Comparing international construction performance

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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. 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. This paper proposes a new method for comparing international construction performance, and in so doing integrates cost with time and quality to determine ratios capable of ranking projects, building contractors, cities and even entire industries – not only today, but retrospectively over time.

The aim in this paper, therefore, is to outline the new model and test it using what is understood to be one of the largest samples of construction project data ever assembled across two sample countries: Australia and the United States. The research comprises 337 high-rise projects of 20 storeys or more, completed between 2003 and 2012, throughout the five largest cities in Australia and the United States and representing two-thirds of the known population of such buildings in these locations. The ensuing analysis not only demonstrates the practical application of the model, but provides new insight into the efficiency track-record of the construction industry in Australia and the United States by city over the last decade.

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 quantity of finished gross floor area completed per month, inclusive of delays related to the construction process on site. Quality is measured as a function of unit price and implicitly includes factors such as complexity, innovation, building height, extent of fit-out, environmental performance, compliance, standard of finish and supervision levels. Construction efficiency is extracted and 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.

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 United States, 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. Notwithstanding the larger number of projects found in the United States (251) compared to Australia (86), the top 10 US performers in terms of construction efficiency have higher scores that the top project found in Australia, and the reasons underpinning this clearly demand future project-level investigation.
Original languageEnglish
Number of pages25
Publication statusPublished - 29 Nov 2012

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International construction
Costs
Construction costs
Currency
Environmental performance
Construction project
Procurement
Benchmark
Exchange rates
Industry performance
International currency
Contractors
Relative performance
Project complexity
Ranking
Supervision
Innovation
Construction industry
Factors
Industry

Cite this

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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. 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. This paper proposes a new method for comparing international construction performance, and in so doing integrates cost with time and quality to determine ratios capable of ranking projects, building contractors, cities and even entire industries – not only today, but retrospectively over time.The aim in this paper, therefore, is to outline the new model and test it using what is understood to be one of the largest samples of construction project data ever assembled across two sample countries: Australia and the United States. The research comprises 337 high-rise projects of 20 storeys or more, completed between 2003 and 2012, throughout the five largest cities in Australia and the United States and representing two-thirds of the known population of such buildings in these locations. The ensuing analysis not only demonstrates the practical application of the model, but provides new insight into the efficiency track-record of the construction industry in Australia and the United States by city over the last decade.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 quantity of finished gross floor area completed per month, inclusive of delays related to the construction process on site. Quality is measured as a function of unit price and implicitly includes factors such as complexity, innovation, building height, extent of fit-out, environmental performance, compliance, standard of finish and supervision levels. Construction efficiency is extracted and 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.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 United States, 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. Notwithstanding the larger number of projects found in the United States (251) compared to Australia (86), the top 10 US performers in terms of construction efficiency have higher scores that the top project found in Australia, and the reasons underpinning this clearly demand future project-level investigation.",
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Comparing international construction performance. / Langston, Craig Ashley.

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Research output: Working paperResearch

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