The study shows the modification of existing prequalification system and why it needs to be modified. The contractor plays a vital role in the execution of the project and achieving the desired aim of the project. Selecting the appropriate and competent contractor comes out to be challenging for the decision maker or the selecting authority. To make sure that the bidding is done by the eligible bidders prequalification system is processed. In India we follow the L1 concept means the bidder who

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... ives the lowest bid is selected by the decision makers, this study is helpful in changing this concept. The methodologies used are: Literature Review, Questionnaire Survey, DEA tool. DEA (Data Envelopment Analysis) is a tool used to determine the efficiency of the DMUs. Questionnaire survey was helpful in analyzing the number of contractors and deriving their efficiency. The factors through which all the contractors are analyzed were derived from the literature review. The concept used in India needs to be changed and new rule needs to be followed. Though the existing prequalification system covers almost all the factors but still some of the factors are missing. Prequalification system plays vital role in the bidder selection so it should be analyzed properly and research in this field should be continuous to make it more effective.