Natural goods : Sources like land, water, air, natural stones, TERMS RELATED TO MICRO ECONOMICS.
sand basic raw materials to be converted to manmade
materials to be used for construction of buildings. Budget constraints : For individuals, the budget for acquiring
property depends in the earning capacity of the family per
Manmade goods : Product like mosaic tiles, tiles of all annum, the ability to raise loan, savings, repaying capacity (in
stones, ceramic tiles, wall finishes, doors/windows/woodwork, 5year/ 10year/ 15year loan periods).
electrical materials, water supply and sanitary pipes and
fittings etc, harnessing solar power, A/C plants, heating, Choice: Depends on the budgetary capability, savings,
cooling etc. willingness to invest, optimum level to spend, location of the
property etc, choice of the specifications, reputation of the
Producers : Producers are individuals, builders, contractors in builders, quality of construction, timely completion of
private sector or governments state or central. projects, proximity to public amenities like transport, railway
station, airport etc.
Primary producers are those who produce raw materials like
wood, stones, basic raw materials for production of building Demand and supply :
materials.
Depends on National income, financial status of the family to
Secondary producers are those who are engaged in production invest, stability of the job, location of the place of works,
of materials like cement, procure sand, metal, steel, means of transportation.
aluminium, various other materials to be used in building
construction. Supply depends on the builders who are willing to invest in
construction to meet the demand of various economic level of
Tertiary producers: Tertiary producers are those who carry buyers.
out the following functions:
Uncertainties : Depends on the stability of the elected
Transportation governments at state/central, cost of living availability of land
Banking at affordable level, building materials, availability of loans at
Architects and Engineers etc who offer services, reasonable rates of interest, skilled and unskilled labour,
insurance agencies for buildings, educational manpower, government policies, natural calamities, riots,
institutions, who train professionals.
inflation, global economy as well as national economy, It overlooks individual differences, the general level
imports/exports, technical knowhow. of prices may be assumed stable, but the food grains
and building materials and consumer goods may go
Equilibrium : Normally, this factor depends on demand and up very high which may cause havoc for the poor and
supply which are interdependent to maintain perfect middle class.
equilibrium, policies in five year plans and execution as per
scheduled programs. Conclusion
Technical constraints : Appropriate technology either According to some eminent economists, the subject matter of
indigenously developed or acquired from other countries, economics includes the Price Theory (micro-economics),
availability of technical expertise like architects, planners, income theory (Macro-economics), employment theory,
engineers, willing efficient builders, innovative technology to growth theory. All these are interdependent on each other.
build eco-friendly buildings as appropriate to our country and
global warming is the need of the hour. Demand and Supply
Profit maximization and cost minimization At national level, this depends on the government policies.
How different building activities and infrastructure are
These aspects are to be monitored by governmental agencies planned and budgeted. Taxation polices, direct and indirect
or some non-governmental agencies so that builders do not tax, allocation of funds for housing for the weaker sections in
make too much profit taking advantage of the demand as it is Five Year plans.
happening in the building industry.
Inflation
Building industry comes under ambit of Consumer Protection
Act. There should be strict rules by sanctioning authorities to This aspect depends on how effectively the government can
see that the building is constructed as per sanction and control inflation by exercising control over general price rise
specifications. and building materials, effective tax collection both at central
and state level, maintaining equilibrium in demand and
Monopoly and Oligopoly supply, earning foreign exchange. The increase in oil prices
invariably increase the cost of living in all walks of life
In the building industry, there is no monopoly. The only including building industry.
department in central government, which does not have
architects is Ministry of Railways and AP state. They are Interest rate
managed by engineers only. There is oligopoly in the building
industry i.e., there are reputed builders and reputed producers The finance ministry through RBI (Reserved Bank of INDIA)
of building who produce quality building materials because of controls the interest rates over products, personal incomes,
intense competition. including housing loans and building materials.
Production Employment
The demand for housing is always more than the production Now major employment takes place only in private sector.
either in government sector or private sector. The production Only an insignificant percentage of employment takes place in
is occasionally affected by inflation, global economic central government and state governments. Pension schemes
recession, rising cost of living, over population, scarcity of have to be discontinued by the governments. The
land in metros and other cities. Lack of proper mass unemployment rate is very high now either in the
transportation. Availability of infrastructure. underemployment, or employment which is not compatible to
qualifications, and resulted in crime rate to unprecedented
MACRO ECONOMICS level by either educated or uneducated youth.
It deals with aggregates and averages of entire economics like Lack of proper education like basic education, education in
national income, aggregate products, aggregate outputs, total trades which helps the weaker sections.
employment, total consumption, savings and investments,
aggregate demand, aggregate supply, general level of prices. Savings and Investments
Here it also studies how these aggregates are fluctuating and
affecting the economic growth of the country. Macro
Government through nationalized banks, financial institutions,
Economics is also called Income Theory.
public schemes can attract savings by offering reasonable
interest on the public investments.
Limitations
BUILDING CONSTRUCTION ECONOMICS Refers to that part of mans wealth which is used in producing
further wealth or which yields an income. Land is considered
We will be discussing Inputs into Building Construction in as a capital as:
terms of four important factors:
1. It is free gift of nature.
1. Land 2. Capital is perishable whereas land has no mobility.
2. Labour
3. Capital The capital can be increased but the amount of land is fixed
4. Materials and the value may vary depending on location. Capital
formation is the very core of the Economic development.
Land Without capital, Building industry cannot survive and flourish
for the benefit of the society.
Marshall defines Land Land means the materials, and the
forces which nature gives us freely for the human beings Materials
(other creatures as well), in land, in water, in air, light and
Heat. Materials are available in two forms:
Land is permanent (lack of mobility) Natural materials such as stones, mud, minerals, water (wood),
ores for various materials like Gold, silver, copper, iron,
aluminium, sand etc.
Land lacks mobility in geographic sense
Manmade Materials
Provides infinite variation in fertility, utility, situation
etc
These materials include bricks, stone blocks, tiles, granites,
marble, steel, aluminium, copper products, PVC, cement,
Labour wood, plywood, laminates, paints, most of the building
materials.
Any work whether manual or material which is undertaken for
a monetary consideration, is called Labour in economics.
Building industry put to use both natural and manmade
materials, to construct structures to cater to various needs of
Marshall defines Any exertion of mind or body human beings on the Gods Gift LAND.
undergone partly or wholly with a view to some good
(consideration) other than pleasure, derived directly from
Technological research in producing innovative new Building
work.
Materials that can withstand suitably THE GLOBAL
WARMING, which is causing ecological imbalance at an
Labour is inseparable from labourer. alarming rate and such innovations are the need of the hour.
This is true especially in the case of our country INDIA.
Labourer has to sell his labour in person.
LIC HFL,
Finance Companies,