LABOUR-BASED/ EQUIPMENT-BASED COST COMPARISONS - WHAT HAVE WE LEARNED?
This paper examines the various cost comparisons that have been carried out between the use of labor-based and equipment-based methods for road construction and maintenance. Despite the fact that a large number of labor-based road programs have been implemented in sub-Saharan Africa, there have been relatively few rigorous cost comparisons with existing conventional methods of construction. Recently there have been a number of attempts to compare costs by reviewing programs that have been in existence for a number of years and for which a reasonable amount of cost data is available. First, the paper examines the methodological issues surrounding such cost comparisons. Three case studies are described in order to illustrate the problems encountered with cost comparison analyses. Finally conclusions are drawn on what has been learnt so far about the comparison of the cost of construction by labor base and equipment- based methods. Early studies looked solely at the financial costs of activities undertaken by both methods. Studies during the 1990s started to look into the economic effects of the choice of technology and began to build economic models for the direct and indirect effects. When economic efficiency and return on investment is needed to justify the choice of technology, then the direct economic benefits need to be included in any cost comparison analysis through shadow pricing of all items. When the purpose of choosing a more labor-intensive method of construction is to contribute to a higher level socio-economic developmental goal, this can only be captured if a full macroeconomic analysis is carried out. A common fact is that conducting even the simplest cost comparison study has proved difficult. Perhaps surprisingly, it is the costing of EBM that has proved most problematic. EBM are characterized by high fixed costs and low variable costs. Any cost comparison where only the marginal cost of using equipment (i.e. running costs only) is used will usually show a clear cost advantage for EBM. As countries decentralize the smaller more scattered projects can gain significant cost advantage from the use of LBM by local roads authorities. Even in countries where LBM appear financially cheaper, EBM continue to predominate. This suggests that there are considerable barriers to entry into the market for labor-based contractors - an area warranting further investigation. A sustained and high-level political commitment is required if LBM are to become established in the market as an available technology choice for construction works.
- Full conference proceedings available on CD-ROM.
World Road Association (PIARC)La Grande Arche, Paroi Nord, Niveau 5
F-92055 La Defense Cedex, France
- Jennings, D W
- Taylor, G
- The XXIInd PIARC World Road Congress
- Location: Durban, South Africa
- Date: 2003-10-19 to 2003-10-25
- Publication Date: 2003
- Features: Figures; References; Tables;
- Pagination: 13p
- TRT Terms: Cost effectiveness; Costs; Economic analysis; Equipment; Labor; Macroeconomics; Maintenance; Management; Methodology; Planning; Road construction; Socioeconomic factors; Technological innovations
- Subject Areas: Administration and Management; Construction; Economics; Finance; Highways; Maintenance and Preservation; Planning and Forecasting; Society; I52: Construction of Pavements and Surfacings;
- Accession Number: 00987806
- Record Type: Publication
- Files: TRIS
- Created Date: Mar 2 2005 12:00AM