The extraction of raw materials and the on-site construction activity is of great importance, as a nation seeks to set up an important infrastructure, in the form of railways, roads and buildings. As a support industry, construction creates, builds, and maintains the workplace in which most businesses operates and flourish, the economic infrastructure which keeps a nation connected, the homes in which its citizens live and the schools and hospitals which provide the crucial services that the society needs. It fuels demand for building materials beyond the construction activity itself. It is because construction ranges from basic materials like gravel for iron and cement, to basic products like concrete, and steel, to more finished products like doors, and wallboards. Depending on the level of construction activity relative to a states economic activity, the effects it poses on its economy is different. In UK, a modern, efficient and competitive construction industry is essential in meeting its Climate Change Act commitments and wider societal and environmental obligations. When a nations economy is undergoing through recession, the government uses the construction industry to manage the local and national economy and increase public expenditure. In developed countries, the construction industry accounts for approximately one third of its total investment in physical assets in the economy useful in accelerating development and creating employment. In addition, the construction industry has significant interactions with other economic sectors as a forward and backward linkage where relationships of inter-industry sales to total output and relationship of inter-industry purchases to total input exists.
Definition of construction
Any definition of construction will need to encompass the entirety of the construction life cycle from the materials extraction stage, through the production of finished products and including the after sales services, all of which creates part of the process of producing and maintaining the built environment. It is the practice of constructing infrastructure or building. The narrow definition of construction concerns itself solely to on-site construction activity. That is, as a construction industry it is placed in the secondary sector since it accounts for the transformation from manufactured materials into a final product. It commences with arrangement, designing, and funding and lingers until the project is completely built and equipped for use. It is altering, erecting, repairing, and demolishing building, civil engineering, works, and other similar structure. It also covers gathering and setting up on-site of manufactured elements and building industrial services. However, the broader definition encompasses construction on the quarrying of construction materials, the manufacture of the building materials, and the sale of the final products and associated professional services which includes facilities management. In addition, the construction industry is considered to be part of the process creating and sustaining the built environment.
The size and nature of construction output
Construction output is a matter of national concern by virtue of the size of the industry and its importance to the national economy. It is because the industry is tremendously complex and different. The construction output is long lasting outputs such as roads and buildings, unique, large and heavy units, expensive, complex process, and immobile. Measuring the size of the construction industry can at times be difficult due to its fragmented nature and because construction activities frequently overlap or can be included as part of another industry. Construction output at current price and chained volume measures seasonally adjusted by private and public sector. One measure of the size of the UK construction industry is the dollar value of construction work. The most widely used statistics on the construction volume are those on the value of new construction put in place by the UK government. In February 2016, output in the construction industry was estimated to have reduced by 0.3% as compared to with that of January 2016. Both all new work and repair and maintenance reduced by 0.2% and 0.5% respectively. In comparison to February 2015, there was an increase of output in construction industry by 0.3% whereas there repair and maintenance increased by 0.8% and no change observed in all new work. From December 2015 to February 2016, construction output was estimated to have increased by 0.3%, all new work increased by 0.8% and repair and maintenance reduced by 0.7%.
Figure 1: Contributions to the monthly volume growth from the main sectors of construction
Consideration of the determinants of construction demand
A change in construction demand affects many people in a state as well as their neighboring countries. In order for construction demand to exist; there must be users of work or construction for both long and short term. There must also be an organization or an individual ready to finance the cost of the construction and one willing to initiate the process of construction or building. The individual or organization must be ready to own the construction. Moreover, there is a positive economic environment and other external factors such as government incentives useful in stimulating such industry activity. Construction demand, in most cases considers the construction industry client, who plays a major role in providing the finance, initiating project, and managing administrative the industry in addition bearing the risk if there are damages or losses in construction product or acquire profits from the successful construction project. Bearing in mind the construction industry as a whole, the overall demand for construction fluctuates in size as well as mix of numerous locations, types, particular combination resources and time for construction.
Description of the characteristics of the structure of the construction industry
The features of a construction industry can divide by its characteristics of its size, output, nature of demand for construction output, government as a main client, variety of construction technology, and structure of the industry. Although construction output is durable, unique, immobile and expensive it requires support from other industries in order to contribute to a States gross domestic product. The industry requires a lot of workers, both unskilled and skilled. In off-shore construction industries such as piping, drilling, and dredging most workers are able to earn enough to sustain them in their daily lives. The construction industry development grows rapidly as well as an inter-connection between quality, cost and time to improve benefits. The structure of the construction industry makes it easier than in other industries to grow firms from small beginnings. The industry reaches deep into local economies and the benefits are felt nearby.
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