Project Selection Program

Project Selection Program © 2022

By Dr. Thomas C Schleifer, Ph.D

There are no bad projects, just bad matches between projects and contractors. The probability of success in go/no-go decisions in project selection can be accurately measured in advance and is directly associated with the construction organization’s experience with similar work. The elements impacting success have been weighted to produce a numeric scale of how well the prospective project matches the firm's experience. Designed for General Contractors, Subcontractors and Construction Managers; effective for Architects, Engineers and Vendors; Supports Owner's Contractor Selection.

The weighting of questions is derived from 40 years of measurement and experience and considered accurate. Statistical analysis was used to estimate the likelihood that an event will occur and the severity if it does occur.

Each question includes relevant information about why the question is important, Hover your mouse over each Info to learn more.

There is a benefit to the company to have multiple people within the organization score projects separately and review as a team. We recommend printing each use of this tool and make it part of your long-term tracking and analysis of your project selection decisions.

This program provides the user with a starting point for considering project selection and should be used along with other factors specific to the user organization, including those found in Section 6 of the tool.

Answer the questions without overthinking them. Total possible scores range from 10% to 90%. The program is based on a firm’s knowledge about a potential project. If nothing is known about a project, probability of success is a “toss up” which in statistical language translates to 50/50 or a 50% probability. Therefore, the program score opens at 50% before adding knowledge about the project. As knowledge is added (changing “Unknown” to Yes/No or Never/Often) it raises or lowers the score. A higher score represents a higher potential for success and a lower score a reduced potential.

There is a benefit to the company to have multiple people within the organization to score projects separately and review as a team.

Project Name

Completed By

Date

Project Size $

Location (City/State)

Type Of Project

Section 1 - Project Fit		Score
Has the firm successfully completed projects this size (this large)? Attempting projects larger than a firm has experience with, generally measured in dollars, is a discriminator of project success. A project 10% larger than anything the organization has profitable experience with is reasonably low risk. A project twice as large is high risk. The user should use judgement in pursuing projects larger than they have successful experience with. Never Few Often		0 pts
Has the firm successfully completed projects of this type? Similar type of project means work that is comparable in nature to work the organization has specific experience completing at a profit either with their own forces, subcontracted or a combination of both. Type of project includes contracting method such as CMAR, Design-Build, Design-Bid-Build, etc. Never Few Often		0 pts
Has the firm successfully completed projects in this geographic area? Geographic area is a significant discriminator of potential project success because of the impact of local knowledge and differences in local practices. This question addresses the organization's experience in the area of the project. Has the firm worked successfully and profitably here under current management? Never Few Often		0 pts
Has firm successfully completed projects with this Owner/GC/CM? The owner is the entity that will own and/or pay for the project and may or may not be the direct user of the project. For example, a state may procure a road project (owner), but not be the user which is the public. The question address the entity that the user will contract with and answer to and if that is two separate parties or agencies both should be considered. Few Often		0 pts

Section 2 - Firm's Experience		Score
Has the firm successfully completed projects with this Owner/GC/CM's representatives, inspectors, etc.? The owner’s representatives, inspectors, etc., is the person or team the owner delegates to represent the owner’s interests and carry out owner responsibilities as designated in the contract. This may include items such as approving change orders, quality inspections, payments to contractors, quality control, etc. Never Few Often		0 pts
Has the firm successfully completed projects with this designer/architect/engineer? Prior experience with a project designer, architect or engineer is a significant indicator of a potential successful relationship and includes knowledge about the level of detail and clarity of design documents, type of cooperation the designers offers, the buildability of their designs, etc. Lack of direct experience may be compensated for by knowledge of a designer's reputation, however the user is cautioned that such information is difficult to verify and may have limited reliability. Never Few Often		0 pts
Has the firm successfully completed projects with this designer/architect/engineer’s field personnel, inspectors, etc.? Has the firm had successful experience with the designer's, architect's or engineer's field representatives, inspectors, and other who may represent the designer’s interests and carry our designer responsibilities? These are usually designated in the contract which may include, but are not limited to: items such as issuing change orders, quality inspections, approving payments, the speed which requests for information and shop drawings are responded to, etc. Never Few Often		0 pts
Has the firm’s estimating team priced this type of project? What is the level of experience of the firm’s estimators with similar types of work including similar materials, subcontractors, vendors and labor? The user should take into consideration those who will be preforming the actual estimating for this project. Never Few Often		0 pts
Has the firm’s anticipated field team (PM, Supt, Foreman) built this type/size of project? The likelihood of success is impacted if the field team that will be responsible to construct this project had direct experience building and/or managing this type/size of project. This does not mean “years in construction” but direct hands-on experience with similar type of work. Never Few Often		0 pts

Section 3 - Project Complexity		Score
Is the required project schedule reasonable? From the experience of the person filling out this form is the duration of the project defined in the contract reasonable? If a duration or completion date is not defined, or the person filling out the form cannot determine if the duration is reasonable, the answer is “unknown”. No Yes/No Yes		0 pts
Is there sufficient labor available to produce the project? (consider available skill levels) Is labor availability in the area the project will be built and at the time the project will be constructed going to impact production or schedule? Labor skill level should also be considered. If uncertain answer “unknown”. Achieving unreasonable schedules impacts cost and not achieving them impacts reputation. No Yes/No Yes		0 pts
Has the firm had prior successful experience with the intended major subcontractors/vendors/etc.? This addresses the level of confidence the firm has in the major subcontractors that will be awarded work on this project. Successful prior experience is a positive as is reputation, however if there are a large number of subcontractors this question is difficult which in itself highlights concerns about unknowns. The less known about subcontractors' performance the greater the exposure. No Yes/No Yes		0 pts
Are there unusual access, room-to-work, parking, dust, noise, storage space, traffic, etc. issues? This issue address convenience and ease of operation which can have a huge impact on productivity. For example an inner city project with zero storage space is managed differently that an open-field project just as working in occupied spaces has different exposures and requirements that unoccupied spaces. Access, room-to-work, parking, dust, noise, storage space, traffic issues or others have associated costs and productivity impacts. Yes Yes/No No		0 pts
Are there unusual ground or surface water conditions? Obvious and announced ground or water condition can be difficult to estimate which impacts costs and suspecting such conditions does the same. Prior experience in a particular area may offer reasonable knowledge about anticipated conditions which may reduces exposure. If there are no obvious or announced conditions the answered is no. Unknown is a relatively common answer, but would be recommended only if the user had reason to suspect or some doubts about the issue. Yes Yes/No No		0 pts
Are there rock, soft soils, unusually deep excavations,etc. that may complicate or delay the project? Obvious and announced rock, soil issues or deep excavations may be difficult to estimate which impacts potential success and just suspecting such conditions does the same. Prior experience in an area provides superior knowledge about anticipated conditions reduces risk. Unknowns increase risk. Yes Yes/No No		0 pts
Are there unusual, circular, curved or angled design elements: i.e. walls, bridges, roofs, structures or other that may complicate/delay the project? Straight lines, squares and rectangles are most common in the built environment and therefore designers and constructors have more experience with them. Conversely fewer have experience with round, curved or oblique angles. A project with unusual, circular, curved or angled design elements: i.e. walls, bridges, roofs, structures, or other may be more complicate than anticipated and/or delayed. Users may want to take into consideration that out-of-the-ordinary designs may impact estimating and/or production in measuring potential success. If the firm has direct prior experience with such issues potential for success is increased. Yes Yes/No No		0 pts
Are there critical long-lead, sole source or unusual items that may delay the project? Critical long-lead, unusual or sole source items can seriously impact schedule. At project selection phase little may be known about how long it will take to procure the items so potential success is impacted. Unknowns increase concern and knowledge reduces it. However, because the user does not have the job yet clarifying these issues may not be practical. In which case caution should be exercised. Yes Yes/No No		0 pts

Section 4 - Financial and cash flow impacts		Score
Is the project owner’s financing in place? There is exposure associated with pursuing a project when the owner’s financing is not firmly in placed, however, the exposure at pre-project stage is limited to the cost of pursuing the project. Pre-project potential is being measured up to, but not including, the award of the contract so it is assumed that without financing in place most firm's would not enter into a contract. Some may not expect all financing to be firm at this stage and may base their pursuit on the assumption that it will be by contract award. No Yes/No Yes		0 pts
Does the firm have experience with the payment processes of this owner/GC/CM? Project owners vary considerably in payment processes. How long it takes to be paid obviously impacts cash flow and has a cost associated with it which may affect project selection decisions. Experience with an owner’s payment process (good or bad) moves the issue of payment to known which reduces exposure. If a user likes or dislikes the process they can base their pricing and decision on experience. Conversely having no knowledge about an owner’s payment process increases exposure at the project selection stage. No Yes/No Yes		0 pts
Will this project strain the organization’s resources: i.e., financial, equipment, manpower, management, or other? An organization’s resources include, but are not limited to, manpower, equipment, financial, management or other. If the firm’s resources are fully committed and outside resources are not available, profit potential will be impacted. Resources from within the firm are known and therefore easier to deploy. If resources must come from outside the firm efficiency and cost may be impacted. Yes Yes/No No		0 pts

Section 5 - Contract issues		Score
Are contract terms reasonable? Contract terms impact performance and determining the reasonableness of contract terms is difficult at best. Because most contracts are issued to the firm by the owner, negotiating terms may be difficult to impossible. A firm may need to determine what contract language it is willing to accept and will the cost for any exposure be included in the estimate? This will often be answered “unknown” as contract terms may not be available when a project selection is being made. No Yes/No Yes		0 pts
Are there any unusual payment provisions, retainage issues or liquidated damages that will affect cash flow? Retainage is a cash flow issue that most firms understand and have dealt with in the past. This question addresses any “unusual” retainage issues that should be considered at pre-project selection stage with an understanding that retainage impacts cash flow. Yes Yes/No No		0 pts
Are there any unusual bonding requirements? Bonds obviously have a cost and may impact a firm’s bonding capacity. Unusual or out-of-the-ordinary bond language is becoming more prevalent and can seriously impact project potential. Yes Yes/No No		0 pts
Are there any unusual insurance requirements? Some contracts require the contractor to provide insurance for issues that are difficult or expensive to insure and some have requirements to insure third parties. A contract that requires no additional insurance other than what a firm already caries has low or reasonable exposure. Contracts that requires additional or special insurance or coverage for third parties has greater cost and exposure. Yes Yes/No No		0 pts
Are there any unusual indemnity issues? Some contracts require the firm to indemnify others which could expose the firm to becoming responsible for the actions of others which may have serious cost consequences. With no unusual indemnity issues or only those the firm has undertaken in the past many consider the exposure to be “normal” which for these purposes would mean low. Unusual or increased indemnity issues in a contract increase exposure and should be considered in project selection decisions. Yes Yes/No No		0 pts

Section 6 - Additional Issues to Consider (these are not scored)
Do you believe you have a competitive edge on this project? Going after a project generally has a cost associated with it along with potential lost opportunity if the use of resources to get the project prevents or impacts going after another job or reduces efforts of attracting other projects. This makes the measurement of a competitive edge or lack of one significant. Where there is a competitive edge on a project it may make sense to invest more resources than on one where there is less or no competitive edge. This is difficult to measure, but for most contractors it is in intuitive.
Do you believe another contractor(s) has a competitive edge on this project? Realistically recognizing any competitive edge other contractors may have is valuable knowledge and can assist in a project selection decision. Most are familiar with projects where a favored contactor was the owner/GC/CM’s obvious choice and many other contractors wasted a lot of effort and resources only to see the obvious choice selected. Screening out projects that a firm has limited chance of capturing saves considerable resources which can be applied to projects with a higher likelihood of success and can potentially increase sales.
Is there consensus within your organization about perusing this project? When everyone in an organization is excited about pursuing a particular project the odds of capturing that work go up through the quantity and quality of the energy expended. The converse is true when there is little enthusiasm for a project making capturing it more difficult. There are situations when not going after a project is the best project selection decision. If some or many are concerned about a certain project it may be the wrong job for the company.
Is your “gut feeling” about this project negative or positive The expression; “If all else fails trust your gut” can be a valuable inclusion in the project selection process. The information collected from the above questions is of great value, however, if persons in responsible positions within an organization still have a gut feeling about a positive or negative decision it probably makes sense to reevaluate the data before making a final decision.
How does the project fit with the existing/anticipated backlog? A contractor whose current work is running smoothly has only limited exposure in taking on additional work. However, a contractor managing a troubled job or two may encounter additional risk in adding the next project. A well-managed and organized backlog has reasonably low exposure and makes additional, prospective projects attractive. A troubled backlog has higher risk which may indicate that this may not be the time to add another project.
Does the contract include Consequential Damages or are they expressed or implied? Consequential Damages are damages resulting as a consequence of the project. The owner is the usual party damaged, the public and others may also be included. Fairly common are damages that result when a revenue-generating project is delivered late such as a restaurant, hotel or retail business. The damages include loss of revenue because the intended use is delayed which can result in serious potential liability for a contractor that causes this to happen. Some contractors will not undertake such exposure which unlike liquidated damages cannot be measured in advance.

The Simplar Foundation provides this as a free tool and provides no guarantees/warrantees of outcomes on your projects.

Go to Dr. Schleifer's Business of Construction Library for downloadable tools, videos, and articles.

How to Use the Program