Construction efficiency: A tale of two developed countries

By Prof Craig Langston MCIOB, Bond University, Australia

Published in Engineering, Construction and Architectural Management, Vol.21 No.3, pp. 320-335, 2014.

Abstract

The measurement of construction performance is a vexed problem. Despite much research effort, there remains little agreement over what to measure and how to measure it. The problem is made even more complicated by the desire to benchmark national industry performance against that of other countries. This paper introduces a new method for comparing international construction efficiency, tested on a dataset of 337 modern high-rise buildings in Australia and the United States. In doing so it demonstrates that the ratio of cost over time is capable of ranking the efficiency of projects, building contractors, cities and even entire industries – not only today, but also retrospectively.

The conclusion, based on data from the largest five cities in each country, is that efficiency on site is improving in both countries. The growth in baseline cost/m2 suggests a possible rise in project complexity over time. While the trend in efficiency improvement is similar, there is evidence that base costs in Australia have outstripped the United States. As a result, ‘real’ construction efficiency in Australia is relatively less. The USA is outperforming Australia in terms of construction efficiency by 1.10% per annum.

This paper was the Highly Commended Winner of the 2014 CIOB Research Paper Award.

The judge's said, “An extremely well-structured paper that outlines a new model for measuring construction efficiency. The author pulls together a considerable amount of existing data from the principal cities of Australia and USA. The paper tackles a very difficult subject that researchers and economists have struggled with for many years. It shows potential for moving towards more coherent global measures of construction performance, and how these can be used to inform management from an international perspective.”

--CIOB