Efficiency measurement in the tendering of road surface renewal contracts

Abstract The problem of slow productivity growth in the road construction (and wider construction) industry is well known. present paper suggests a means for efficiency analysis one part this industry, namely surface renewal Sweden, built upon application Stochastic Frontier Analysis (SFA) techniques. novel that it focuses on project level rather than firm or contractor performance and takes perspective inefficiency may result from way contracts are specified by highway agency’s pavement engineers (client side). We compare 233 tendered over four-year period via estimation cost frontier, with controls heterogeneity between projects. Our results produce first estimates expose substantive differences relative different within Swedish highways procurement organisation (Trafikverket); indicative savings around €40 m out total renewals budget Sweden €200 m. also find substantial economies scale could, principle, point to further if projects can be packaged up as larger These client-side represent potentially important sources addition those achieved through pressure competitive tendering supplier side. therefore illustrates how disaggregate information readily used revealing about best frame process thus deliver unit improvements time.