Performance Evaluation of Construction Companies Using Integrated Entropy–Fuzzy VIKOR Model

Weng Siew Lam,Kah Fai Liew,Saiful Hafizah Jaaman,Weng Hoe Lam

doi:10.3390/e23030320

Weng Siew Lam, Kah Fai Liew + Show 2 more

Open Access

https://doi.org/10.3390/e23030320

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Abstract

The construction sector plays an important role in a country’s economic development. The financial performance of a company is a good indicator of its financial health and status. In Malaysia, the government encourages the construction industry to develop an advanced infrastructure related to health, transport, education and housing. In view of the COVID-19 pandemic, the operations and financial performance of construction sector companies have been affected recently. Additionally, uncertainty plays a vital role in the multi-criteria decision-making (MCDM) process. Based on previous studies, there has been no comprehensive study conducted on the evaluation of the financial performance of construction companies by integrating entropy and fuzzy VIKOR models. Therefore, this paper aims to propose an MCDM model to evaluate and compare the financial performance of construction companies with an integrated entropy–fuzzy VIKOR model. A case study is carried out by evaluating the listed construction companies in Malaysia with the proposed model. The findings of this paper indicate that the company ECONBHD achieves the best financial performance over the study period. The significance of this paper is to determine the priority of the financial ratios and ranking of the construction companies with the proposed entropy–fuzzy VIKOR model.

Highlights

The proposed model consists of two stages as follows: Stage 1: Determine the weights of decision criteria with the entropy weighting method; Stage 2: Compare and rank the decision alternatives with the fuzzy VIseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR) model
The optimal ranking for 90% of the construction companies between the VIKOR model and entropy–fuzzy VIKOR model was significantly different. This implies that the integration of entropy and fuzzy approaches in the VIKOR model has a significant impact on the financial performance evaluation and ranking of construction companies
The entropy weight method is proposed to identify the objective weights of the financial ratios, because it can avoid the subjectivity of weight selection

Summary

Introduction

COVID-19, which was declared a pandemic by the World Health Organization (WHO). In March 2020 and is still tempestuous, has caused dramatic losses globally, both among humans and economically. Impact and duration pose a vicious cycle of ousting businesses, jeopardizing consumer confidence and tightening financial conditions leading to losses in jobs and investment. Nations reacted to the pandemic by taking precautionary measures, such as banning travelling and imposing certain kinds of movement control order (MCO), shutting down government and private premises and imposing total or partial lockdowns. Pre-pandemic, these revolutionary actions would be considered unthinkable, but it is termed the “new normal”, where workers are forced to work from home, food is delivered and meetings and business dealings are conducted online

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