Analysis of Factors Influencing the Project Selection System in Construction Projects

Abstract

Project selection plays a crucial role in ensuring that every decision aligns with the company’s objectives and resources. However, the project selection process in some companies remains suboptimal due to weak risk assessment, inadequate utilization of objective data, and limited integration of decision support systems. This study aims to identify the factors influencing project selection in construction projects and analyze the relationship between these factors and company profitability in the construction sector. This study uses a quantitative approach. Primary data collection was conducted by distributing a 5-point Likert-scale questionnaire to respondents who are practitioners in the construction sector in Indonesia. These data were analyzed using the Structural Equation Modeling (SEM) method with the use of SmartPLS software. From the results of SmartPLS processing, the relationships between variables X and Y are as follows: (X2) Technology has an influence of 45.4%, (X1) Finance has an influence of 43.4%, and (X3) Marketing has an influence of 12.3%. These findings suggest that these criteria have been effectively implemented and have a positive impact on enhancing commercial criteria, specifically in terms of company profitability in construction projects. Meanwhile, the legal criterion (X4) had a negative influence of 7.3%. This finding suggests that this criterion continues to have a negative impact or exhibits a downward trend in its application for improving commercial criteria. A deeper understanding of these factors and their interactions can help companies develop more effective project selection strategies, thereby improving the quality and efficiency of the Indonesian construction industry.