Construction Economics

Course description

This course presents the fundamental micro and macro-economic principles in relation to the construction industry. It consists of the application of the techniques and expertise of economics to the study of the construction firms, the construction process and the construction industry. The course presents a detailed review on the role of construction projects in economic development and demonstrates the application of economics during the construction life-cycle process from conception to maintenance of infrastructure, with emphasis on building and heavy construction projects. The course also introduces to the various forms of budget pricing in construction projects and concept of the time value of money using simple rates of return, interest rates and types, and decision criteria. Pricing techniques and methodology are introduced as part of the estimating process and bid preparation. Key topics covered include cost estimation, economic resources, feasibility studies and cost benefit analysis.

Course outcomes

Upon the completion of this course, students will be able to:

• Acquire and understand the basic economics principles that underpin construction projects
• Learn cash flows, construction investment appraisal methods, importance of economics and finance in construction
• Identify the economic resources required to complete a typical construction project
• Study the accounting concepts in construction industry
• Learn how to manage budget and analyzing risk, how to plan and control construction costs, how to produce financially feasible projects in construction business

Course contents

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🔽 0 h 44 min | Introduction

Background to construction economics
Basic economics principles
Basic financial and accounting principles
Importance of economics and finance in construction

🔽 2 h 05 min | Construction Accounting Systems and Alternatives

Background to construction accounting and basic principles
Cash flows and cash flow diagram
Time value of money and interest rates
Equivalence
Construction accounting methods

🔽 0 h 46 min | Cost Estimation Types, Principles and Tools

Background to price and cost
Cost estimation and types of cost estimates
General estimating principles
Cost estimation process, tool and cost control

🔽 1 h 03 min | Financial Statements in Construction

- Preparation and understanding of financial statements for construction companies
- Working capital and current ratio
- Under billing and over billing
- Analysis of financial statements by financial ratios
- Financial ratios in construction

🔽 0 h 44 min | Financing Construction Projects