Construction sectors efficiency analysis on seven European countries

Abstract

Purpose The purpose of this paper is to measure and compare the technical efficiency of construction companies in seven European countries: Austria, Germany, Hungary, Italy, Poland, Portugal and Spain, during the 2008–2015 period. The analysis involves nine sectors grouped into three divisions: construction of buildings (F41), civil engineering (F42) and specialized construction activities (F43), by NACE classification. Design/methodology/approach Multidirectional efficiency analysis was adopted to investigate the levels of efficiencies, the differences in those levels and the possible causes of such differences by further defining two new indices. Findings It showed that F43 is the most efficient division during the study period, followed by F42 and F41. The sectors/countries with less efficiency are: construction of roads and railways/Poland, construction of other civil engineering projects/Hungary, demolition and site preparation/Poland, other specialized construction activities/Portugal. Globally, the development of building projects sector uses resources in the most inefficient way and there was a drop in the efficiency in 2011 and 2013, showing a delay in the crisis impact. After 2010, civil engineering projects required a substantial effort to access resources. Other features regarding (in)efficiency were further identified. Originality/value The analysis was conducted with one of the most effective techniques in frontier analysis. The first introduced index allows for comparing efficient/inefficient subgroups, and the other index measures the resource acquisition effort, allowing a better comparison along years. The study provides a good understanding of the performance of the construction industry and indirectly exposes the strategies to overcome the crisis, through the identification of the inputs/outputs which are well/badly used.

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“…That's why the influence of the construction industry extends to overall economies and can also be seen in GDP level; already Turin (1978) proposed that the output of construction industry correlates with national income per capita, and Bon (1992) released a theory, known as the Bon curve, presenting the relation of GDP and economic development of countries. At the global level, the construction industry's share of GDP is about 12% and at the EU level 10% (Bertino et al 2021;Murillo et al 2019).…”

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