Optimization of Contractor Selection Process in Iranian Law of Tenders Utilizing VIKOR Method (Case Study: Water Industries in East Azerbaijan Province)

Contractor selection for a construction project is among the most important factors in achieving the project’s success. In Iran, contractors for construction projects in public sector are mainly selected according to Tender’s Law. Despite the fact that a quality assessment is implemented through a prequalification phase, however, in the final phase of the tender process, “the lowest bid price” criterion reigns and the contractor with the lowest proposed price is considered as the eligible contractor to whom the contract of the project is awarded. The prequalification phase eliminates many incompetent contractors from the competition process, but this does not lead to a considerable improvement in the quality of construction because no responsibility is established for a better performance and the winner of the contract keeps meeting the minimum requirements.Contractor selection by the lowest tender is one of the main reasons for quality shortcomings, weak performance of the contractor, cost and time overruns, increasing in change orders and claims, conflicts, dissatisfaction of the client, increasing in life-cycle costs and other disorders and may finally lead to the project failure (Zavadskas et al., 2008, El-Sayegh et al., 2019, Hasnain and Thaheem, 2016, Scott, 2006). To overcome this, some multi-criteria decision-making methods have been proposed by many researchers. As a proposal for reforming the tenders’ process in the context of Iran, in this paper, VIKOR method is used for ranking of the alternatives in which “the proposed price” criterion is added to the assessment criteria which are commonly used in the prequalification phase. An illustrative example from water industries in East Azerbaijan province confirms the applicability of the proposed method.