Best, R (2012) International comparisons of cost and productivity in construction: A bad example. Construction Economics and Building, 12(3), pp. 82-88. ISSN 2204-9029
Abstract
In a report published in June 2012 the Business Council of Australia (BCA) reported that it costs considerably more to build a variety of types of infrastructure in Australia than it does in the US. Airports (90 per cent more costly) and hospitals (62 per cent) were quoted as the worst cases with other projects ranging from 26 to 43 per cent more. They used these figures to conclude that Australia is a high cost, low productivity environment for building infrastructure projects. These claims were based on cost/m2 figures published by a major international construction consultancy. The method used by the BCA is flawed in two ways: one is the in the use of costs that are recognised as giving only the broadest of indications of probable costs and the second is the use of exchange rates to convert Australian construction costs to US dollars. Careful analysis of the methodology used, supported by a series of other comparisons based on other data sources and other conversion factors (purchasing power parities or PPPs), suggests that in real terms it probably costs no more to build in Australia than it does in the US and that it may well be cheaper to build in Australia than it is in the US.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction costs; international comparisons; productivity; purchasing power parities |
| Index terms: | purchasing, productivity, infrastructure project, construction cost, Australia, consultancy, conversion, methodology, international construction, international comparison |
| Subjects: | financial and cost management, data analysis and analytics, infrastructure and transport systems, procurement strategy, research methods, organization, manufacturing engineering, management, strategic management, Geography |
| Topics: | Engineering Principles, Research Practice, Geographical Context, Cost Management, Business Strategy, Procurement, International Construction, Organizational Design |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here