will be
followed by further refinements and improvements.
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 Management in Construction Research Association (MiCRA)
Postgraduate Conference

Table 1. Criteria for Supplier Selection and Evaluation.

Cheraghi et Choy, Lee Liu and Chen, Lin Hou and Wang, et al Chan and Xia and Sanayei et Luo et al Watt et al
al (2004) and Lo Hai (2005) and Huang Su (2006) (2004) Kumar Wu (2007) al (2008) (2009) (2009)
(2003) (2006) (2007)

Cost / Price √ √ √ √ √ √ √
Performance √ √ √ √ √ √ √ √ √ √ √
Time / Delivery √ √ √ √ √ √ √ √
Supplier’s Profile
Technical √ √ √ √ √ √ √ √
Capability
Service √ √ √ √ √ √ √ √
Financial √ √ √ √ √
Strength
Management √ √ √ √
Capacity √ √ √ √ √ √ √
Reputation √ √
Relationship √ √ √ √
Innovation / √
Knowledge
Contribution

Block A1 Block A2 Block A3

Contribution of
Knowledge validation Dissemination of
knowledge by
Block A suppliers
by Experts knowledge

System administrator to
Construction
register users and assign
project
roles Block B1 Block B2 Block B3
Communication of the
Evaluation of suppliers'
Supplier selection performance with the
performance
suppliers

Figure 1. Methodology for selecting/managing suppliers' performance and knowledge sharing in construction project.

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