Component of construction industry :

- Supply n demand

Supply component of construction

- In the construction industry the main factors of production are: (a) building materials; (b)
labour; (c) equipment; and (d) finance. Energy is also a crucial factor of production but is
normally accounted for in the production and distribution of building materials.

- The single largest input in construction is building materials, which can typically account for over
50 per cent of the total value of construction output. There is a vast range of building materials
used in the construction industry, notably basic items and ancillary products. However, for the
delivery of any construction output, every specified building material is of vital importance and
nonavailability of a single seemingly unimportant item may be the cause of an abandoned
construction project.

- Labour constitutes the second largest single component of resources required by the
construction industry. In construction, labour is classified into four basic groups: (a) unskilled; (b)
skilled, e.g., masons, plumbers and carpenters; (c) professionals, e.g., architects, civil engineers
and quantity surveyors; and (d) managers, notably contractors. The basic practice in
construction requires a mix of all the labour groups in an interdepedent manner. Within some
limits, labour can be replaced by machinery. However, certain operations in construction are
skill-intensive with no opportunities for substitution of labour with capital. Even where
machinery can substitute labour, the capital scarcity in developing countries implies that the
absence of requisite skills can limit the capacity of the construction industry.

- As resource inputs, plant, equipment and tools constitute smaller proportions of total cost than
building materials or labour. Despite that fact, the nature of certain construction activities, such
as the construction of dams, airports and irrigation schemes, tends to make the contributions of
plant and machinery indispensable to the supply of construction. If appropriately utilized,
machinery and tools are capable of increasing productivity in construction activities, thereby
leading to reductions in the cost of construction and improved performance. Preference for
machinery over labour is normally influenced by the high cost of labour and its low productivity.

- The cost of construction is usually high because of the high cost of building materials, labour and
equipment. The construction industry is dependent on financing required, among other things,
to purchase plant, equipment, machinery, building materials and other inputs. Apart from
investments in capital stock and fixed assets, demands for operational or working capital are
high. Sometimes, the precarious nature of building materials supply means that large sums of
money are required to purchase building materials and keep them in stock in anticipation of an
eventual shortage. Similarly, contractors require funds to retain or maintain at least the core of
the labour force during seasons of low or no construction demand. Because of the long period
for which investments in construction mature, financing of construction is not attractive on the
market. In addition, there are risks in construction, such as accidental damage to heavy
 equipment in civil engineering works, so that a viable insurance scheme is desirable as an
incentive to attract a flow of funds for financing of construction.

- By its very nature, the supply component of construction has farreaching implications for
planning of the construction industry. This is largely due to the fact that, while each factor of
production is essential, supply of construction is only possible when all the factors have been
brought together in a desired mix. To the extent that a single factor of production can cripple
the entire construction industry, planning is essential to ensure the availability of all factor
inputs in a balanced manner. However, the factors of production, often have no relationship to
each other, belonging to separate sectors of the economy and responding to separate
institutions in an isolated manner, so that there are serious implications for planning if the
factors have to interact for a single purpose. Each of the four main factors of production in
construction, is in itself, the outcome of a complex interaction of activities. For instance, the
building materials industry involves an interaction of several sectors such as the chemical
industries, agriculture, energy and other manufacturing activities. For this reason, supply of a
single factor of production in construction, requires a level of planning to ensure that
fragmented activities are brought together for the desired output.

- In most developing countries, the supply capacity of the construction industry is dependent on
imports. Typically, building materials, labour and equipment are imported in relatively large
quantities. Because of the scarcity of foreign exchange, there is a limit to the availability of
imported factor inputs, thus limiting the supply capacity of the industry. In some instances,
there is an indigenous capacity for supply of construction materials with little dependence on
imports. However, there are certain constraints which still limit the indigenous supply capacity
of the industry. For instance, an expansion in the supply of building materials from indigenous
industries can only be achieved within certain resource capabilities and within a stipulated time
period, because of the intricate processes involved in building materials production. Similarly,
the expansion of manpower resources in construction can only be achieved over a specified
period of time, a relatively long period of time. All these issues are matters of concern to
planning.

Demand component of construction

- The demand for construction can be classified in terms of the final output, namely, civil
engineering works, houses or other buildings. This classification is significant because the nature
of construction output largely determines the type of production factors to be used and the mix
of factor inputs in construction. For instance, there is a higher demand for equipment and
machinery in civil engineering works than in shelter construction. Even within the sphere of
shelter construction, the demands for machinery, equipment and specialized building skills will
be higher for multi-storey construction than for single storey dwellings. The nature of
construction output is directly related to the factors of production and ultimately the supply
capacity of the construction industry can be judged by the type of demands made on the sector.
For this reason construction demand is a crucial factor in planning the construction sector.
- Another way to classify construction demand is in terms of demand from the various sectors of
the national socio-economic structure: demands for education, health, defence, agriculture,
transport, aviation and a multitude of others. This can further be regrouped into public sector
ant private sector construction. On this basis, construction demand is extensive and complex
cutting across a vast range of institutions and sectors and thus of significance to planning.
Because of the state of underdevelopment of most developing countries, the demands for
construction from each sector of the economy are large. In fact, if the magnitude of unfulfilled
demand for construction is related to the limited supply capacity of the construction industry,
then construction demand is a vital factor for planning the sector.

- In the private sector, the underlying determinants of construction demand are basically an
interaction of quantifiable factors, such as incomes, and non-quantifiable factors, such as value
judgements. These determinants are to a large extent uncontrollable and, under circumstances
where supply capacity is limited, can influence a pattern of demand far in excess of existing
supply capacity. In developing countries, there is a large component of the population classified
as low-income or non-income earning, so that their demands for construction are not effective.
Despite the inability to afford their basic construction needs, the construction needs of the low-
income population are real and massive to the extent that it is a critical issue in planning the
construction sector

Construction economics

- Construction economics is the process of economising construction processes – from project

initiation to completion – ensuring practical and sustainable financial decisions are made
throughout the project. But this role is not just about tightening purse strings, it also requires
a dexterous ‘bigger picture’ mentality. The project economist needs to know where spending
needs to be made to ensure the best possible quality resources are used during
construction.

- The role is all about balance. If a construction project economist is too driven by the bottom
line then the project may be completed within budget, but at what cost? Poor quality
materials and construction processes will cost dearly later on. On the other hand if the
project economist is too cavalier about spending and wastes a lot of funds then the project
may never be completed at all. Funds will simply dry up and the project will grind to a halt.
Green building vs conventional building

Introduction to Green building

A green building is one which uses less water, optimises energy efficiency, conserves natural
resources, generates less waste and provides healthier spaces for occupants, as compared to a
conventional building.” • Elements of Green Building: There are 4 elements of Green Building. That
shows the main points required to be considered while designing any building. • Smart Design •
Energy Efficiency • Eco Materials • Water Conservation

Building a sustainable future

Sustainable construction aims to meet present day needs for housing, working environments and
infrastructure without compromising the ability of future generations to meet their own needs in times
to come. It incorporates elements of economic efficiency, environmental performance and social
responsibility – and contributes to the greatest extent when architectural quality, technical innovation
and transferability are included.
Sustainable construction involves issues such as the design and management of buildings;
materials performance; construction technology and processes; energy and resource efficiency in
building, operation and maintenance; robust products and technologies; long-term monitoring;
adherence to ethical standards; socially-viable environments; stakeholder participation; occupational
health and safety and working conditions; innovative financing models; improvement to existing
contextual conditions; interdependencies of landscape, infrastructure, urban fabric and architecture;
flexibility in building use, function and change; and the dissemination of knowledge in related academic,
technical and social contexts.

Significant :

Construction is an important sector that contributes greatly in the economic growth of a nation. The
Construction Industry is an investment-led sector where government shows high interest. Government
contracts with Construction Industry to develop infrastructure related to health, transport as well as
education sector. For prosperity of any nation, Construction Industry is quintessential.