A Factor Analysis Model for Assessing the Performance of the Construction Industry: The Case of Shanghai

Abstract The past two decades have witnessed the steady growth of the Chinese economy. As a major contributor to the economy development, the construction industry in China has also grown at an even pace. Like the cliché ‘you cannot improve what you cannot measure’, it is crucial to measure the performance of the construction industry in order to maintain its growth and reduce its drawbacks over the long-term. This research, therefore, aims to develop a model for evaluating the performance of the construction industry by using the factor analysis method. A case study of Shanghai is conducted on the basis of the proposed assessment model by using relevant data from 1999 to 2004. The results indicate that the annual performance of the construction industry in Shanghai is moving towards a better direction, particularly from the year 2002 on. It is also found that the proposed model using factor analysis method can overcome the shortcomings of other similar assessment methods in terms of obvious correlation among the initial indicators and subjectivity in determining the weights of the indicators. The model also has great potential in being applied to other similar regions which have the same characteristics as the construction industry as Shanghai.