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BUILDING ECONOMICS

ASSIGNMENT

evaluation and comparison of design schemes at early design stages. Buildings today are. That is a large amount to be spent as initial cost.life support systems. Construction Management. Project Management."We no longer build buildings like we use to. Real Estate financing etc. communication terminals.. Construction Financing.. nor do we pay for them in the same way. Buildings nowadays cost almost quarter to one half of monthly income of a person. They are incredibly expensive tools that must be constantly adjusted to function efficiently." (Wilson) Building Economics is microeconomic (how individual actors in economic realm make economic plans and decisions) analysis which studies the economic implications of architectural design decisions and impacts of these decisions. It includes:      Engineering economics Real Estate Economics Urban Economics Energy Economics Environmental economics It includes Construction Estimate. data manufacturing centers. Architectural design decisions can be expensive. and much more. The cost of operation and maintenance is much more than the initial cost. Therefore more and more resources should be allocated to the careful analysis. The economics of building has become as complex as its design. And not .

designers have become . Technical solutions need to be suitable for use in a dynamic economic environment.under environmental. with the interests of their clients in mind. All buildings are investments. The problem here is to be able to measure benefits and costs as functions of the design solution. Thus they can also judge cost implications of various design alternatives. construction and operation of buildings. it has recently become clear that the environment within buildings is important not only for the welfare of the people using them but also for their productivity. In the same way. whereas buildings used to be looked upon as "inanimate". which is rising high day by day. Nowadays. Architect can analyze these things in the critical design time and workout solutions.forgetting the labor cost. But in the end. Also. combined with the process of estimating the cost -. In other words. Clients expect workable economic solutions to these problems. One reason it is dynamic is that government is changing the regulations all the time. market factors are changing. "socioeconomics" has become increasingly important to more engineering professionals.who will pay? Someone has to .more sophisticated in their application of economics. Design engineers in the past have applied simple economics to their designs. social and other pressures . and that economic assessment is a twoedged exercise: the process of evaluating the return.how much the client will pay. Indeed. another economic dimension has been imposed on the design. which is very important. All these things which disturb a client are in fact under architect’s own control. even if there is a benefit. the tax system is changing. the loop has to be closed by asking the question . The key problem is measurement.

But there is still not enough data to apply it intelligently to construction. that an architect or engineer is in possession of everything he ought to know is being challenged. This is. these days. to the large number of small participating companies . To take an example.pay. due to the industry itself. the construction industry tends to be overlooked in the economy after manufacturing and resource industries such as agriculture. Clients are also challenging the correctness of technical information. in part. technical information is hard to come by for the small organization. life-cycle cost analysis is a great idea and a powerful tool for providing a sensible basis for broader decision making. Another factor is that in government research policy. The assumption. Most applications of it are simply transpositions of the procedure used in the manufacturing sector. But without help from the design people.

economics offers us a tool to evaluate new technologies.which cannot afford to do research themselves or to go looking for new technical information. We can build micro and macro models to predict the market . The result has been that job costing has become the main concern of the industry. even in the largest companies. These companies have no capacity whatsoever for research. master builder era. At the level of the individual building project. although it may have done this to some extent in the earlier. it is easy to understand why the client is unwilling to pay for data that have not yet been collected. inefficiencies of this kind in the system are gradually being identified. and the other is the development of methodology for applying it. In the area of design. reflecting the frustrations that many people feel when the financial markets and the economy are not behaving as they would have them behave. Economics is often looked upon negatively. They can be assessed and their economic impact predicted. On the other hand. One is the data. Consequently. owners respond to what the contractor is offering. therefore. However. economics offers a powerful tool for bringing order and understanding to business and is in fact being used very effectively these days in housing and especially from a "micro" standpoint where a lot is being done to explain and to predict the phenomena found in this market. Two things appear to be missing. Owners tend to look on initial capital costs as large items and fail to recognize that small increases in these costs now may lead to substantial savings later on. Who should by paying for these? Perhaps the construction industry has never made up its mind to sell a "product". for example.

or objective. whether by the engineer or by the architect. We can assemble packages for energy conservation to achieve the largest set of benefits for a given budget. The exercise of imagination on the part of these professionals plays no part in the fee structure. Building owners use economic analysis to determine . Buildings must also be designed and built as fast as possible.earthquake damage and the combination of safety measures which will provide the most efficient package for addressing such a situation. To what extent can the architect influence the building process? How well does the architect sell his product? Perhaps the main problem is the limitations on fees. We are able to address safety issues. The economic analysis of projects goes back at least to the 1930's. It allows us to address scale problems -. for identifying the areas in which these problems lie. economic analysis has been integrated into the decision making process. Since that time. these professionals do not receive enough feedback and thus continue to make the same mistakes. and for developing ways in which improvements can be made. Economics gives us tools for addressing the problems of building productivity. We can rank investment projects and levels in an order of priority. or we can identify a level.penetration that new technologies may be able to capture. Moreover. even from the standpoint of looking at how much it is economical to spend to prevent a particular hazard from occurring. which is currently in quite a depressed state. for minimizing .say . It allows us to address trade-offs between different kinds of building features.how much investment is it economically efficient to put into different kinds of features.

THE ECONOMIC ANALYSIS PROCESS .the most economically efficient or cost-effective choice among building alternatives. time is money. From one perspective of the client. Architect can in fact speed up the construction process. Building economics is also very important if we study the role of building industry in national economy.