Performance Assessment of Construction Companies Integrating Key Performance Indicators and Data Envelopment Analysis

Abstract

The web benchmarking systems broadly used in the construction industry (CI) are designed to provide results based on key performance indicators (KPIs). No insights concerning organization overall performance and improvements targets are available. This research aims to fulfill this gap using data envelopment analysis (DEA) as a method to complement the information provided by a set of KPIs. The methodology proposed is useful to all organizations involved in benchmarking routines. To enable a more realistic assessment of CI companies, two types of DEA models were used, one allows factor weights to vary freely and the other includes weight restrictions. These models assign an efficiency score to each organization, identifying efficient organizations and providing performance improvements targets for the others. To enable suggesting targets for all organizations, expert opinion was used to specify virtual units which were included in the efficiency assessment to define a practical frontier located beyond the productivity levels of the original DEA frontier. Based on a sample of 20 Portuguese leading contractors, the Portuguese web benchmarking system for CI, icBench, was used to demonstrate the advantages of integrating the DEA method with KPIs benchmark scores.