1.Overview Construction n Development[1]

8/14/2019 1.Overview Construction n Development[1]

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QSM 506

ConstructionEconomics

Overview of theConstruction and

Development


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p

Overview of the Construction

and Development Introduction to development economics

Development economics Vs Economic

developmentDefinition of economics, construction

industry, construction economics

Economics in construction industry Classification of the industry

Construction industry categories


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Overview of the Construction

and Development The nature of construction industry

Characteristics of construction industry

Building process

Factors related to construction economics


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Introduction to developmenteconomics

Development economics Vs EconomicDevelopment

Development economic- a branch of economics that deals with the study

of developing countries, focuses on

macroeconomics (long term economic growth)

and microeconomics (the incentive issues ofindividual households and firms)


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Development economics Vs Economicdevelopment

Economic developmentThe process of expanding the real freedoms

that people enjoy

The objective of the development is to create an

enabling environment for people to enjoy long,

healthy and creative lives (more to economic

development than growth in incomes)


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Definition of economics

The science studies ofhuman behavioras a

relationship between ends (needs) and scarcemeans (things) which have alternative uses

Choice of the way in which scarce resources

are allocated between all their possible uses

It is all about the choice of means to achieveends


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Definition of construction industry

The erection, repair and demolition of things

as diverse as houses, offices, shops, dams,bridges, motorways, home extension, factories

and airports


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Definition of construction industry (contd)

Provide construction products to clients and tosociety at large

The carrying out of buildings, engineering,

mining or other operations in, on, over or under

land, or the making of a material change in theuse of any buildings or other land


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Construction, extension, installation, repair,

maintenance, renewal, removal, renovation,alteration, dismantling, or demolition of;

any building, erection, edifice, structure, wall,

fence or chimney, whether constructed wholly

or partly above or below ground level

any road, harbour, works, railways, cableway,

canal or aerodrome


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any drainage, irrigation or river control works

any electrical, mechanical, water, gas,

petrochemical or telecommunication works; or

any bridge, viaduct, dam reservoir,

earthworks, pipelines, sewer, aqueduct culvert,

drive, shaft, tunnel or reclamation works


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- And includes any works which form part and

integral part of, or are preparatory, to ortemporary for works described before,

including site clearance, soil investigations and

improvement, earthmoving, excavation, laying

of foundation, site restoration ad landscaping



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Definition of construction economics

A study of the ways in which resources

available to the construction industry may beappropriately allocated and optimally used

Consists of the application of techniques and

expertise of economics to the study of theconstruction firms, construction process and the

construction industry



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Economics in constructionindustry

5 important issues regarding economics

BEST RESOURCES

BEST CHOICE

BEST ALTERNATIVE

BEST ALLOCATION

BEST OBJECTIVE

scarce resources (resources in this world are limited)

choice; choosing the right choice

allocation of resources (right allocation or use of

everything and anything)

possible use of resources (alternative inresources; gives best value for money)

means to achieve ends (objectives or

aim of life or task)


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Economics in constructionindustry

About the importance of achieving the objective or aims of

life

The way how the scarce resources is being selected from

many alternatives to produce its best use, for best value for

money VALUE is probably the criteria of every humans objective

QUALITY and PRODUCTIVITY is the utmost agenda in

everyones mind

Everybody is asking not only for quality product, but also

forBEST QUALITY or even WORLD CLASS QUALITY


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Economics in constructionindustry Construction product is basically the output of the

public sector (government) and the private sector Works termed under New Works or Repair and

Maintenance Works Classified under Building Works and Civil Works Construction products can be classified under 4

major headings a) nature b) structure

c) demand or market d) price determination


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Construction industry categories

1. Building Construction Industry

All general and operative contractors primarily engaged

in the construction of residential, farm, industrial,commercial, or other buildings

Classification of the industry

* Definition Source: Standard Industrial Classification


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2. Heavy Construction Industry

All general contractors primarily engaged in heavy

construction other than building, such as highways and

streets, bridges, sewers, railroads, irrigation projects, and

flood control projects and marine construction

This includes special trade contractors primarily engaged

in activities not normally performed on buildings, such as

highway grading or underwater rock removal (does not

include special trade contractors primarily engagedactivities performed on buildings)




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3. Special Trade Construction Industry

All special trade contractors who undertake

activities of a type that are specialized either to

building construction, including work on mobile

homes, or to both building and non-building

projects

e.g. painting, electrical work, plumbing, etc. (not

include activities for heavy construction)




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The nature of construction industry

1. Technologically complex

- range from the familiar, well-known materials and tradesto highly complex facilities involving multi-

interacting sub-system

2. Vague

- involves such a wide range of activities that industrys

external boundaries are also unclear as well asrelationship between the parties are also not always clear

Characteristics ofconstruction industry


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3. Poor at coping with risk

4. Poor at safety records and inherently or naturally

dangerous industry

- due to its nature; encompasses very wide range of risksources

- complexity, different, unique production process

- different structure of the procurement, dynamic of the

end user



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5. Often very heavy, very costly, covers wide

geographical area

6. Involves extraordinary diversity of professions,

specialists and suppliers

7. Very massive, multi-dimensional of interaction,

integration, interfacing and coordination

8. Future in nature



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9. Procurement for services rather than a simple

sale of goods

10. Temporary multi-organisation, product

contacted out for and covering payment andservices delivery

11. Demand or product originates from the owner

12. Uncertainties, lack of vital information

13. Adversarial



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Factors related toconstruction economics

Consideration of the broad categories of clients

of the industry, their individual needs and factors

influencing them, and the best ways in whichthese requirements may be met

Evaluation of the total (life cycle) costs of

alternative solutions to the problems of meeting

the requirements of a particular client and choiceof the best solution


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Study of the nature of the construction process,

the roles of the participants on construction

projects, and ways and means of planning,

monitoring and controlling costs and ensuring

efficiency throughout the construction process

Assessment of the determinants of demand for

construction activity and study of the effect onthe industry of different volumes and mixes of

total demand


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Consideration of the nature of the construction

industry and its needs, strengths and problems

Examination of the relationship betweenconstruction and other sectors in economy, the

contribution the industry makes to the national

product and implications to the construction, of

changes in government policies related to themanagement of the economy


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Examination of the government policies and

roles to the construction sector

The construction economics should extent tosustainable development and environmental

economics taking care of the environmental

isssues


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1.Overview Construction n Development[1]

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