The Brutal Reality of Global Cost Comparisons

In the US building a 4 lane highway 10 miles long typically takes a year if the labor unions cooperate and the ecologists and government authorities are in sync. In Europe this same distance would typically take around 5 years and then there are still many obstacles to overcome each of which could delay the project months if not years.

In China however, roads 3 times this distance are constructed in less than a year and if that weren’t enough, in 2007 they also added another 2 lanes to the projects I studied and still managed to deliver on time and within budget using western resources for planning and supervision and local labor for the grunt work. Yes, the quality was similar to what one would expect to encounter in the west.

Another interesting example comes to us from one of the largest hospitals in Switzerland near Bern. We attended a conference where the director of this hospital was proudly announcing that with a staff of 4,000 he served 170,000 out-patients in 2007. He wanted to improve his statistics and was planning to meet with the Swiss minister of finance and the minister of health to come up with ways to fund a staff increase so that he could serve even more people in his new and ‘extremely efficient’ Swiss hospital.

I had the privilege of accompanying a delegation from Taiwan on part of their European tour a few years ago. You should have seen the expression on the Swiss hospital director’s face when the Taiwanese delegation leader mentioned that they had fewer beds than the Swiss hospital but an equal number of employees. Yet when it came to patients served, the hospital in Taiwan showed the Swiss how inefficient their business model was. The room went silent as the leader of the delegation pointed out that his hospital served 1,400,000 out-patient cases in the same period.