Enhancing Procurement Decision Making in Projects: A Reliability-Based Model for Contracting Suppliers

In project environments characterized by frequent change orders and inherently complex procurement processes, effective procurement decision making is critical for managing uncertainty and mitigating disruptions. One key strategy for reducing the risk of delays due to scope changes is the use of backup suppliers, which helps ensure timely material delivery even when primary suppliers underperform. However, maintaining backup suppliers involves substantial costs, including contract management, logistics, and added supply chain complexity. Balancing the costs of securing backup suppliers with the benefits of minimizing delays is a crucial challenge in projects. Despite its significance, existing decision-making models predominantly emphasize the operational continuity of production lines and supply chains, often neglecting the unique challenges of project-based procurement. This research addresses this gap by developing a decision-making model grounded in the concept of reliability cost/worth to inform procurement strategies in projects. The model determines the optimal number of backup suppliers required to minimize project delays and associated costs. To validate its practical application, the model was implemented in a real-world construction project. Scenario analyses revealed how achieving an optimal number of backup suppliers enhances decision making, reduces delays, and minimizes overall costs. By integrating reliability cost/worth assessments into procurement planning, this research provides a practical tool for decision makers while advancing theoretical insights into the role of reliability theory in decision-making processes within the project-based procurement context.