Civil Engineering Reference
In-Depth Information
Key Points 1.2
❍
We need to use scarce resources, such as land, labour, capital and
entrepreneurship, to produce any economic good or service.
❍
The exchange of information between buyers and sellers about factors such
as price, quality and quantity happens in a market. Construction is made
up of a diverse range of markets, as the industry comprises a large number
of relatively small firms.
❍
Every economic model, or theory, is based on a set of assumptions. How
realistic these assumptions are is not as important as how effective they
make the model or theory.
❍
Microeconomics involves the study of individual decision-making.
Macroeconomics involves the study of aggregates. Mesoeconomics
combines the territory shared by microeconomics and macroeconomics to
study a specific sector such as construction.
INTRODUCING CONSTRUCTION INDUSTRY ACTIVITY
The system of industrial classification used for statistical and government
purposes favours a narrow definition of the construction industry that includes only
firms that are involved with building and civil engineering. This categorisation is
derived from the United Nations International Standard of Industrial Classification
(ISIC). There are also American and European equivalents: the North American
Industry Classification System (NAICS) and the General Industrial Classification of
Economic Activities - otherwise known as NACE. In other words, firms generally
recognised as officially comprising the construction sector tend to embrace a range
of 'on-site' activities including those relating to infrastructure, new construction,
repair, maintenance and (eventually) demolition.
Table 1.3
shows the type of work
that is classified into these various sectors and
Table 1.4
gives some indication of the
monetary value of these different activities in Great Britain.
As
Table 1.4
(on page 20) shows, repair and maintenance are of major
importance and comprise nearly 40 per cent of the total annual activity - this
includes all public and private sector work carried out on houses, infrastructure
and commercial buildings. It is also evident that government departments and their
agencies are significant clients of the construction industry. As both
Tables 1.3
and
1.4
suggest, official statistics often draw a distinction between public and private
sector activity. The public sector includes everything that is owned and/or funded by
national or local governments such as roads, schools, the National Health Service,
and local council leisure centres. In fact, a close examination of output tables reveals
that approximately 30 per cent of construction industry turnover relates to public
sector clients. Obviously this includes a vast range of contracts, varying in size from
£10,000 for a small flood defence scheme to £9.4 billion for the new venues and
infrastructure for the Olympic Park in east London.
