ABA 2307

B. Arch 3rd Year 2015

BUILDING ECONOMICS

Lecture 2

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Outline

Course Overview

Course Outline

Semester Plan

CATs & Assignments

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Building Economics

Construction Industry & the economy 1

Determinants of demand & supply

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Cost in use/Life cycle costs 4

Estimating methods 5

Measurements & role of a QS 6

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Construction Industry & the Economy

Today's lecture plan, we will look at

Introductions

Role of the construction industry

Industry & the economy

Relationships & processes

Complexity of the construction industry

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Introduction

The construction industry is the sector

involved with erection, repair and

demolition of buildings and civil engineering

structures in an economy

Construction industry & the property

industry are intertwined

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Introduction cont

The construction industry handles the

constructed-facility production process while

the property industry handles the

constructed-facility output.

Demand for constructed facilities is satisfied

either through the purchase or lease of a

building from the existing stock

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Introduction cont

The function of the construction industry is

therefore to serve the portion of total

demand for constructed space in the

economy that cannot be served from the

existing stock of constructed space.

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Role of construction industry

It provides constructed physical facilities

which provide space where other activities

may take place

The monetary value of all the buildings & civil

engineering works produced by the industry in

a given period of time, normally 1yr is referred

to as the gross output of the constr. industry

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Construction industry & the Economy

The construction industry affects & is

affected by the economy

The interrelationships between the industry

& the economy stem from three distinct

characteristics of the industry:

Size;

investment goods;

Government is a client for a large part of its work

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Construction industry & the Economy

Size is important because changes in output

of the construction industry have a significant

effect on the size of the national product

both directly and indirectly.

If the output of the industry is down, total

investment is down, and the investment is of vital

concern to the health of the nation.

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Construction industry & the Economy

It provides an investment good means that it is

subject to fluctuations in demand, for most of

its products will be required only if certain

other factors are favorable, e.g-

the expected sales of goods, which a factory would produce

the availability of mortgages for house purchase

the economic climate in which government takes decisions about the level of social services

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Construction industry & the Economy

The dependence on government as a client

means that government is able to influence

the demands on the industry by: -

action on its own proposed projects

control of credit and interest rates

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Construction industry & the Economy

There are 4 main aspects of economic life in

which the construction industry affects & is

affected by the economy

in demand and output

in employment and incomes

in balance of payments

in the level of prices.

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Complexity of the construction industry

It may be assumed to consist of sub sectors,

each sub-sector consisting of numerous

projects, and each project involving different

stages of activities from project conception

to completion.

The basic process conception to completion

is regarded as the INPUT-OUTPUT.

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Complexity of the construction industry

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Complexity of the construction industry

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Questions?

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