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Identify three key economic principles and use examples to discuss the extent to which these principles influence and underpin the work of the BS practitioner.

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Introduction

Economics Identify three key economic principles and use examples to discuss the extent to which these principles influence and underpin the work of the BS practitioner. Building surveyors are a key asset in the construction industry and need to be well positioned and have an overall view of all economic factors that influence the construction industry in order to fufill their roles. We are going to look at key economic factors that affect their jobs and the construction industry. The UK economy is a very complex model and the work of a building surveyor can be greatly influenced by the state of the economy. In the UK, construction accounts for about 7% of the national output and can be used as a good indicator for the overall state of the economy. Knowledge of future demand for products and services is vital in the construction industry. Construction contractors will need knowledge of changes in demand for their services in order to anticipate pricing strategies over the coming year, with how many houses they need to build and supply. The earlier the contractor knows of likely changes in demand and supply the better they are placed to take strategic action to achieve maximum profits. ...read more.

Middle

The main factors that can really influence the cost of a building project over a year are material costs. Global demand for commodities such as oil and energy are soaring and this is having huge impacts on the construction industry as many industries such as cement manufacture and clay brick manufactures are highly energy intensive. If they experience higher overheads the price of there goods will fluctuate over a period of time. So predicting wage fluctuations and material costs becomes very difficult over a one year period due just some of these market variables. This means that the building surveyor will have to judge very carefully all these factors and draw up construction cost schedules as accurately as possible in order to remain within a certain budget that contractors may have. When the UK economy is at a peak, the prosperity means that the local authorities and government would also be advised to initiate major building projects. A recent example of a major project increasing demand for new building's and development is the London Olympic Games, where tender prices have risen 4-5% just in 2006 as Olympic expectations build. When the economy is at a trough less investment goes on in the construction industry. ...read more.

Conclusion

Monopoly market structures are formed when a firm has a unique product, has a government backing which only allows it to be the sole producer or has a patent on a product. If a monopoly is supplying materials to a building firm it can reap benefits in the form of fewer costs. A natural monopoly can take advantage of economies of scale. This is because it is such a large producer of a product that it can cut costs due to large scale production. This means that construction costs can be reduced for building firms. On the other hand a firm that is a monopoly does to strive to innovate, where as a small firm striving to prove themselves will produce new products and make best use to technologies in order to produce cheaper and new products that may attract new customers. The UK construction industry can be used as a good indicator for the condition of the overall economy. If demand for houses is low then demand for construction is also low. This is high or low demand is mirrored by the whole economy. It is clear that a building surveyor's role is affected directly by economic factors as peaks and troughs of the economy are reflected by highs and lows in building surveyor's workloads as well as important decisions they make when it comes to building projects. ...read more.

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