Nowadays, the growth of construction industry’s productivity is slow, unlike the manufacturing sector, where standardization of components, mechanisation and innovation greatly enhance the rate of production, that is because of the procedure of construction industry is more complicate and always take longer time than manufacturing sector. Therefore, the supply to meet the needs and demand of housing and infrastructure is a very slow process.
This is a serious problem which indicates that over the past 40 years, construction projects have required significantly more field work hours over cost of contract. In other words, the construction industry seriously lags other industries in developing and applying labour saving ideas and in finding ways to substitute equipment for labour. While there are a number of construction tasks that have been made more productive through the use of labour saving equipment, it is clear that, looking at the whole industry, there is a significant productivity problem. Productivity in the construction industry reached a peak in 1968 and, except for a brief and small upturn between 1974 and 1976, has been falling ever since. This paper examines the sources of this slow productivity by estimating a production function to assign weights to various factors responsible for productivity change and deriving a new price deflator for construction which does not rely on labour or material cost indexes, thus eliminating a systematic bias toward overstating the rate of growth of prices There are few reasons, why the supply is slow in construction sector which because of the rising cost, human affect the construction sector, income tax, lack of labour and the housing supply. And therefore I will discuss about the problem of slow supply that exist in construction sector.
The Rising cost
Basically, cost that have been rising are the rising costs of steel, cement and other building materials are expected to cause a juggling of priorities, if not a mild slowdown, in all types of construction, ranging from freeways and office buildings to schools and homes. And if the cost increases continue, the state as well as cities, towns and counties likely will be forced to reassess plans for public works construction, such as new freeways, bridges, schools or other projects. Materials costs for construction have greatly outstripped the Consumer Price Index and even the overall Producer Price Index. However, contractors are so hungry for work that they are continuing to promise to deliver jobs for almost no increase in price, in spite of their having to pay more for materials. It is a dangerous situation for contractors who have already cut their margins to a minimum or maybe into negative territory The prices of cement and steel marched upward and labour shortages increased last summer when the season's powerful hurricanes churned across the Gulf Coast, devastating communities by tearing down homes and damaging office buildings, bridges, roads and harbours. Today, cement prices are up as much as 30 percent over a year ago, and no one can say where the price is headed. And because of this the price of houses will increase and most of the people cannot afford it. Income Tax
Income tax also plays an important role that is because if the government increase the income tax the demand for house will decrease due to the lack of purchaser money. The purchaser is force to save of make a budget of his or her money just to purchase a house. And when the demand for house is low the developer is force to decrease the price of the house and therefore the expense of the developer will higher and the developer will either stop the project or reduce the expenses of the project. The abandon project will appear until the material price is cool down so that the developer will continue the project.
The weak planning and economy will cause the slow supply. Supply is refers to the quantity of goods suppliers are willing...
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