BUILDING ECONOMICS

SUBJECT CODE : AR517

REPORT 2
UNIT 2 : RELATION TO ARCHITECTURE, ENGINEERING AND

OTHER SCIENCES

SUBMITTED TO : TARIQUL ISLAM SUBMITTED BY : IQRA JAVED

SEMESTER : 10TH
 MEANING AND SCOPE OF BUILDING ECONOMICS

Building economics can be defined as a branch of

economics that focuses on the economic aspects of the
construction industry, including the financial, investment,
and management aspects of construction projects. It
involves the analysis, evaluation, and management of
the costs, benefits, risks, and returns associated with
construction projects, with the goal of ensuring their
financial viability and sustainability. Building economics
also encompasses the study of market conditions and
trends, as well as the planning, coordination, and control
of resources to achieve project objectives.
Overall, building economics is concerned with the
efficient and effective use of financial resources in the
construction industry.

Building economics is a branch of economics that focuses on the economic aspects

of the construction industry, including the financing, investment, and management
of construction projects. The scope of building economics includes the following:

Cost management: Building economics involves the analysis and management of the
costs associated with construction projects. This includes the estimation of project
costs, cost control, and cost reduction strategies.

Investment appraisal: Building economics also involves the evaluation of the

financial viability of construction projects. This includes the assessment of the costs
and benefits of a project, as well as the analysis of the risks and returns associated
with the investment.

Financial management: Building economics involves the management of financial

resources during the construction process. This includes the identification of funding
sources, cash flow management, and financial reporting.

Project management: Building economics involves the management of construction

projects, including the planning, coordination, and control of resources to achieve
project objectives.

Market analysis: Building economics also involves the analysis of market conditions
and trends to identify opportunities and risks for construction projects. This includes
the analysis of supply and demand factors, market segmentation, and competition.

Overall, building economics plays a crucial role in ensuring the successful completion
of construction projects, while also ensuring that the projects are financially viable
and sustainable in the long term.

Source : https://www.investopedia.com
 ISSUES AND CHALLENGES ASSOCIATED WITH
BUILDING PROJECTS IN BUILDING
MANAGEMENT
There are several issues and challenges associated with building projects in building
management. Some of these include:

Cost management: One of the biggest challenges in building projects is cost

management. Construction projects are often plagued by cost overruns due to
unexpected events, changes in scope, and poor project management. Effective cost
management is critical to ensuring the financial viability of a project.

Project planning and scheduling: Another challenge in building projects is project

planning and scheduling. Projects often face delays due to poor planning, scheduling
conflicts, or unexpected events. Effective project planning and scheduling can help
ensure that projects are completed on time and within budget.

Quality control: Quality control is another issue that building projects face. Ensuring
that construction work is of high quality can be challenging, especially in large and
complex projects. Poor quality work can result in safety hazards, damage to property,
and costly rework.

Sustainability: With increasing focus on environmental sustainability, building

projects now face challenges in meeting green building standards and regulations.
This includes issues such as energy efficiency, use of sustainable materials, and waste
management.

Risk management: Building projects also face various risks, such as construction
accidents, weather-related damage, and disputes with contractors. Effective risk
management is critical to ensuring that projects are completed safely and without
significant financial losses.

Technology adoption: The building industry is rapidly evolving, and new technologies
are constantly emerging. The adoption of new technologies can be a challenge, as it
requires significant investments and changes in work processes.

Source : https://www.investopedia.com
 BUILDING EFFICEINCY
Building efficiency refers to the ability of a building to meet its intended purpose
while minimizing its energy consumption and environmental impact. Building
efficiency is closely related to building economics because it has a direct impact on
the financial viability of a building project over its lifetime.

Improving building efficiency can lead to significant cost savings for building owners
and occupants. This can be achieved through a range of strategies, including:

Energy-efficient building design: Building design plays a crucial role in determining

the energy efficiency of a building. Incorporating energy-efficient design features such
as improved insulation, efficient lighting, and optimized HVAC systems can reduce
energy consumption and operating costs.

Building automation systems: Building automation systems can help optimize

building performance by automatically controlling lighting, HVAC, and other building
systems based on occupancy and usage patterns.

Renewable energy systems: Incorporating renewable energy systems such as solar

panels or wind turbines can help reduce a building's reliance on grid electricity, which
can lead to significant cost savings over the building's lifetime.

Sustainable materials: Using sustainable materials in building construction can help

reduce the environmental impact of a building, as well as improve its energy
efficiency. Sustainable materials such as bamboo, recycled steel, and sustainably
harvested wood can help reduce the carbon footprint of a building.

Building management and maintenance: Effective building management and

maintenance practices can help ensure that building systems are operating at peak
efficiency. This can include regular maintenance and upgrades of building systems, as
well as monitoring and analyzing energy consumption data to identify opportunities
for improvement.

Improving building efficiency can result in significant financial benefits for building
owners and occupants. By reducing energy consumption and operating costs, building
efficiency can lead to increased profitability, improved tenant satisfaction, and a
reduced environmental impact.

Source : https://www.investopedia.com
 BUILDING LIFE CYCLE
The building life cycle refers to the stages of a building's existence, from its
conceptualization and design to its construction, operation, and eventual demolition
or reuse. Building economics plays a crucial role in each stage of the building life cycle,
as the financial viability and sustainability of a building project depend on careful
management of resources and costs at each stage.

The building life cycle can be divided into the following stages:

Conceptualization and design: This stage involves the development of the building
concept and design, including the identification of project goals, site selection, and
design specifications. Building economics is critical in this stage, as decisions made at
this stage can have a significant impact on the project's financial viability.

Construction: This stage involves the physical construction of the building. Building
economics plays a crucial role in this stage, as the efficient use of resources, effective
cost management, and careful project management are critical to the successful
completion of the project.

Operation and maintenance: This stage involves the ongoing operation and
maintenance of the building. Building economics is important in this stage, as it
involves the management of ongoing costs such as energy consumption,
maintenance, and repairs.

Renovation and reuse: This stage involves the renovation or reuse of an existing
building. Building economics plays a crucial role in this stage, as it involves the
assessment of the costs and benefits of renovation or reuse compared to demolition
and reconstruction.

Demolition: This stage involves the demolition and disposal of a building at the end of
its useful life. Building economics is important in this stage, as it involves the
assessment of the costs and benefits of demolition compared to reuse or renovation.

Throughout the building life cycle, building economics is critical to ensuring the
financial viability and sustainability of a building project. Effective management of
resources and costs at each stage can lead to significant cost savings and improved
environmental sustainability over the building's lifetime.

Source : https://www.investopedia.com
 MONETARY AND NON MONETARY COSTS AND
BENEFITS OF BUILDING
In building economics, the costs and benefits associated with a building project can be
categorized into monetary and non-monetary costs and benefits.

Monetary costs and benefits refer to those that can be measured in monetary terms.
Examples of monetary costs associated with a building project include the cost of land
acquisition, construction materials, labor, financing, and ongoing maintenance and
operating costs. Monetary benefits associated with a building project include rental
income, property appreciation, and cost savings resulting from energy-efficient
building design and operation.

Non-monetary costs and benefits refer to those that cannot be easily quantified in
monetary terms but can still have a significant impact on the financial viability and
sustainability of a building project. Examples of non-monetary costs associated with a
building project include environmental impact, social impact, and health and safety
risks. Non-monetary benefits associated with a building project include improved
quality of life for occupants, improved health and well-being, and improved social and
community connections.
Some examples of the monetary and non-monetary costs and benefits associated
with a building project are:

Monetary costs:

Cost of land acquisition

Cost of construction materials and labor
Financing costs
Ongoing maintenance and operating costs

Monetary benefits:

Rental income
Property appreciation
Cost savings resulting from energy-efficient building design and operation

Non-monetary costs:

Environmental impact (e.g., energy consumption, carbon emissions, water usage)

Social impact (e.g., displacement of local communities, impact on local culture)
Health and safety risks (e.g., exposure to toxic materials, fire hazards)

Non-monetary benefits:

Improved quality of life for occupants (e.g., access to natural light and ventilation,
healthy indoor air quality)
Improved health and well-being (e.g., access to green spaces, opportunities for
physical activity)
Source : https://www.investopedia.com