1.1 Explain the economic principles related to construction industry, taking the following in to consideration; Scarcity, Specialization, Division of Labour
This is the basic economic problem. Mainly Scarcity means that the resources are not enough to satisfy human wants fully or completely. In other words the resources are insufficient to produce all the goods and services humans might desire as the resources are limited and the human wants are unlimited. Here the resources mean the land, labour, capital and enterprise that are used to produce goods and services. Land is the physical space on which production occurs, and the natural resources that come with it. Labour is the time human beings spend producing goods and services. Capital means long-lasting tools used in producing goods and services. Enterprise means organizing the other factors of production, decision making and risk taking. The construction industry is no exception for this scarcity of resources. Therefore construction industry must use their resources in very efficient way to get a great success. For an example the land is the initial need for construction purposes and it is limited. In some popular cities, land price is higher than the building price because there is a scarcity for land in those areas. Mostly all over the world people has prompt to build high-rise buildings to overcome the problem of scarcity of land. If we take Dubai in Middle East, currently the value of ten perches land is nearly fifty thousand therams (Dubai currency), Dubai doesn’t have that much of land area but this country is popular for the business purpose so country wants more land area. Due to this type of scarcity problem, contractors build the high-rise buildings those are commonly known. To overcome from this problem, in Dubai they filled the Palm sea city by soil beds and build attractive high-rise buildings above the filled areas in sea. Human has not stopped by that. Now they are trying to build buildings in the air bubbles also due to the scarcity of land.
Figure 1 - Dubai sea island
Specialization is the separation of tasks within a system. When a worker is engaging and practicing a particular task or a job for a period of time continuously, the special abilities and skills that he gain on that job can be named as Specialization. This can be person wise or company wise. For an example, if we consider a mason, as he engaging in masonry work for a period of time he will gain special abilities and skills in that masonry work with the time. If we consider a plumber as he engages in plumbing work for a continuous time period, he becomes a specialized person for plumbing works with the skills and abilities he developed within that time period. That is person wise. When we consider construction firms, there are specialized firms or companies for building construction, roads construction or bridge construction. As an example, nowadays Access Engineering (pvt) ltd has become specialized in fly-over bridge construction in Sri Lanka as they have performed in that particular task for a period of time and they have gained special abilities for that task.
Division of Labour
Division of labour means that one person will be concentrating on particular job or a task of a production process. When considering the construction industry, each worker has been assigned in a particular job or a task to perform. For an example a quantity surveyor’s job will be mainly estimating cost of construction projects. Architecture’s job will be designing the construction projects. Structural engineers’ task will be designing structural elements.
1.2 Explain Opportunity Cost and how they are measured.
Opportunity cost is the cost of next alternative of a selection among alternatives or the highest value alternative given up. In other words it is the next best thing foregone. As we know resources are limited when compared...