| Author: | Luo, Ming |
| Title: | Multidimensional analysis of labor cost performance in China’s regional construction industry |
| Advisors: | Fan, Hongqin (BRE) |
| Degree: | Ph.D. |
| Year: | 2021 |
| Subject: | Wages and labor productivity -- China Labor costs -- China Construction industry -- China -- Management Hong Kong Polytechnic University -- Dissertations |
| Department: | Department of Building and Real Estate |
| Pages: | xvi, 161 pages : color illustrations |
| Language: | English |
| Abstract: | Labor cost estimation, control, and regulations are of great importance to achieve the final success of construction project, and sustainable development of construction industry. Cheap construction workforce underpinned by rich labor force has been regarded as a major advantage of contractors against rivals in a competitive market. The labor-intensive development of construction industry has made stable contributions to China's economic growth and social employment. Because of its close linkage with the rest of economy, construction industry is considered as an effective instrument for the government to stabilize and revitalize the economy. The development of construction industry is investment-driven by large-scale real estate development and infrastructure construction in the new century. With a rapid growth of real wage due to the increasing demands over recent decade, the affordability and availability of construction workforce has gradually become the history and exerted widespread effects on construction workforce recruitment, construction project management, and construction industry development. However, due to the limitations of data availability and model development, most of previous studies focused more on the qualitative analysis and partial evaluation of construction labor cost, few efforts have been devoted to the in-depth investigation of labor cost performance in China's construction industry. To bridge these research gaps, the primary aim of this study is to investigate labor cost performance in China's construction industry through a multi-dimensional analysis. Four specific objectives are fulfilled and they are: (1) To investigate the relationship between construction labor cost and critical determinants across the different regions; (2) To develop an efficiency measurement for construction industry and explore the regional differences of construction productive efficiency; (3) To identify the optimal pathways for stepwise efficiency improvement in regional construction industry; (4) To forecast the future trend of regional construction labor cost. First, this study conducts a holistic review of construction labor cost performance from temporal and regional dimensions, then identify the critical determinant of construction labor cost based on empirical analysis of literature review and questionnaire survey. Panel data model is then developed to investigate the relationship between construction labor cost and critical determinants across different regions of China among various time periods. Second, this study develops an overall efficiency measurement for construction industry under the conceptual framework of neoclassical economic theory. Data Envelopment Analysis (DEA) model is applied to measure the performance of construction productive efficiency. Further, the causes of inefficiency and the sources of growth for regional construction industry can be identified based on the empirical results of Distance Friction Minimization (DFM) approach. Regional differences of construction productive efficiency are discussed from input optimization and output potential, respectively. Third, for those less inefficient provinces that cannot achieve the significant improvement within a short period of time, a Target-Oriented (TO) approach is adopted to set reasonable stage-wise targets according to the efficiency gaps and study period. The optimal pathways for stepwise efficiency improvement in regional construction industry can be further explored according to the results of TO-DFM model. Final, Panel Vector Error Correction (P-VEC) model is established accordingly based on identified critical determinants for regional construction labor cost forecasting. The predictability of P-VEC models is validated in comparison with that of Panel Ordinary Least Square (P-OLS) model for in-sample forecasting. Scenario analysis are further conducted based on P-VEC models to predict the future trend of regional construction labor cost in the coming periods. This research provides a new perspective for understanding the labor cost performance in China's construction industry. Significance of this research can be summarized from theoretical and practical perspectives. Questionnaire survey can provide insights into construction migrant worker and labor cost management in real practice. In accordance with literature review and questionnaire survey, investigating the regional construction labor cost through panel data modeling can help stakeholders and policymakers understand labor cost variations in evolving construction market, provide valuable insights for contractor to formulate forward-looking market strategies and for government to fine tune economic policies. Construction industry in eastern region is more mechanized with extensive application of construction plants and equipment, offsetting the pressures of rising wage rate of skill workers. In contrast, the competitive edge of construction industry in western and midland regions is established primarily through a lower level of labor wage, underpinned by rich surplus labor force. More critically, the slow growth of labor productivity weakens the long-term competitiveness of regional construction industry. Construction Productive Efficiency (CPE) is conceptualized under the framework of the neoclassic economic theory, benchmarked with three input and one output using DEA-based models without considering complexity in intermediate process. Construction productive efficiency in coastal areas is better than that of inland regions. Besides, Distance Friction Minimization (DFM) approach can identify the causes of inefficiency, and the sources of growth in regional construction industry. The development potential of construction industry in western region is the largest, followed by midland region and then eastern region. The inefficiency of input usages involving construction worker, real wage, construction plant and equipment, leads to diverse efficiency performance across regions. For those low efficiency provinces, the optimal pathways can be mapped out by using Target-Oriented Distance Friction Minimization (TO-DFM) model with stage-wise targets for stepwise efficiency improvement, which serves as good references for resource optimization and investment planning across different regions of China. For eastern region, investing more on construction plant and equipment for labor savings is more efficient to long-term productivity growth. The heavy reliance on cheap manpower can be gradually relieved by allocating more budgets to vocational training and education program boost quality workforce in midland region. It is more effective to raise the wage rate to retain and recruit more workforce to meet the demand of local construction in western region. Further, regional construction labor cost forecasting can provide early information concerning the construction labor cost variations in regional market on the assumptions of two control variables. Scenario analysis is conducted based on P-VEC model to simulate the trend of construction labor cost. Due to inherent divergences of local resources and regional development, construction labor cost competitiveness can be accordingly enhanced through different ways. The forecasting results of P-VEC model provide insights into practical implications for construction labor cost estimation, construction workforce management, and construction industry development. |
| Rights: | All rights reserved |
| Access: | open access |
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