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Content of Presentation
Introduction
Definition
Role
Scope
Importance
Principles
INTRODUCTION
Building economics is concerned with production, consumption,service
and the analysis of commercial activities-
INTRODUCTIONOF BUILDING
ECONOMICS
RELATEDTO ARCHITECTURE
AND BUILDINGACTIVITY
Building Economics is concerned with all economic aspects of
construction projects – from planning, design and implementation to the
completion.
The better the definition and accurate planning undertaken so the
understanding of the economics of your project will ensure optimum
results.
Building Economics is a summation of many diverse components and
specializations. Every project in the construction industry utilises some of
these specific disciplines – from construction to restoration, construction
economics is relevant everywhere.
A purely mathematical approach, though useful rarely provides the
desired outcome; construction costing is not only a matter of knowledge,
but also finesse, empathy and imagination, and of course experience
helps!
DEFINITION
“ Maximum utilization with limited resources .”
“The economic analysis of the market for services of architects and
construction companies.”
SCOPE AND IMPORTANCE OF BUILDING ECONOMICS
LIMITATIONS
Choice
Depends on the budgetary capability, savings, willingness to invest,
optimum level to spend, location of the property etc, choice of the
specifications, reputation of the builders, quality of construction, timely
completion of projects, proximity to public amenities like transport, railway
station, airport etc.
Equilibrium
Normally, this factor depends on demand and supply which are interdepe
ndent to maintain perfect equilibrium, policies in five year plans and
execution as per scheduled programs.
Technical constrains:
Appropriate technology either indigenously developed or acquired from
other countries, availability of technical expertise like architects, planners,
engineers, willing efficient builders, innovative technology to build eco-
friendly buildings as appropriate to our country and global warming is the
need of the hour.
Profit maximization and cost minimization
These aspects are to be monitored by governmental agencies or some
non-governmental agencies so that builders do not make too much profit
taking advantage of the demand as it is happening in the building
industry.
Production
The demand for housing is always more than the production either in
government sector or private sector. The productionis occasionally
affected by inflation, global economic recession, rising cost of living, over
population, scarcity of land in metros and othercities.
Macro Economics as an article is built by the following terms :
• Demand and supply
• Inflation
• Interest rate
• Employment
• Savings and investments
• Monetary policy
• Fiscal policy
Inflation
This aspect depends on how effectively the government can control
inflation by exercising control over general price rise and building materials,
effective tax collection both at central and state level, maintaining
equilibrium in demand and supply, earning foreign exchange. The increase
in oil prices invariably increase the cost of living in all walks of life including
building industry.
Interest rate
The finance ministry through RBI(Reserved Bank of INDIA) controls the
interest rates over products, personal incomes, including housing loans
and building materials.
Employment
Now major employment takes place only in private sector. Only an
insignificant percentage of employment takes place in central
government and state governments. Pension schemes have to be
discontinued by the governments. The unemployment rate is very high
now either in the underemployment, or employment which is not
compatible to qualifications, and resulted in crime rate to unprecedented
level by either educated or uneducated youth.
Lack of proper education like basic education, education in trades which
helps the weaker sections.
Fiscal policies
Some fiscal policies are controlled by central government and some by
state government by levying taxes like sales tax, excise tax, income tax,
import/export duties, property tax, wealth tax, taxes on investments in
fixed deposits if the interest earned is more than 10,000/ per year,
taxation is either directly orindirectly.