On information and communication technology and production cost in construction industry: evidence from the Netherlands

The interplay between information and communication technology (ICT) and the competitiveness of construction firms is considered. More specifically, the question is whether firms that invest in information and communication technology have a production cost advantage. The economics literature hypothesizes that ICT brings about a production cost advantage, as ICT brings flexibility and improves the planning, organization and control of work. To test this proposition for the construction industry, a production cost function allowing for the inclusion of ICT is formulated. Using statistical nearest-neighbour matching methods it is possible to identify the effect of ICT on production costs thereby controlling for economic moderators. Data from a sample of Dutch construction firms reveal that those firms that installed ICT capital do have a production cost advantage. The results indicate further that firms need a minimum level of ICT capital to fully benefit from its production cost advantage.