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Profitability performance assessment in the Australian construction industry: a global relational two-stage DEA method

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  • Xiancun Hu
  • Chunlu Liu

Abstract

Effective performance measurement drives performance and supports the development of construction. Only minimal literature measuring construction performance, efficiency and effectiveness simultaneously can be identified. A global relational two-stage data envelopment analysis (DEA) method is here proposed in order to produce effective and informative performance results. A relational two-stage DEA method systematically measures overall efficiency for a whole construction system and also yields scores for the individual stages of construction. The DEA results can be directly compared through global benchmark technology. The Australian construction industry is employed in order to implement the new method, in which profitability performance as a vital indicator of business survival, and its two dimensions of efficiency and effectiveness, are measured. The construction profitability performance and efficiency measures obtained provide evidence of underperformance and a slight imbalance in Australia between 1991 and 2012, while the measures obtained for the effectiveness factor indicate better achievement. The approach here developed promotes progress in modelling two-stage performance measurement and it can be replicated worldwide by construction projects, organizations or industries in order to quantify their performance, identify internal inefficiency components and recognize competitive advantages for promoting sustainable development.

Suggested Citation

  • Xiancun Hu & Chunlu Liu, 2016. "Profitability performance assessment in the Australian construction industry: a global relational two-stage DEA method," Construction Management and Economics, Taylor & Francis Journals, vol. 34(3), pages 147-159, March.
    • Handle: RePEc:taf:conmgt:v:34:y:2016:i:3:p:147-159
    DOI: 10.1080/01446193.2016.1180415
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    Cited by:

    1. Day‐Yang Liu & Hsin‐Hsin Yao & Wen‐Min Lu & Cheng‐Hsien Lin, 2020. "Impulse response function analysis of the impacts of land value‐added tax policy on government performance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 1020-1032, September.
    2. Helu Xiao & Na Wang & Shanping Wang, 2023. "Dynamic sustainability assessment of poverty alleviation in China: evidence from both novel non-convex global two-stage DEA and Malmquist productivity index," Operational Research, Springer, vol. 23(2), pages 1-40, June.
    3. Shokhrukh-Mirzo Jalilov & Mohammed Mainuddin & Md. Maniruzzaman & Md. Mahbubul Alam & Md. Towfiqul Islam & Md. Jahangir Kabir, 2019. "Efficiency in the Rice Farming: Evidence from Northwest Bangladesh," Agriculture, MDPI, vol. 9(11), pages 1-14, November.
    4. Zhang, Puwei & You, Jianxin & Jia, Guangshe & Chen, Jindao & Yu, Anyu, 2018. "Estimation of carbon efficiency decomposition in materials and potential material savings for China's construction industry," Resources Policy, Elsevier, vol. 59(C), pages 148-159.
    5. Ioannis E. Tsolas, 2020. "Financial Performance Assessment of Construction Firms by Means of RAM-Based Composite Indicators," Mathematics, MDPI, vol. 8(8), pages 1-16, August.
    6. Xiancun Hu & Chunlu Liu, 2017. "Slacks-based data envelopment analysis for eco-efficiency assessment in the Australian construction industry," Construction Management and Economics, Taylor & Francis Journals, vol. 35(11-12), pages 693-706, December.

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