Managing Production Costs of Small and Large Developers in Sweden: A Case Study on Multi-Family Construction

Abstract

This article demonstrates that small developers can outcompete larger developers in terms of cost efficiency when the physical scale of a building project is not to large and that this efficiency can be achieved through a market of specialized subcontractors. In Sweden, small developers have trouble obtaining financing, acquiring land from municipalities and obtaining approval for land use plans. If attention is focused on facilitating market entry for small developers, markets could become more cost efficient. An exploratory case study of two developers, based on visits to two worksites to obtain information on construction processes, documentation, construction costs and the type of problems that arise during construction, is presented. One of the two developers was small, while the other was one of the four largest developers in Sweden and had international operations. Although housing production costs have received a considerable amount of attention, to the best of the author's knowledge, no studies on the competitiveness of small versus large developers have been conducted in Sweden or elsewhere.

Keywords:

• case study
• cost efficiency
• multi family construction
• project management
• small and large developer

Notes

It should be noted that: there are no generally accepted operational definitions for large and small developers. In this study, the small full-service developer run its own business and was completely outsourced, meaning that the developer had no equipment or employees to complete a residential project, while the large full-service developer (a economically independent department in a large construction corporation) had in-house resources to complete a residential project cf. Peiser (1991).