How To Benchmark Construction Speed Performance Between Two Countries

Transcription

1 Benchmarking construction speed performance: An evaluation of German and UK residential building sectors Onur Dursun, M.Sc Research Assistant and Ph.D University of Stuttgart, Institute of Construction Economics CEEC Conference, Malta May, 2011

2 Introduction Why construction speed? The capacity to organise and control site operations Optimally allocate resources Manage the information flow between design team among subcontractors To contractors enhance the profitability To clients enhance competitive position by entering the market first Why international benchmark? To assess the competitive positions of counterpart industries, objectively Therefore, the aim is set to facilitate a fair benchmark between construction speed of residential building projects executed in UK and Germany.

3 Data Set No Observations: 759, 1076 from Germany and UK, respectively. Residential buildings between 1973 and Type of work: New construction, no renovation or refurbishments Variables Construction speed = average gross floor area constructed per month. Construction cost: All costs are rebased to 2005 prices All cost definitions are matched according to CEEC s publication UK costs are exchanged to Euro by employing Purchasing Power Parity. Low standard apartment UK DE PPP = 0,595 /

4 Methodology The motive to develop a regression model: Observations are not controlled. The results may be manipulated by external factors that were not taken into account. Literature reported various factors that influence the construction time performance. Above all, it is highlighted that construction cost, not only indicates the project size and scope, but also reflects the work s complexity and quality, is a significant factor to determine construction duration.

5 Hypothesis It is postulated that the construction speed can be defined by a linear function of construction cost (restricted model): ln(speed) = β 01 + β 1 ln(cost) + ε We expect to observe substantial variation in construction speed between UK and Germany. Thus, an indicator variable is added to the model (full model): ln(speed) = β 02 + β 1 ln(cost) + β 2 loc + ε The restricted model neglects the effect of location on the construction speed whilst the full model take location factor into account and concludes two separate relationships remain within the data set. The null hypothesis (there is no difference between two locations) will be rejected if substantial variation is present for the model intercept. The computation will be on the basis of the F statistic.

6 Results The result revealed that substantial variations are present at 1% significance level Projects executed in UK: ln(speed) = ln(cost) Projects executed in Germany: ln(speed) = ln(cost) Let us assume a hypothetical project valued 1million indexed to 2005 prices. In UK the anticipated construction speed is 171 sq meters per month. In Germany the estimated construction speed is 110 sq meters per month.

7 Discussion and Conclusion Why construction speed performance in UK is superior to Germany? Annual performance measurements are conducted (inc. procurement) When compared to Germany the standard (quality) of residential units are significantly lower Cultural differences (planning & quality versus commercial considerations) Market conditions (supply and demand in residential buildings) The further research shall focus on: To develop international standards to facilitate fair international benchmarks To develop national standards for annual performance measurements in Germany To create international data bases available to researchers To repeat the analysis once in every five years to observe the variation

8 Thank you