Measuring the Construction Industry’s Productivity Performance: Critique of International Productivity Comparisons at Industry Level

Abstract

The authors review work on international comparisons of construction productivity performance by providing an in-depth critique of the existing literature and highlighting the existing methodological challenges. Using studies and data on the United Kingdom’s relative construction productivity performance as an exemplar, it is suggested that any investigation of international productivity differences in construction at the industry level is highly problematic because these productivity estimates do not compare like for like. Data definitions and coverage differ substantially across countries. In addition, deflators and exchange rates used to convert output into a common currency are unreliable. While the new standard industrial classifications 2007 could provide a better basis of cross-country productivity comparisons and further research on deflators, conversion rates, labor inputs, and capital stock estimates could improve the robustness of international comparisons, there are conceptual limitations to an industry-level approach. This paper’s contribution is to discuss these methodological challenges in detail and propose a research agenda for enhancing cross-country productivity comparisons for informing government policy intervention on productivity improvement. The authors argue that cross-country productivity at the project level can enable a more detailed analysis of the tangible and intangible inputs to the construction process while accounting for the heterogeneous nature of the industry. However, the existing project-based productivity measures fall short of providing a common framework for systematically gathering comparable cross-country productivity data that could enable robust benchmarking. The authors conclude by calling for the need of facilitating the collection and analysis of robust project-level productivity data, e.g., through an international benchmarking club, in order to support effective policy intervention for enhancing construction productivity performance.