Structural equation modelling for subcontracting practice: Malaysia chapter

Purpose: Most of the previous studies conducted on the subject of subcontractors often focussed on a single phase of subcontracting practice; either on registration, selection of subcontractors or on monitoring of subcontractors without much integration to other different phases involved. Thus, on the basis of that reason, the purpose of this paper is to link the gap between different phases of subcontracting practice. This study also attempts to explore the relationships between the key criteria used by general contractors in selecting subcontractors before job awarding (CSSC) and the key criteria used for monitoring subcontractors during construction work (CMSC); which will then include an investigation of the effects these criteria have on project performance (PP). Design/methodology/approach: The data obtained from a total of 162 G7 contractors in Malaysia were analysed. The interrelationships between the criteria and the effects of these criteria on PP were investigated simultaneously by employing a single model based on structural equation modelling (SEM) method. Findings: The final model has discovered four major criteria that are often considered during the selection of subcontractors namely, “communication”, “relationship”, “general obligation” and “resource management” of a subcontractor. Meanwhile, the major criteria that are referred to in the monitoring of subcontractors are “workmanship”, “awareness of environment, health and safety” and “communication and relationship”. The four CSSC were found to be interrelated among themselves and affected CMSC during the construction stage. The research also revealed that the criteria used in monitoring subcontractor do affect the performance of a project. Thus, based on the result of this investigation, the monitoring of subcontractor is essential in discerning the performance level of a project. Originality/value: An established SEM improves a subcontracting practice by creating platforms for CSSC, CMSC and PP to influence each other. With the gap between selection and monitoring subcontractors are filled, then the prediction of the subcontractors' performance can be made possible.