Capital projects are inherently complex undertakings involving significant resources, numerous associated parties, and interconnected project elements, all influencing governance and procurement decisions. Because materials and equipment can account for up to 60% of total project costs, choosing the right suppliers can have a major impact on budget, schedule, quality, and risk.
In their paper “Current State of Supplier Qualification in Capital Projects: Factors, Practices, and Industry Perspectives,” researchers Malek Alazzam and Amelia Celoza explore how organizations decide which suppliers are qualified to provide critical materials and equipment. Their literature review creates a detailed picture of current supplier qualification practices, examining which factors and methods organizations use most often, how industry professionals believe the process should work, and whether owners and engineering, procurement, and construction firms view supplier qualification differently.
This snapshot of supplier qualification and engagement was developed using input from industry experts, existing research, and a survey of capital project professionals. The findings highlight commonly used qualification criteria and prevailing procurement practices, exploring common areas and differences among key project participants. For professionals involved in project delivery, procurement, or supply chain management, the research provides valuable insight into how organizations are working to balance risk, quality, collaboration, and performance when selecting suppliers. Learn more about practices and industry trends shaping supplier qualification in the Journal of Construction Engineering and Management at https://doi.org/10.1061/JCEMD4.COENG-18161. The abstract is below.
Abstract
Materials and equipment often comprise a majority of capital project costs, making supplier qualification pivotal to controlling cost, schedule, scope, quality, and risk. Prior studies have examined specific aspects of supplier qualification; however, few empirical investigations have simultaneously mapped the factors, practices, and industry perspectives that shape supplier qualification for major equipment and materials in capital projects, and compared the perspectives of owners and engineering, procurement, and construction (EPC) organizations. This study maps how frequently qualification factors and practices are applied, assesses agreement on industry perspectives, and compares owners and EPCs, interpreting the findings through transaction cost, resource-based, institutional, and relational-contracting perspectives. An analytical approach combining a literature review and industry panel input informed the development of a survey distributed to capital project professionals working primarily on capital projects in North America. A total of 114 valid responses that met the inclusion criterion of prior supplier-qualification experience, including owners (𝑛=38) and EPCs (𝑛=22), were analyzed using descriptive and nonparametric statistical methods based on a nonprobability, expert sample recruited through professional networks. Results show that safety, experience, insurance, quality management, and financial stability are the most frequently applied factors. The most common practices include site visits, early engagement, segmentation, and tailoring technical and nontechnical qualifications to project needs and objectives. Widely supported industry perspectives include early engagement, quality management, collaboration capacity, audits and verification, and postcompletion support, indicating a broad consensus that supplier qualification should support risk control and collaborative project delivery. While no statistically significant differences were observed between owners and EPCs for factor and practice frequencies, differences were found for certain industry perspectives, particularly early engagement and location-based tailoring of technical and nontechnical qualifications, indicating small, role-specific emphases on how future qualification practices should evolve. Overall, the results indicate convergence on core qualification factors and practices combined with selective divergence around context-specific tailoring, especially location-based criteria. Practitioners can use the findings to support more objective supplier qualification processes, benchmark their current practices and perspectives against industry patterns, and clarify where to standardize versus where to tailor qualification approaches in capital project settings.
Learn more about what’s working best in supplier selection in the ASCE Library: https://doi.org/10.1061/JCEMD4.COENG-18161.
