Application of signalling theory in contractor selection for long-term collaborative relationships in construction

The selection of an appropriate contractor for construction projects is essential to achieve the expected productivity of the construction industry. Contractor selection for long-term collaborative relationships will involve carrying out a behavioural assessment of potential contractors to establish their competencies for collaboration and long-term relationships. However, people behavioural characteristics such as their trustworthiness, emotional states, genuineness, innate abilities and their possibility of acting in an expected way in the future are often difficult to directly evaluate in a physical encounter. In this study, the exact observable signals that indicate a contractor’s suitability for long-term collaborative relationships were explored, employing signalling theory. Data was collected using semi-structured interviews with eight purposively selected organizations involving sixteen key informants in South Africa. From the findings, the significant signals which are perceivable indicators of contractor’s suitability for long-term collaborative relationships are: Past-performance signals; commitment signals which concerns attendance, willingness, participative contributions and top management involvement in the various activities during the selection processes; and behaviour signal which comprises of being polite, honest, respectful and realistic. The study result represents a significant contribution to knowledge and understanding that are useful in supporting realistic evaluation for better decision making in selecting an appropriate contractor for long-term collaborative relationships. Additionally, the study makes a strong case in providing theoretical explanations of contractor selection practices accommodating long-term collaborative relationships from a signalling theory perspective.