Like many developing economies, the construction industry in Bangladesh is vital to its economic development and growth. However, the Bangladeshi construction industry is plagued by unethical practices, sub-standard construction work, and the inability of local contractors to partake in internationally funded (lucrative) contracts (as general contractors). A contractor prequalification process is proposed to address the problems facing the industry. In this work, an extensive literature review was used in combination with research surveys, statistical analyses of the literature and survey results, and the analytical hierarchy process to develop sets of factors and criteria pertinent to contractor prequalification/selection. A five-level framework involving regulatory verification, project-specific validation, performance evaluation, state-of-the-art best practices, and capacity assessment was developed to address the problem. This research developed innovative practices that could be used for the prequalification of contractors in Bangladesh and a method for implementing a recommended system for evaluating and prequalifying contractors.