Pergamon

0305-0548(95)00047-X

Computers Ops Res. Vol. 23, No. 4, pp. 393-404, 1996

Copyright 1996 ElsevierScienceLtd
Printed in Great Britain. All rights reserved
0305-0548/96 $15.0+ 0.00

EFFICIENCY OF TRUCKS IN ROAD CONSTRUCTION

AND
MAINTENANCE:
AN EVALUATION WITH DATA
ENVELOPMENT ANALYSIS

Lennart Hjalmarsson* and James Odeck ~

Department of Economics, Goteborg University Grteborg, Sweden

Scope and PUrlmSe--This study investigates the efficiency of trucks in road construction and road
maintenance. Efficiency is defined relative to a benchmark in the form of best-practice trucks. For every
truck, not serving as a best-practice benchmark itself, its benchmark is derived within the framework of
Data Envelopment Analysis (DEA). With the same approach distance measures i.e. efficiency scores, are
calculated. A main attraction with this approach is that it is possible to handle multiple input-multiple
output technologies. The efficiency scores measure different aspects of a truck's performance relative to its
best-practice benchmark (potential input saving, output augmenting etc). We shall calculate efficiency at the
production unit level (the truck) and then, since the choice of output variables may be controversial,
compare the stability of efficiency rankings between different choice of output definitions. Further, we shall
investigate the impact of other factors such as the vintage year of the truck, make and model of the truck
and its area of operation. The data set consists of heavy trucks, owned and operated by the Norwegian
public roads administration.
Abstract--This paper focuses on the performance of trucks involved in road construction and maintenance,
and operated by the regional agencies of a national public roads administration. The performance is
evaluated from the productive efficiency point of view. The framework is that of a deterministic nonparametric (DEA) approach to efficiency measurement. In this context several important issues are
addressed: efficiency ranking and distribution among trucks, the importance of an appropriate output
measure, impact of regional characteristics and the significance of the make and model of the trucks.

1. I N T R O D U C T I O N

In this paper we evaluate the performance of heavy trucks, owned and operated by the Norwegian
public roads administration (PRA) from the point of view of productive efficiency.
PRA is responsible for approximately 40% of all road construction and 80% of road maintenance in Norway. It is subdivided into 19 branches (or agencies) each performing road
construction and maintenance within its assigned region. Each branch owns a number of machines
that are used in its activities in the region and are orgainzed as an entity (office). This is done to
ensure adequate machinery and material supplies for the construction and maintenance units. The
fleet of machines comprises heavy trucks, tractors, excavators etc. There is a total of 50 machine
groups of which "heavy trucks" is one of the 3 largest. Heavy trucks are used both in road
construction (in transportation of mass from rock blasting, transport of asphalt, sand etc.) and in
road maintenance, notably snow plowing.
In the recent years, the public sector in Norway, as in many other countries, has been criticized for
not performing as well as it should in providing services. A recent report by a government
commission shows that there is a great potential for increasing efficiency in providing infrastructural
services. One way to realize the potential is to identify the causes of inefficiency within a sector. A
*Lennart Hjalmarsson is currently Professor of Economics at Goteborg University, Sweden. His main research fields are
industrial economics, productivity, production theory, energy economics and deregulation. His list of publications include
12 monographs and edited books, more than 20 articles in international journals and a large number of contributions to
edited books.
SJames Odeck is currently economist with the Norwegian Public Road Administration in Oslo, Norway. He holds his Ph.D.
from Goteborg University, Sweden.
393

394

Lennart Hjalmarsson and James Odeck

first step may then involve an evaluation of micro units of the sector, e.g decision making units of the
road sector, and find out how these units perform. By relating the performance of units to one
another and identifying the most efficient units, benchmarks or yardsticks are provided. If such
efficiency scores are made public, the inefficient units may be encouraged to adopt the technology of
the efficient ones and hence increase efficiency in the sector as a whole (so called yardstick
competition).
In this study efficiency measures for the utilization of trucks in road construction and maintenance are computed within the framework of a deterministic non-parametric model, Data
Envelopment Analysis (DEA). We shall calculate efficiency at the production unit level (the
truck) and then compare the stability o f efficiency rankings between different output measurements.
Further, we shall investigate the impact of other factors such as the vintage year of the truck, make
and model of the truck and its area of operation. Efficiency calculations and the subsequent
comparisons are done for all the 72 units, spread all over the country and performing the same set of
tasks.
Applications of DEA in the measurement of efficiency are now abundant. For a more extensive
bibliography of D E A studies, see [1]. Applications on the road sector are, however, rare. To our
knowledge the closest one gets to the road sector in this extensive literature is [2] on ferry services,
and [3] on maintenance patrols.
The rest of this paper is organized as follows: Section 2 presents the methodology and Section 3
the data along with discussions on the different output measures. The empirical results are presented
in Section 4, while concluding remarks are in Section 5.

2. METHODOLOGY
The D E A method is closely related to Farrell's original approach [4] and should be regarded as an
extension of this approach initiated by Charnes et aL [5] and related work by F~re et al. [6]. In this
approach the efficiency of a micro unit is measured relative to the efficiency of all the other micro
units, subject to the restriction that all micro units are on or below the frontier.
The Farrell measures are illustrated in Fig. 1 where a one input (x) and one output (y) production
activity for which statistical data are available (e.g in cross-sectional form) is assumed. The frontier
technology with variable returns to scale is XAABCD and the frontier with non- increasing returns
to scale is OBCD. The constant returns to scale (CRS) frontier is the ray from the origin through
point B.
In measuring efficiency we adopt the system of efficiency measurement introduced in [7]. This
system is a generalization of Farrell's measures to a variable returns to scale (VRS) technology. The
efficiency measures for any unit in K in Fig. 1 are given as:
(i)
(ii)
(iii)
(iv)
(v)

E1
E2
E3
E4
E5

=
=
=
=
=

Xj/XK, input saving technical efficiency (VRS)

Yk/YL, output increasing technical efficiency (VRS)
XI/XK, gross scale efficiency (input saving when (CRS))
E3/E1 = XI/X~, pure scale efficiency (input corrected)
E3/E1 = YL/YM, pure scale efficiency (output corrected).

The input saving measure shows how large a proportion of the observed input would have been
necessary for the output quantity observed if the unit in question had been moved to the efficient
frontier. The output increasing efficiency measure compares the actual output produced to that of a
unit at a point on the production frontier that uses the same amount of input. These measures are
such that the efficient units will have a value of 1 and the inefficient ones will be less than 1. As an
example, a point such as J in Fig. 1 will, under VRS be input saving efficient since the efficiency
measure is Xj/XI = 1. Point K will be both input saving and output increasing inefficient since
X s / X K < 1 and YK/YL < 1. When technology is CRS, the input saving efficiency measure coincides
with the gross scale efficiency. This can be seen in Fig. 1 for point K where both measures are
calculated as XI/XK.
Once input saving, output increasing and gross efficiencies are obtained, pure scale efficiencies are
calculated as in (iv) and (v) above (E4 = E3/Ea and E5 = E3/E2).

Efficiency of trucks

395

Scale properties, for a unit i, are expressed as follows, see [7]:

Eli > g2i indicates that the unit is performing with increasing returns to scale
Eli < E2i indicates that the unit is performing with decreasing returns to scale
Eli = g2i Indicates that the unit is performing with constant returns to scale.

2.1. Computation o f the efficiency scores

Compared to Farrell's approach, DEA offers a more operational framework for the estimation of
efficiency; efficiency is calculated separately and directly for each production unit in turn, while at
the same time the location of the corresponding linear facets is determined.
Calculating efficiency measures as defined above is trivial as long as the production activity
consists of only 1 input and 1 output. In order to handle more than 1 input/output, it has been
shown, notably in [5], that a linear programming problem (LP) can be solved for each unit at time.
The input saving measure is found by solving the following LP-problem for each unit, k, with
output Yk and input Xk, to obtain the input saving measure under VRS (where Ak is a vector
containing the non-negative weights, Akj, which determine the reference point):
rain Eak

(1)

Ak
subject to the following restrictions

y.k <- Y:::',y.,

r = 1,...,m

(la)

Elkx~k >1Y.N,XkjXo, i = 1 , . . . , n

(lb)
(lc)

E::,. = l

(ld)

Akj>~O,j = 1 , . . . , N

where m is the number of outputs, n is the number of inputs and N the number of units.
Restriction (la) implies that the reference unit must produce at least as much as unit k, while
restriction (lb) implies that the efficiency adjusted volume of input used by unit k must at least
amount to the input volume used by the reference unit. Restriction (lc) is the condition for VRS. If
this restriction is omitted, CRS is implied. E1 and E2 then coincide, and both coincide with E3 in the
case of VRS.

./

YM

D
"0

YL

r~

X1Xa X.t

Xx

Fig. 1. DEA efficiencymeasures.

E>
x

396

Lennart Hjalmarsson and James Odeck

When efficiency is measured along a ray from the origin a micro unit may turn out as fully
efficient, although it is not fully efficient in the sense that it is dominated by other units (regardless of
assumption about scale property). In empirical applications this can be controlled for by inspection
of the slack variables.
The output increasing efficiency measure is achieved by restricting the reference point on the
unknown frontier to employing the same amount of input(s) as observed for unit k. The efficiency
scores are obtained by the following LP-problem:
1
max ~72kw.r.t

EzkYrk<~ ~ j AkjYrj,
x U>~ zN,~kjXij,

r= 1,...,rn
i = 1,...,n

(2)

(2a)

(2b)

zN,~kj = 1

(2c)

),ej 1>0, j = 1 , . . . , N

(2d)

where E2k is the output increasing efficiency measure for unit k. The rest of the variables are defined
as in (1-ld). Restriction (2a) states that the efficiency corrected volume of output [(1/E2k)Yrk] must
be less than or equal to the amount of output produced by the reference unit. Restriction (2b) states
that the amount of inputs used by unit k must at least equal the amount of input used by the
reference unit. Restrictions (2c) and (2d) are interpreted as in (lc) and (ld). Observed outputs,
r = 1 , . . . , m, of unit k will now be efficiency adjusted proportionally upwards to be less or equal to
output at the frontiers reference point, where at least one output equals the reference point.
Since scale inefficiency is due to either decreasing or increasing returns to scale, one can easily
determine the case by inspecting the sum of weights, S:
s =

(3)

for the E1 calculations with CRS technology. If this sum is less than one we have increasing returns
to scale (both at K and at the adjusted point J at the VRS frontier), and if it is larger than one we
have decreasing returns to scale.
Banker et al. [8] defines a specific scale measure termed Most Productive Scale Size (MPSS).
MPSS is obtained as:
Mess =

E3
~_dN_-iAkj

(4)

The relation between the actual scale and M e s s is that for units exhibiting increasing returns to
scale, input saving efficiency improvement will move the unit further away from MPSS. The
implication is that the units are encouraged to increase their activities rather than reduce them.
Some caution is in order concerning DEA as a technique for efficiency measurement. Since DEA
yields relative efficiency measures and defines a unit (in this case a truck) as ineffective by comparing
combinations of input and output with other units, units operating with input-output quantities
sufficiently far from the other units at both ends of the size distribution will be identified as efficient
due to the lack of comparable units. Problems of this kind are, however, minimal if the sample size is
large in comparison to the number of inputs and outputs. This is because larger samples decrease the
average level of efficiency, due to the positive probability of including more efficient outliers in the
sample.
3. T H E D A T A

For the analysis we have used 2 sets of data available in the PRA's data base involving trucks of

Efficiency of trucks

397

vintage 1983-1985. The data are collected and monitored by the regional branches according to a
standard set up by the PRA.
The first data set is the yearly accounts of costs associated with the running of each truck. The
following comprises this data set:
- - model year (vintage) of the truck
make and model of the truck
capacity of the truck in tons
region of operation
- - wage costs of the driver per year
- - fuel costs of the truck per year
- - cost of rubber accessories (tires, belts etc.) for the truck per year
- - maintenance costs for the truck per year (excluding rubber maintenance equipment).
-

All costs are expressed in Norwegian currency (NOK). The capacity of trucks is, however, fixed
(all at 16.5 ton) for the whole fleet of trucks. These data are available for 72 units.
The second data set contains tasks performed by each of the 72 trucks. This data set consists of:
- - transportation work in kilometers per year
- - volume transported in cubic meters per year
- - effective hours in production per year (i.e excluding stoppage time).

3.1. Inputs
The accounting data given above cover all the costs related to running a truck with the exception
o f fixed costs. Fixed costs are not registered and it is difficult to obtain them. The insurance
premium, being one of the major components of fixed costs could have been used as a proxy.
However the insurance companies informed us that a difference of 3 yr (note that our data comprise
o f trucks of model (1983-85) is insignificant when considering insurance premiums. Therefore the
fixed costs are excluded.
The driver's wage is measured as the annual driver's wage given in the accounts. Each machine
employs only one type of labour (the drivers) and hence the problem of heterogeneity does not arise.
Since the machines are publically owned, the drivers are on the same wage scale. The price of labour
is therefore not expected to vary by units due to variations in local labour markets.
Concerning fuel, although we have no liter prices, the information gathered indicates no variation
in price per liter across units or regions.
The cost of rubber accessories (tires etc.) is registered separately from the maintenance costs. For
an ordinary vehicle, these 2 cost components should be aggregated together. Itere, they are kept as
separate inputs because rubber accessories for trucks tend to vary according to kilometers covered
and most importantly, volume of the mass transported.
There is no reason to expect variation in maintenance and rubber costs across units and regions
since prices for most of the services are standardized throughout. The analysis is therefore carried
out with 4 inputs, wage (W), fuel (F), rubber (R) and maintenance (M). As is evident from Table 1,
wages are by far the largest single input followed by maintenance.

3.2. Output
The traditional output measure of transportation work is the transported volume of mass times
kilometer, i.e. tonkm. The trucks belonging to PRA perform several tasks both in maintenance and
construction of roads. These trucks generally transport massess during construction but they also
plow snow during the winter season. The volume of mass transported (snow plowed) is, however,
not registered in maintenance operations. Thus, tonkm cannot be applied as an output measure.
Therefore, we have chosen to use 2 alternative output measures: Total transport distance (KM)
and effective hours in production (EH). While the latter measure reveals the degree of capacity
utilization of the trucks the first measure is a more direct output measure.
An overview of the input and output variables used is given in Table 1.
C~OR23:4-G

Lennart Hjalmarsson and James Odeck

398

Table 1. Summarystatisticsof inputs and outputs

Sum
Avg
Min
Max
S.D.

In NOK1000
R

20718603
287758
4293
553084
100606

3112910
432354
7051
114699
20715

4616280
64115
11441
146389
29056

EH

KM

6742941
93652
12789
247478
53386

130888
18t8
252
3263
582

2555128
35488
8158
76537
15982

4. E M P I R I C A L RESULTS
F o r each truck in the sample, the LP-problems (1) and (2), outlined in Section 2, were solved with
and without constraint (lc) and for the 2 alternative output measures.

4.1. Efficiency results

We use the Farrell measures to compare observed performance with potential frontier performance, keeping the factor inputs or outputs as observed. The 3 types of efficiency we calculate in this
paper are those illustrated in Fig. 1.
The distribution of E 1 (VRS) for both the alternative measures of output are presented in Figs 2
and 3. Each histogram in Figs 2 and 3 represents a unit (truck). The size of the truck, as measured by
output is represented by the width of the histogram normalized by the output shares.
The input saving efficiency distribution E1 (VRS) when output is measured by kilometer
transportation work, presented in Fig. 2, shows that the most efficient trucks represent about
25% of total output. The efficiency values then decrease evenly down to about 0.6 then continue
falling rapidly to the least efficient unit with an efficiency value of 0.36.
F o r effective hours in production (EH) as an output measure, the values of E1 (VRS) in Fig. 3
indicate that the most efficient trucks represent about 30 of total output. Compared to KM-output,
the efficiency values fall at a slower pace and ending at the least efficient truck, measuring 0.63 and,
representing about 2% of the total output. In total, there are 13 efficient trucks under K M - o u t p u t as
compared to 24 under E H as output measure.
A summary of results for all the computations using the two alternative output measures are
given in Tables 2 and 3.
Consider first the input saving efficiency measure when variable returns to scale technology is
imposed, i.e El in Tables 2 and 3. This measure indicates the input saving potential for the individual
truck had frontier technology been employed. The results in Table 2 show that if frontier technology

l0'

E1

0.9
0.8
0.7
0.6
0.5.
0.4.
0.3.
0.2.
0.1
-~ %
10 20

30

40

50

60

70

80

90

100

Output shares
Fig. 2. The distribution of E~ - VRS with KM as output measure.

Efficiencyof trucks
1.0t

399

El

0.9
0.8

0.7
0.6
0.5
0.4
0.3
0.2
0.

0 I

10 20 30 40

50 60

.'-

'70 80 90 100
Output shares

Fig. 3. The distribution of E I - V R S with E H as output measurc.

had been imposed, the average truck and the least efficient truck could have covered the observed
annual distance with only 76 and 36% of the inputs, respectively.
The values in Table 3 indicate that there is potential for input saving of 12% for the average truck,
i.e. the average truck could have managed the observed annual effective hours in production with
only 88 % of the inputs (i.e wage, fuel, rubber and maintenance) if the frontier technology had been
employed. The least efficient truck could have managed its observed output with only 64% of the
observed inputs had it adopted the frontier technology, i.e. the potential for input saving achieved
by adopting frontier technology is 36% for the least efficient truck.
Consider now E2 which is the ratio of observed output to potential frontier output, keeping the
level of input unchanged. Table 3 shows that the outputs for the average and the least efficient trucks
could have been increased by 11 and 47/0 respectively had frontier technology been employed.
When the output specification is changed to annual kilometers travelled, these measures are at 23.5
and 170% for the average and the least efficient truck, respectively.
Turning to the gross scale efficiency measure (E3), which can also be interpreted as an input saving
efficiency measure for the constant returns technology (see Section 2), we find the values to be lower
than those of Ea and E2. The potential saving assuming CRS technology are always greater than
potential savings assuming a VRS technology, simply because the envelope, under a VRS
assumption, will wrap data more closely (i.e. more units are efficient/define the envelope) than
under a CRS assumption.

Table 2. Summary statistics for efficiency measures and scale indicator (effective hours in production as output measure)

Mean
Min
Max
S.D.
Weighted mean

E1

E2

E3

E4

E5

Scale

MPSS

0.88
0.64
1.00
0.10
0.89

0.90
0.68
1.00
0.09
0.90

0.82
0.55
1.00
0.12
0.82

0.93
0.58
1.00
0.08
0.92

0.91
0.58
1.00
0.08
0.90

1.51
0.23
3.46
0.71
1.64

0.70
0.20
2.40
0.47
0.83

Table 3. Summary statistics for efficiency measures and scale indicator (distance in km as output measure)

Mean
Min
Max
S.D.
Weighted mean

El

E2

E3

E4

E5

Scale

MPSS

0.76
0.36
1.00
0.18
0.80

0.81
0.37
1.00
0.16
0.84

0.64
0.29
1.00
0.17
0.67

0.85
0.56
1.00
0.13
0.84

0.79
0.50
1.00
0.13
0.80

1.36
0.26
3.45
0.66
1.59

0.65
0.18
3.17
0.55
0.88

400

Lennart Hjalmarsson and James Odeck

Input and output adjusted pure scale efficiencies, E4 and Es, are obtained by dividing E3 by E 1
and E2 respectively. The tales depict that these scale efficiency measures follow the same pattern as
the other 3 measures of efficiency under the 2 alternative measures of output. There is obviously no
severe scale efficiency problem in this industry. Technical inefficiency accounts for the largest
potential of efficiency improvement.
When less than one, the scale indicator "scale", in both Tables 2 and 3 indicates an output smaller
than the optimal scale, but larger than the optimal scale when it is larger than one. The results in the
tables indicate that an average truck is larger than the optimal size. This implies that an average
truck will be more productive had the unit been smaller, i.e. the utilized capacity of an average truck
is too large relative to the tasks that it performs irrespective of output specification. On the other
hand, the magnitude of this efficiency loss is fairly small as indicated by the small difference between
the gross scale efficiency, E3, and the pure scale efficiencies, E 4 and Es.
The results of the MPSS measures in Tables 2 and 3 show that the optimal level of inputs for an
average truck should be smaller than observed, i.e. 65 and 70% of the observed input for K M and
E H as output measures respectively.
These unweighted figures are averages that exert equal importance to small and large units. In
order to obtain a proper picture of the stock of trucks as a whole weighting the different results with
some measure of size is required. In Tables 2 and 3 the output related measures i.e. E2 and Es, have
been weighted with total output. The input related measures, i.e. E 1 and E4, have been weighted with
total input while E3 and S are weighted with total output. The tables reveal that the weighting
improves the average efficiencies and scale but only slightly and not consistently.
The following conclusions can be drawn. First, there is a notable potential for efficiency gains
among trucks due to technical inefficiency, much less so due to scale inefficiency.
Second, since we are comparing observed performance with potential frontier performance
keeping the inputs or outputs as observed, the difference in potential efficiency gains is present
between technologies. On average E2 > El, implying decreasing returns to scale for the average unit
in the sample; see [7]. This observation is consistent with the mean of scale measures which are found
to be greater than 1.
Third, the values of efficiencies depend upon the choice of output measure. On average measuring
output by effective hours gives a higher level of efficiency measure in comparison to distance in
kilometers. The explanation for this is that the effective hours in production are highly correlated to
wages (which is also the largest input) as opposed to distance driven in kilometers. We note that the
use of fuel and rubber varies in the opposite direction i.e. more with distance driven than with
effective hours in production.

4.2. Potential efficiency gains

To measure the input saving and output increasing potential for this fleet of trucks as a whole,
sector efficiency measures t may be used. These measures are defined as follows:

I1-

ZsyJ
Yl
Zs e2j(t)

(5)

where
I1 is the output increasing potential for the fleet of trucks
yj is output for truck j
E2j is output increasing efficiency measure for truck j
t is technology (either CRS or VRS)

I2

~-'dxijElj(t)
--

(6)

~ xo"

tin [9] the input and output saving potentials for the whole sector are calculated as individual measures by entering the
average as a unit. These measures are termed structural efficiencyand are denoted by Si. To avoid confusion in
calculation, we denote the measure applied in this paper by Ii.

Efficiencyof trucks

401

where
12 is the input saving potential for the fleet of trucks
x/j is input i for truck j
Elj is the input saving efficiency (VRS) for truck j.
Equation (5), thus, measures observed output in relation to potential output, while (6) measures
potential input in relation to observed input. The percentage by which total output can be increased
is then calculated as (100/I1- 1)100. The percentage measure for input saving potential is
calculated as (1 - 12)100. The values obtained for 11 and 12 are given in Table 4.
On average, we find that when measured by effective hours in production (EH), output could be
increased by 25 and 12.4%o for CRS and VRS technologies respectively. When output is measured
by transportation kilometers (KM) the potential for increasing output is 59 and 23% for CRS and
VRS technologies respectively. The difference between technologies is quite large, 12.6% for EH
and 36,/o for KM. Comparing the 2 alternative output measures, the values for EH are higher than
the values for KM. This implies that kilometers as an output measure yields lower total gains.
When CRS is imposed, smaller gains are obtained in comparison to VRS independent of output
measure. This latter observation conforms with our previous observation that the average unit does
not operate at constant returns to scale (in fact at decreasing returns to scale).
The potential input savings, 12, when technology is VRS are about 22 and 12% for KM and EH
respectively. As the results illustrate, the effect of different factor proportions on input savings is
rather small. Once again KM yields lower gains. In terms of levels, the input potential (VRS) for
savings is greater than the potential increase in output.

4.3. Sensitivity analysis

How robust are the efficiency scores with regard to output measures and technology assumption.
One measure of robustness is the extent of similarity in ranking i.e. the correlation between the
efficiency scores for different model specifications. Therefore, Spearman's ranking correlation
coefficient for pairwise comparisons of different model specifications was calculated.
In general, the rank correlation coefficient is fairly high, about 0.75, for comparisons between
CRS and VRS technology for the same output measure and efficiency measure. On the other hand,
there is only a weak correlation in ranking between the 2 output measures, with the same
technology. To take one example, in the CRS case the rank correlation coefficient for a comparison
of the E1 measure for the 2 output measures, EH and KM, is 0.24. Thus, it matters a lot for the
efficiency ranking which output measure is chosen.

4.4. The importance of background factors

4.4.1. The significance of the brand type and vintage of the trucks. The brand type of the trucks is
also of interest. Our data set provides this piece of information. Out of the 72 trucks analyzed there
were 54 Volvos, 9 Saab Scanias, 3 Mercedes Benzes and 3 M.A.Ns. Thus, trucks of the Volvo type
dominate the sample.
In testing the significance of brand type, Volvo trucks were compared to a set of all the other
vehicles in the group. A Mann-Whitney test was then carried out to compare the efficiency rating of
T a b l e 4. S e c t o r efficiency m e a s u r e s
11

/2

Output = KM
t = CRS
t = VRS

0.63
0.81

t = CRS
t = VRS

0.80
0,89

0.78
0.78
0.76
0.76

i =
i =
i =
i =

W
F
R
M

0.88
0.87
0.87
0.88

i =
i =
i =
i =

W
F
R
M

Output = EH

402

Lennart Hjalmarsson and James Odeck

the 2 populations. The results indicate no influence of make on efficiency level irrespective of the
choice of output variable.
A common assumption is that old trucks require more inputs (repair, lubrication, consumes more
fuel etc.) in producing the same output than newer vehicles. Our data comprise of trucks of 3
different age groups: those produced and set into operation in 1983, 1984 and 1985. A M a n n Whitney test on the influence of age on performance was also carried out.
The result shows that the model of truck does not significantly influence vehicle performance. No
test could be rejected at the 10% significance level. An obvious reason here is that a 3yr age
difference is not long enough period for trucks to perform differently on the basis of age.
4.4.2. Regional comparison of efficiency measurement. When investigating the performance of
trucks in the road sector and when these trucks are both used in maintenance and construction,
some regional aspects need to be considered. For a start, in maintenance services such as snow
plowing there will always exist differences across regions for instance in terms of cubic meters of
snow plowed annually. This is mainly due to differences in climatic conditions. As regards
construction, the distance driven by trucks depends on the amount of mass being transported
and their place of disposal. As an example, regions along the Norwegian coast are mountainous and
hence rock blasting is more common. Tunnel construction is common in these areas. This implies
that a much larger amount of mass transported here than in other regions. One might then expect
regional differences in efficiency.
The data set allows for regional comparisons. For this purpose we have aggregated the data to
only 2 regions as follows: regions along the coast which also have relatively low annual snow fall and
the non-costal regions with relatively high amounts of snow fall. Again, a Mann-Whitney test is
performed. The results presented in Table 5 indicate that the observed differences in efficiency
between regions are all significant at the 1% level for measures apart from E1 (VRS) and E2 (VRS)
when output is KM, and E1 (VRS) when output is EH. These results indicate that the region factor
is important when measuring efficiency across regions.
The figures in Table 5 show that when output is measured by KM, the mean efficiency in the
coastal regions are higher than in the inland regions. When output is measured by effective hours
worked the result is the reverse. An explanation here is that trucks are disposed differently in the
different regions, i.e. in costal regions they do more of mass transportation while they perform more
of snow plowing in the inland regions.

4.5. The frontier units

A main purpose of calculating efficiency scores is to get ideas for improving the performance of
the ineffective units relative to the best practice units. It is, therefore, quite important that the best
practice units and their properties are revealed. In Table 6 the frequency of occurrence on the
frontier by efficiency and output measure is presented.
Let us first look at the dominating units relative to the output measure. When output is measured
by KM, 3 units dominate (unit 28, 54 and 71) under all technology restrictions. However, when VRS
technology is imposed units 41, 45 and 50 also become dominant. Changing output measure to EH
increases the number of dominant units (and also the number of efficient ones) under all
specifications of technology. The most dominant units are 8, 24, 54 and 63. It is only 1 unit that
is dominant under both output measures (unit 54). Again there are more frontier units when VRS

Table 5. Test of the impact of regional differences on efficiency scores

EH
Coastal

KM
Inland

Coastal

0.79

0.61

Inland

~'1(CRS)

E~(VRS)
E~(VRS)

Mean efficiency
Sign. level

0.84

Mean efficiency
Sign. level

0.90

Mean efficiency
Sign. level

0.91

0.0763
0.85

0.74

0.1556

0.82
0.3715

0.87
0.1407

0.69
0.0000

0.78

0.85
0.0304

Efficiency of trucks

403

Table 6. Frequency of units on the frontier

Output

KM
El
CRS

El
VRS

--

--

5
8

---

10

14
19

---

20
24
25
26

--

Unit

EH
E2
VRS

Scale

El

Ez

Scale

EH

Kid

1.53

1.00

1810

--

0.35
1.09

14
34

5
28

5
27

1.00
--

525
1.00

9117
1810

---

---

0.26
0.98

6
--

2
1

2
1

1.00
0.50

1339
1151

14100
20694

---

8
16
1
--

11
-1
--

1.85
1.00
1.85
0.66

-25
---

-12
1
3

-13
1
4

1.06
-2.46
1.99

1855
1.00
3133
2382

38909
1679
76537
36893

28
30
40
42

24
----

--

--

----

2.16
1.40
1.53
1.14

--

----

2.21
1.00
0.99
1.78

2155
1941
1725
2149

51204
29488
34276
41527

45
46

---

18
16

22
1

3.50
0.39

---

1.50
0.30

2308
252

73520
8158

47
48
50
51
52
54
62
63
71
72

-----

-13
17
--60
--

--

0.87
1.00
2.87
2.30
1.00
1.00
0.72
0.82
1.00
3.48

7
3
1
37
7
25
6
36
8
--

9
4
1
48
2
22
1
28
2
--

1.00
1.63
1.83
-1.00
-1.00
-2.60
1A9

1911
2942
3263
1.92
1962
1.00
1462
1.00
2982
1793

43799
72412
63372
3245
29335
360
23123
1430
75644
73321

67
--28
--

--

El

Size

39
1

7
23
--61
--47
2

8
---

7
--

6
--

1
-6

--2
48
2
42
---

AVG

21106

1817.8

technology is imposed. A clear observation from Table 6, which is also mentioned in the previous
section, is that the composition of units on the frontier varies with the output specification.
Consider now the units on the frontier, given in Table 6, relative to their size measured by outputs.
The units that dominate in all specifications and output measures differ when size is considered. As
an example, units 54 and 71 dominate when K M is specified as output measure. Their sizes by the
KM-measure reveal that while unit 54 is smaller than the average unit, unit 71 is twice the size of the
average unit. It is also noted that unit 40 although efficient, does not appear as best practice for all
other units than itself. This is one of the largest units in the sample.
In terms of optimality with respect to scale, most dominant units are scale optimal, i.e. have scale
values of 1. This observation being irrespective of the choice of output. It is also observed that there
exist a few dominant units that operate under Strong increasing returns to scale. These are 5, 14 and
46 when the KM-output measure is used and 19 and 46 when the output measure is EH. Unit 45 is
the only one among the dominant ones that operates with strong decreasing returns to scale, and
only when the KM-output measure is used.

5.

C O N C L U D I N G

R E M A R K S

The results received indicate substantial variations in efficiency across trucks. An average truck is
found to have an effciency score of 0.76 and 0.88 when the output measure used in kilometers (KM)
and effective hours (EH) respectively.
The potential for increasing output/ saving input is measured by /1 and 12 underlines the
importance of technology when dealing with trucks. An imposition of the VRS technology when
output is measured by EH would increase output by 25% as opposed to 12.4% when CRS is
imposed. An average unit is, however, found to exhibit decreasing returns to scale technology.
Appropriate measures of output are important when dealing with trucks involved in more than
one type of operation. The results reached here indicate that when all units are considered as one
group the number of kilometers as an output measure generates lower efficiency measures in
comparison to effective hours in production. When trucks are classified according to their regions
this difference has, however, a second dimension. K M are found to generate high scores in inland
regions while EH generate higher scores in the coastal regions. The difference is due to the

404

Lennart Hjalmarsson and James Odeck

composition of operations i.e. trucks in the inland regions undertake more snow plowing than those
in the coastal regions where there is less snow and more mass transportation.
Neither the make of the truck nor the model were found to influence performance. Regarding size
of trucks measured in terms of annual output, the influence on efficiency measures were slight when
output is measured by D M and insignificant when measured by EH.
In summary, it can be concluded that there is substantial variation in the performance of trucks
and that there is scope for eradicating some of the causes o f the inefficiency. F o r the latter, the most
useful information relates to the region in which the truck operates, the output measure to be used
and, the units that define the frontier and their relative weights.
The results arrived at here have a number of policy implications. The efficiency results obtained
by D E A methodology yield values of inputs, outputs and scale which, in principle, an agency should
be able to achieve. F o r example in Section 4.1, we showed that if the frontier technology had been
employed the average truck could have sustained the annual effective hours in production with only
88% of the input (i.e. wage, fuel, rubber and maintenance). Although the adoption of frontier
technology would bring the truck to the frontier, complete adjustment m a y not be possible because
some factors that influence performance m a y not be under the control of the agency concerned.
Nevertheless, while D E A does not provide a precise mechanism for achieving efficiency, it does help
in quantifying the magnitude of change required to make the inefficient units (trucks) efficient.
The tasks, thus, involve finding explanations for variation in performance. One way to go about
this is to inspect the key characteristics of each frontier truck and then compare it to the inefficient
trucks that it defines the frontier for. The agency with inefficient trucks can then learn from the
frontier trucks and/or explain the causes of own inefficiency. The central authority (PRA) could also
isolate the agencies that use public funds inefficiently from those that perform satisfactorily. More
administrative attention m a y then be paid to those that perform poorly.
The Public Roads Administration of N o r w a y lacks market prices for its services. A c o m m o n way
o f measuring productivity in public sectors, when market prices are lacking, is by dividing physical
output by physical input. However, when there are m a n y outputs and inputs, managers of public
sector agencies prefer multiple output/input ratios, each of which tells a different story. In this case
no robust conclusions can be drawn on the performance on any particular agency, in comparison
to others of the same nature. It is in this respect that the D E A approach used in this study could
assist in aggregating several measures so that a single indicator for an agency's performance is
obtained.
Acknowledgement--Financial support from HSFR and Jan Wallander Research Foundation is gratefully acknowledged.

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