A Cost-benefit Analysis of Tracking and Tracing Systems in Road Construction

A major problem in road construction is the lack of timely and accurate information about the location and productivity of equipment. As a result, the productivity rate of certain types of construction equipment is low and equipment has to be hired in from third parties. Lack of co-ordination between the equipment department and the site manager is the major cause of these problems. In this paper, two basic solutions for this co-ordination problem are presented by using the Galbraith’ framework. A road construction company can either (1) reduce the need for information processing between the equipment department and the site manager or (2) increase its capacity to process information. The focus of this paper is on the second mechanism by analysing the role of tracking and tracing systems in increasing the capacity of information processing. The paper provides an improved understanding of the factors determining the costs and benefits of these systems in road construction. This cost-benefit analysis is based on the three elements of a tracking and tracing system: collecting, transmitting and analysing data. Empirical research was conducted at one of the biggest road construction firms in the Netherlands. The study shows that investments in tracking and tracing systems can be very efficient for equipment that has to be rented frequently.