Comparing productivity means to measure design-build pay-off

Comparing productivity means to measure design-build pay-off

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Torbjörn Stenbeck

The effect of design-build and other procurement decisions and strategies related to owner and contractor working more together has long been a topic of discussion. The cost and quality effects have however often been concluded in qualitative terms based on participants’ general feelings rather than by objective measurements. Most economics and evaluation literature define productivity as output/input. The first purpose in the current study was to develop methods to calculate construction productivity. The second purpose was to use one of them to compare the mean productivity of all design-build (DB) projects with design-bid-build (DBB) projects. When an extensive literature scan for prevailing definitions, methods and values delivered nothing useful, an own method to calculate productivity was developed and used. First overall annual productivity change was calculated, then the mean difference between DB and DBB, controlling for up to 20 variables. Input, the productivity denominator, was an infrastructure project’s total cost until completed. Output, the productivity numerator, was a weighed aggregation of its road length, railway length and a number of other cost-driving variables. A couple of methods to calculate productivity were prestudied by using annual report data, but none delivered a trustful result. We therefore asked for more precise data directly from the agency. Over 80 project managers were engaged to deliver us road and railway lengths, and about 20 other data variables, in their projects. The variable values were multiplied by expert-determined weights and added into a model cost representing the output. This output was divided by the real cost representing the input. Output/input = the project’s productivity. The means of all projects opened each year constituted a time series and the average annual change was calculated. The nominal annual decline turned out to be about -5 %. Corrected for general inflation, it was about -3 % and corrected with the higher road-works-index it was about -1 %.

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