Quantifying Subcontractor Risk Impact on Construction Project Performance

Abstract

Delays in the gas unitisation project in Bojonegoro were caused by subcontractors' inability to carry out the job, resulting in the project not meeting its performance goals. This study examines the effects of subcontractor-related communication risks, resource, financial, technical, and management on the execution of construction projects. The quantitative method with survey data was gathered from 39 personnel interacting with subcontractors on an Indonesian gas project to quantify risk influences on performance quality. Structural equation modelling analysis revealed that the R-square value for the monitoring and control variable is 0.582; it may be inferred that technical risk, risk associated with finances, manpower risk, managerial risk, and interpersonal interaction risk account for almost 60% of the variance in management and control. The result also reveals the direct adverse effects of technical and resource risks. Financial and managerial risks exhibited indirect effects through monitoring mechanisms. However, risk impacts were insensitive to motivational factors of subcontractor reputation, experience and competence. By highlighting salient risk drivers of project outcomes, results offer guidance for contractors in subcontractor selection and oversight.