ABA 2307

B. Arch 3rd Year 2015

BUILDING ECONOMICS
Lecture 2

Outline

Course Overview

Course Outline

Semester Plan

CATs & Assignments

Building Economics

1
3

Construction Industry & the

economy
Determinants of demand &
supply

Cost in use/Life cycle costs

Estimating methods

Measurements & role of a QS

3

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

4

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.

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
11

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

12

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.

13

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

15

Complexity of the construction industry

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Questions?

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