Competitiveness has become a dominant challenge for Local Construction Contractors (LCC) in realizing business growth and continuous performance improvement. Understanding an organization’s competitiveness and hence finding the competitive strategy has been an important issue for construction businesses. Contractors need to recognize their competitiveness and implement competitive strategies. This study aims to examine the understanding of measuring the competitiveness of local building contractors and the influencing factors related to strategy for competition in the context of Bahir Dar building construction projects. Contractors should be aware of their competitiveness within their particular market segment and create a competitive strategy. This could be achieved by using their internal resource and capability efficiently to hold the potential opportunities in the external environment and hence achieve superior performance in the competition. In the local building industry, there has both external and internal competition was examined, which could help contractors to assess their local market opportunities, risks, strengths, and shortcomings. The main tools for the collection of data were questionnaires and interviews, used to identify the various indicator in relative importance value. The data were analyzed using a Statistical Package for Social Sciences (SPSS) including correlation analysis, and internal consistency. An organization’s competitiveness and hence formulating the competitive strategy stands a significant concern in the building industry. The finding of the study shows that there is a significant association between building contractor competitiveness and key indicators such as; technology and innovation, marketing capability, financing capability, organizational management skills, and human resources strength. Keywords: Competitiveness, Local construction, Performance, Building contractor, Competitive measurement, Competitive indicators