The choice of construction technology in developing countries: A socially conscious economic assessment approach

The construction industry plays an important role in the economies of developing countries. Its efficiency is greatly influenced by the technological choice of building construction. However, market prices, which generally guide these choices, mislead decision makers. They do not represent the real costs to society, especially in developing countries, where government interventions, market imperfections, etc. distort the relative prices. This study developed a methodological approach aimed at improving the technological choice of building construction in developing countries. The approach was designed to identify the appropriate technology for a specific project, provide information for the successful adaptation and improvement of available technologies, and determine the influence of government policies on the technological choice. It used the social valuation methodology, which accounts for the real costs and benefits to the society and for the national objectives. Hence, the approach provided a much needed link between advances in economic assessment methods and their useful application in the construction industry. The approach was applied to a case study in Egypt. The social costs of six construction systems were valued and the technological choice was derived. These costs accounted for relevant conditions such as: foreign trade and domestic market distortions, imperfect capital markets, and inadequate technical infrastructure; as well as two national objectives: reduction of the foreign exchange gap and income inequality. The case study provided evidence of the inadequacy of using market prices as basis for the technological choice. It concluded that there is a good opportunity for reducing the social costs of available technologies by substituting some of their inputs; demonstrated that most of the recent building construction technological developments in Egypt did not result in actual social cost improvements; and exhibited the inappropriateness of limiting the capital-labor intensity criteria to construction stage choices. Moreover, the case study determined the bias imposed on technological choices by the current price structure, and revealed its underlying reasons and associated social cost. It also identified the influence of subsidy policies on the choice and suggested policy options.