Civil Engineering Reference
In-Depth Information
were devised to ensure that the client would get the best possible deal from
the profession and from the market place; it is 'as if' the manufacturer of
building materials and components knew in advance what is expected of
him and geared his production to such expectation; it is 'as if' the contractor
knew how his resources were used, was in a position to control them, and
was able to use this experience on his next job.
(Turin 1975: xi).
Although this summary of the industry was expressed nearly 30 years ago, as
the text unfolds you will realise some striking similarity between then and now. It
is this complex, fragmented and conservative nature that gives the subject matter of
construction economics its appeal - as economists seek to unravel these seemingly
unconnected threads of random behaviour. Economic models seek to identify
the interrelationship between the key variables and simplify what is happening in
the sector. So although some economic models may at first appear abstract, they
do have practical applications. The important point we are trying to clarify is
that an economic model cannot be criticised as unrealistic merely because it does
not represent every last detail of the real world that it is seeking to analyse. If the
model elucidates the central issues being studied, then it is worthwhile. For example,
students may be expected to commence their course by completing an assignment
based on a theoretical economic model of competition in the marketplace. This
provides a simple introduction to the economic framework and the opportunity to
demonstrate how construction deviates from or reflects this reference point. In short,
the model provides a starting point - it enables us to proceed.
Following the recommendations of the Fairclough report (2002: 34) the
construction industry should favour models that prioritise strategies aimed to
improve sustainability, competitiveness, productivity and value to clients. In
Part
A,
we present models of market behaviour that encourage a far better grasp of the
meaning and purpose of efficiency, competition and profit. In
Part C,
we introduce
a model of aggregation to study the operation of the whole economy that brings a
fresh dimension to productivity by reviewing the total output of construction and
reflecting on its contribution to the total output of an economy. In
Part B,
we bring
the environment into the traditional model as a key variable for construction and
the economy to consider. When the whole book has been studied, we identify a
significant number of concepts that underpin an understanding of sustainability.
This leaves the precise nature and details of the models to emerge as the topic
unfolds and their purpose should become self-evident. Once we have determined
that a model does predict real-world phenomena, then the scientific approach
requires that we consider evidence to test the usefulness of a model. This is why
economics is referred to as an empirical science - empirical meaning that real data is
gathered to confirm that our assumptions are right.
An Example of an Economic Model
Before closing this section on models, we review one specific example to analyse and
explain how income flows around an economy. Economists begin their explanation
