Adequacy of contractor’s financial capability weighing criteria in Tanzania construction projects: a quadratic and gap analysis

Purpose Contractors, despite being initially deemed financially capable, sometimes falter during project execution, questioning the reliability of existing selection criteria. This study aims to evaluate the suitability of current weighing criteria in capturing contractors’ financial risks and challenges. Design/methodology/approach A cross-sectional study design involving construction professionals, including architects, engineers and quantity surveyors was adopted. Questionnaires were used to collect primary data. Mean scores ranked the criteria used and deemed adequate, whereas gap and quadrant analyses identified strengths in the current evaluation system and areas for improvement. Findings The study identified the most and least used criteria, as well as those most and least deemed adequate criteria for assessing contractor financial capability. Interestingly, while the criteria currently in use are generally considered adequate, Altman’s solvency profile Z-score model showed the largest gap (0.63), followed by net profit margin (0.30) and return on assets (0.27), as these are given less importance than their deemed adequacy would suggest. This misalignment implies that certain criteria may be underemphasized and others overemphasized relative to their actual suitability for evaluating contractor financial capability. Research limitations/implications This study is limited to perspectives solely from construction professionals in Tanzania, thus potentially overlooking insights from other regions and stakeholders with differing experiences which could bring bias into the information collected. Despite this, the findings offer actionable insights for refining contractor assessment criteria, enhancing transparency and aligning financial evaluation frameworks with project needs. Originality/value This study contributes to discussions on financial assessment in construction by relying on gap and quadratic analysis in analysing criteria usage and adequacy, pinpointing areas for enhancement and advocating for criteria alignment with industry requirements to improve assessment efficacy and project success prediction.