Who They Know and What They Know: Risk Management Implications of Subcontractors’ Interfirm Alliances and Service Scope

Abstract

This project management study examines subcontractor selection through the lens of risk management and identifies the possible combined impact of subcontractor interfirm alliances and service scope on project outcomes. Utilizing company records and qualitative interview data from members of a joint venture, whose two stakeholders were oil and gas multinational corporations operating in Saudi Arabia, we posit a 2x2 matrix indicating the preferred quadrant in which subcontractors could be selected. From the data, it appears subcontractors who are both free from interfirm alliances and offer a wide scope of services are preferred. Project managers should exercise caution when employing subcontractors whose service offerings are limited and are aligned in some fashion with the main contractor through joint ventures or subsidiaries.