Existing research on construction performance measurement is dominated by project level studies, and the firm stakeholders require the development of models that compare performance in terms of efficiency. A new framework that integrates data envelopment analysis (DEA) and ratio analysis using a two-step approach is described to evaluate performance in terms of profitability and effectiveness of a sample of construction firms listed on the Athens Exchange. In the first step, profitability and effectiveness are assessed by employing DEA and by using the profit margin (i.e. income-to-sales ratio), respectively. In the second step, a Tobit and an ordinary least squares model are used in order to identify the drivers of profitability efficiency and effectiveness, respectively. Results do point out positive links between profitability efficiency and effectiveness. Profitability inefficiency can be explained by the size and expenses-to-total revenue ratio, whereas effectiveness can be explained only by the latter explanatory variable. The research framework may benefit not only Greek construction firms, but also firms in other countries to quantify their performance and improve their competitive advantages.
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