Management efficiency performance of construction businesses: Australian data

Abstract

Purpose

Construction businesses are perceived uncertainly by investors, and are generally assumed to represent more risk than other businesses. Added to this is the perception of poor business management practices being adopted by construction companies, sometimes resulting in business‐failure. Fluctuations in construction workload contribute to investor anxiety. In this light, the paper aims to present a study of the comparative management efficiency performance of construction companies.

Design/methodology/approach

Publicly listed Australian construction companies over the ten‐year period 1998‐2007 are examined. Performance is compared with a select number of “blue chip” companies as a benchmark. In total, 19 management efficiency measures are used including asset management ratios, debt and safety ratios, and cash flow ratios. The construction companies used in the study engage in work covering the full range of construction activities.

Findings

The results indicate that construction companies perform as well as, and in some cases better than, other businesses, dispelling some of the misconceptions about construction businesses.

Originality/value

The paper's finding will be useful to those investing in the construction industry, and will lead to a better public perception of construction businesses.

Citation

Balatbat, M.C.A., Lin, C. and Carmichael, D.G. (2011), "Management efficiency performance of construction businesses: Australian data", Engineering, Construction and Architectural Management, Vol. 18 No. 2, pp. 140-158. https://doi.org/10.1108/09699981111111120