Journal of Engineering and Applied Sciences
ISSN: Online 1818-7803ISSN: Print 1816-949x
Abstract
Contractors are vulnerable to bankruptcy or financial risk due to discontinuous orders, the economic recession and restructuring of construction industry. Therefore, general contractors have been straining to predict subcontractor’s financial risk based on credit information during tendering. This research aimed at developing the subcontractor bankruptcy risk index set based on subcontractor’s credit rating with overdue information. And studied the current subcontractor’s bankruptcy risk management conducted by general contractors, correlation analysis between short-term overdue and bankruptcy of subcontractor and produced the bankruptcy risk monitoring model based on short term overdue condition. Case study was conducted to compare new model with current model serviced by credit rating agency and showed how accurately this system containing short-term delinquency information can be applied to default of subcontractors. When applying for the pre-alarm system, it is possible to grasp the bankruptcy of suppliers in the on-site field at least 30 days before the bidding process. In addition, the system can be used independently or in conjunction with the existing procurement system, so it can be applied irrespective of the construction company size and procurement system. The study results could be applied to SRM (Supplier Relationship Management) or subcontractor management system of general contractors and support timely monitoring of subcontractor’s financial risk for reducing bankruptcy rate.
How to cite this article:
Shinjo Eom and Sangchul Kim. Subcontractor Bankruptcy Risk Monitoring System Based on Credit Information.
DOI: https://doi.org/10.36478/jeasci.2017.5074.5078
URL: https://www.makhillpublications.co/view-article/1816-949x/jeasci.2017.5074.5078