Contractor selection process and performance of construction projects: exploring the mediating role of technical and financial examination of tenders

Purpose The performance of the contractor is essentially what determines whether a construction project succeeds or fails. The study aims to examine the mediating function of technical and financial examination of tenders (FET) on the relationship between the contractor selection process and the performance of construction projects (PCP) using the Tanzanian context. Design/methodology/approach The explanatory design was deployed in data collection and analysis. The data were gathered from 205 members of user departments of the Institute of Accountancy Arusha and analysed using the partial least squares structural equation modelling. Findings Both the technical examination of tenders (TET) and the FET are significantly related to the PCP and fully mediate the relationship between the commercial examination of tenders and the PCP. Research limitations/implications The study uses empirical data from Tanzania, which makes it difficult to extrapolate its findings to the worldwide construction environment. Social implications The procuring organisations should ensure that the contractor selection criteria are well prepared and observed during the selection process. Originality/value This study advocates that deficiencies in the TET and financial examination lead to adverse selection, moral hazard and signalling.