Measuring efficiency, effectiveness and overall performance in the Chinese construction industry

Purpose

The purpose of this paper is to develop a simultaneous measurement of overall performance and its two dimensions of efficiency and effectiveness in the case of Chinese construction industry.

Design/methodology/approach

A relational two-stage data envelopment analysis (DEA) method, which builds a relationship between component stages and can effectively identify inefficient stages, is developed and applied in order to measure overall performance, efficiency and effectiveness.

Findings

The construction industry of the Eastern region in China demonstrated the best results for overall performance, efficiency and effectiveness. The gaps between regions were primarily reflected in differences of pure technical efficiency. Performance indicators in the whole construction industry improved steadily and but could be improved more effectively. The coefficients of variation became smaller and more well-balanced across the whole industry.

Practical implications

Improving overall performance should focus on promoting construction efficiency at the project level and increasing management effectiveness at the company level. Sustainable development policies, which may include large investment and preferential policies, can narrow performance differences among the regions’ construction industries, and ultimately promote overall performance for the whole industry.

Originality/value

The relational two-stage DEA model is further developed in a variable returns-to-scale condition. The developed approach is generic and can provide a pathway for simultaneously measuring performance, efficiency and effectiveness and to recognise competitive advantages for promoting sustainable development.