Competitive positioning and performance assessment in the construction industry

Abstract

The purpose of this paper is to characterize the competitive positioning of the construction industry companies and evaluate their financial performance. The methodology proposed involves three major stages., The first stage concerns the identification of the competitive positioning of companies within the construction sector. This is achieved using a hierarchical clustering algorithm suitable for large datasets and mixed type variables. The second stage is the analysis of performance of the different clusters. This is done using the Data Envelopment Analysis technique. To characterize in detail the main performance features of each cluster, a decision tree is used to extract the main rules concerning the performance spread within each cluster and the gap between the cluster best practices and the national benchmarks. The third stage concerns the analysis of the strengths, weaknesses and areas of potential improvement for contractors in each competitive positioning. This required the analysis of benchmark companies of each cluster. The methodology proposed was applied for the analysis of performance of all contractors that operate in the Portuguese construction industry.