Construction efficiency: a tale of two developed countries

Purpose

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. As clearly construction cost forms part of the analysis, the mere adjustment of cost data to an “international currency” has undermined past attempts to draw any meaningful conclusions. The paper aims to discuss these issues.

Design/methodology/approach

This paper introduces a new method for comparing international construction efficiency, tested on a data set of 337 modern high-rise buildings in both Australia and the USA, and in so doing 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 retrospectively over time.

Findings

It is concluded that, based on data from the largest five cities in each country, 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 USA, meaning that “real” construction efficiency in Australia is relatively less. If Australia held an advantage in the past, then it seems that advantage might be disappearing. The USA is outperforming Australia in terms of construction efficiency by 1.10 per cent per annum.

Originality/value

Cost is measured as the number of standard “citiBLOC” baskets necessary to construct a project, where a standard basket comprises common and globally applicable construction items priced in each city in local currency, removing the need to apply currency exchange rates that otherwise introduce volatility and erroneous outcomes. Time is measured as the number of months between commencement on site and handover, inclusive of delays related to the construction process on site. Construction efficiency is defined as the ratio of construction cost per month, and is used to comment on the relative performance of the procurement process in different locations.