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Why Construction economy does matters ?

Construction is one the largest sectors of the UK economy which contributes £90 billion to the UK economy(or 6.7%0 in the value added, comprises over 280000 business covering some 2.93 million jobs, which is equivalent to about 10% of total UK employment.(DBIS,2013,p.7).In 2007, the construction sector accounted for 8.9% of the UK’s GVA but by 2011 the sector contributed had decreased to 6.7%(See figure 1). In early 2012, the construction contracting industry returned to recession for the third time in 5 years.( DBIS,2013,p.7).A research has  been carried out and exhibit throughout this assessment report how economic factor does impact a company or small business establishment, and how can be mitigated those factors  as well as some important issues which should be analysed  to keep a company on track or financial viability  in line with the direction of economic situation with  both  national and global aspects to keep continue companies activities in line with governmental policy and guidance too.

Economic factor which impact on industries, firm or small business entities or small companies and how to mitigate those impacts

Governmental action to control the whole economy does have important influence in all countries in the world. What kind of action can government  be taken? Increase the rate of interest, the amount of public sector expenditure, the system of taxation or relaxation of taxation system, borrowing powers  to balance between demand and supply with economic activities. To increase demand governmental initiative would be increase spending ,on reverse to decrease demand ,it does cut spending and increase taxation  (Hellebrandt, 2000,p. 21-24 ) .The rate of interest provided by government or central bank as control mechanism with special emphasis on regulating the rate of inflation .Change in the rate of interest can be used in ways similar to government spending ,borrowing and taxing as describes by above analogy.

There are various economic factor which can impact small business or industries or companies such as GDP , recession ,inflation , increase bank interest , increase wages , increase unemployment, decrease capital investment ,decrease  governmental spending ,increase land price, increase productivity by skilled workforce ,innovation ,technology  and so on. GDP (Gross domestic products ) represents the total money value to all the production that has taken place inside a specific territory during one year”(Myers , 2017,p.219). In contrast, when there is negative gross domestic product for six or more months which lead to an overall decline in the economy , means economy is considered to be in a recession .

It was noticeable that in 2007 there was 40 % and 33% declined of private housing and private commercial building respectively as a part of recession though infrastructure and public non-residential activity was continued grew up and was sharp fallen in the first half of 2012 according figure 2 and figure 1 has been illustrated annual volume of UK construction contracting output and change over between 1955 to 2012(DBIS,2013,p.13).

Figure 1: Annual volume of UK construction contracting output and change over previous year in Great Britain , 1955- 2012(DBIS,2013,p.13)

Figure 2: Change in output performance in construction contracting sub-contractors (DBIS,2013,p.14)

Therefore forecasting by Oxford economics had suggested that that  recession in constructing contracting among European countries would have been last twice as long as previous recession because of some combination of economic factors such as household demand uncertainty , constraint of financial access , austerity measure which has impacted to public sector, property market dynamic & high business etc. As well as Construction Product Association had forecasted that a fall in construction output of 2.1% in 2013 because of the effect of cuts in public investment which is important economic factor ,though they also forecasted the growth of 1.9% in 2014 and 3.8%in 2015 which could have been driven by an increase in private sector activity  (DBIS,2013,p.14)

Fluctuation of foreign exchange rates and changing of  interest rates  accompanying with inflation reduce plan for business investment which is very important to ensure stability or stable economic environment. If prices are continually changing , small entrepreneurs would get greater uncertainly ,but it does require transparency regarding their investment and costs or prices of any project. Economics define the associated impacts of inflation on business called  ‘Menu costs’, does mean if inflation get increase , business needs to revise their existing contracts ,bids for work ,new tenders in line with changing inflation rates( Myers,2017,p.243)as extra menu costs .

How does change in Bank interest rate affect in construction industries?

 Change in the rate of interest does also  have both direct and indirect affect .Firstly , when the rate of interest increase ,it does affect directly because the cost of contractor’s borrowing does increase which does affect substantial overdraft ,may be forced out of business sometimes .Secondly , the interest paid by clients on money contractor did borrow for project  ,would get increase which potentially increase the total cost for whole project , as well it does have some other associated affect such as capital investment project can be postponed , mortgage rates can be increased, householders might postpone their investment to buy new houses , and so on. At the same time ,  increase the rate of interest might have indirect affect such as it might reduces spending power over the whole economy because a fall in the demand for manufactured goods and fall in consumer’s confidence , purchasing power as well as people would less willingness to spend money for maintenance and improvement of houses .( Hellbrandt,2000,p.24).

For instant a case review of Taylor Wimpey ,which is the UK’s house builder had sent out a letter to firm in its supply chain stating that a credit crunch (credit crunch represents a period of tightening lending conditions ,both in terms of cost and availability )action had been imposed and  5% cut on call existing and future contracts (Rechardson,2008) due to economic circumstances which had affected many small and medium sized firms become insolvent and as impacts were strongly in the construction sector ,nearly 76 construction companies went bankrupt during march,2008 and further more were in following years (Myers,2017,p.253).

The Home Builders Federation has pointed out that the supply of land through the planning process does requires on average 15 and a half months for  a residential planning application to be approved ,as consequences through planning system getting land has fallen by 7% between 1997 and 2003 which is the biggest single constraint on the Government’s ability to increase the rate of housing new build in the UK as well as infrastructure sector ,also affects all parts of the sector, from quarry products ,through house-building to infrastructure e.g. Heathrow Terminal 5 and Sizewell B nuclear power plant are being delayed significantly by the planning system. So keep land available for investor , planning system need to be modified or mitigate some constraints so that land available would be released quickly to start project to keep on economic activities in construction sector (House of Common,2008,p37).

Mitigation of economic factor from the point of government and SMEs (Small-medium enterprise )

The government has introduced support to small business , has doubled of Small Business Rate relief from 2013  to April 2015.Currently, business establishment would receive small business rate relief if rate payer’s property does not have rateable value which does not exceed £15000, then will receive a percentage  reduction in their rates bill for this property of up to a maximum of 100% ,if rateable value of not more than £12000 , the ratepayer will receive a 100% reduction in their rates bill(Milton Keynes council, 2017)

Employment allowances from April 2014 was £2000 which had lead employer cheaper to have staff under 21 ,at the same time it would reduce youth unemployment problem. Recommendation having from Lord Young’s report , a new scheme designed to make in simpler for small firms to win public sector contracts value ,estimated to be worth £230 billion a year. Same day payment mechanism has been introduced both for large contractors and small supplier for public sector work to keep free from any risk for downward supply chain for their economic activity.(Ward et al.,2014,.p5).SME Growth Loans has been introduced as part of Enterprise Finance Guarantee Scheme.

To increase investment, increase export activities would help to growth our economy . If Governmental policy focused how to develop people and skills, how to get easy access to finance e.g. loan from bank or lender with governmental help as government has given opportunity to help to buy scheme which has given 2000 home new home buyers as well as investment in construction sector and keep live a lot of firms on economic activities. Example, In 2008 in the eve of economic downturn, china had announced  financial support a $586 billion economic stimulus to boost investment and continue economic activities in line with the directive of economic growth(Forum,2009)

To keep the balance economy to support and grow competitive  business in Europe, UK government has set out its plan to put the UK on a path to sustainable ,long term economic growth and published “Plan For Growth” in March 2011 and also published “The National Infrastructure Plan” in November,2011 where governmental will support over 10000 first time buyers to buy home through a First Buy programme. Since novemeber,2011 , house builder has got significant outcomes and responses from first time buyers , over 4200 reservation has been reported as at end of February ,2012 and three largest house builders reporting sales of over 1200 by December 2011.( House of Common,2008,p.32)

To strengthen demand for residential property , Finance Act 2011 has been introduced where stamp duty land tax rule has been reformed for bulk purchases( House of Common,2008,P.32).Also to remove barriers to entry for new Real Estate Investment Trusts , government is introducing a range of measures. Also to keep governmental announcement to keep control  carbon dioxide for reducing global emission , regulatory requirement has been introduced in 2016 where house builders are accountable for carbon dioxide emission that are covered by Building Regulations which should have to be cost effective .( House of Common,2008,p.33)

Company need to increase productivity rather redundant their employees, which would affect economy again because unemployment rate would be increased. Employer does need to pay continue to their downward supply chain to keep them continue economic activities, take further steps to increase productivity, decrease any unnecessary expenditure which can be accounted as waste, lender need to continue their support and provide sufficient loan so that SME can continue their economic activities during any negative economic situation e.g. recession or if inflation is increased. Company should continue employability with their existing staff Rather than cut off staff , it would affect further in economy and down ward supply chain e.g if any staff lose their job, might affect their family , they might not be able to pay their bills , rent or insurance , or bank interest or mortgage .

To maintain a stable marcoeconomic environment with low inflation and sound public finances ,HM Treasures’ objective had been set out 8 objectives in 2005-06 to 2007-08,among those object where emphasised increase the productivity of the economy, increase employment opportunities for all, improve the quality and cost effectiveness of public services etc(HM Treasury,2007-2008,p.17).In this report , government had been identified five key drivers to productivity growth such as competition , enterprise, innovation ,skills and investment. And had prioritised to provide an effective regulatory system , which enables business to start up, grow and stay competitive .(HM Treasurey,2008,p.19).In regards competitiveness, in construction practice ,there are effective tender process keep construction cost in competitive which is good for economy where less resources would be used and maximum output (productivity) can be secured.

Government can introduce incentives scheme and development of infrastructure in order to attract direct foreign investment for the benefit of the economy which know as “Nation Marketing”(Hellebrandt,2000,p.25).In relation incentives, labour incentives for example or apprenticeship scheme can increase employment ,when employment in construction is increased , the workers spend their wages on products and thus providing there are no bottlenecks, output and employment. High level of employment is likely to have a positive impact on the whole economy. (Hellebrandt,2000,p.25).

By above analogy which has been carried out by project manager to discuss with finance director and a transcript has been illustrated in appendix A. For further analyses has been carried out by project manager where has been identified with reference of Experian (2018) who recent carried out construction industry focus  survey where 53% respondents has being experienced 5% increase in materials in the residential and non-residential sector and  does expect one 25bps Bank Rate rise in 2018 .It does mean , materials cost is being increased by which mean all existing  contract sum would be affected  as a result either it does require  to increase productivity to all of  existing project to cut off cost and save some revenue. For remedies, existing work forces can be employed another project which is pipeline at the moment. If company want to save some time which might give total saving estimate £100000 pounds by which company  can manage its  finance and company  can cope with extra 3% increase of contract expenditure. If company’s current project can be completed before schedule which might give some extra profit, so that company can cope with extra burden of materials cost because of increase Bank Rate. Bank of England has been as already indicated that .05 percent would be increased means business need to pay more repayment by 3% , does  need to manage those extra money from other sources. It would be best option to rent out some of our net assets and rent out other companies to our plant and machineries to get extra revenue to meet up extra burden of inflation or increase of material cost to adjust existing contract sum to mitigate our profit and ensure our shareholder a positive growth afterward to keep our shareholder with us so that they are not going to sale their shares. As a example in recent Carillion collapse their existing contract was not profitable, was some constraint to get payment delay from some of its middle east clients and the resign of CEO has given sense among shareholder which lead them to sale their share and share price has been plunged because if share price does not have demand, its price would be dropped .So it is best approach to keep aware against any kind of negative aspects for companies activities or transaction and be always  proactive to protect company first from any kind of risk of negative turnover.

Governmental policy (e.g. fiscal policy , monetary policy ,incentives, new flexible legislation ,different kind of relief are   creating  variable for demand and supply mechanism .For example, if mortgage interest does  decrease by mortgage interest tax relief or renovation grants introduce by local authority or council, does increase demand indeed. In fiscal policy where governments attempt to manipulate the economy by changing the level of government expenditure and /or taxation, similarly by monetary policy where government does attempt to manipulate the economy by changing the cost and /or availability of credit. For example again, changes the rate of interest will have an impact upon the cost of a mortgage which lead to increase lender’s monthly repayments which ultimately curtail demand. In Autumn budget 2017, government has been declared freezing fuel duty for the eight year in row would lead to save the average driver £160 a year , freezing alcohol duties .Extra £2.3 billion of support has been committed for business to reduce the burden of business rate across the UK which would help SMEs or regional based business (Stride,2017,p.8).

References

Department for Business Innovation & Skills (2013) UK construction : An economic analysis of the sector .Available[online ]: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210060/bis-13-958-uk-construction-an-economic-analysis-of-sector.pdf

[Accessed  11th March,2018]

Forum(2009)A global challenge for the engineering /Construciton industry.Leadership and Management in Engineering.9(3),pp.103-104

HM Government (2013) Industrial Strategy: government and industry in partnership. Available [online]: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210099/bis-13-955-construction-2025-industrial-strategy.pdf .[Accessed 11th March, 2018]

HM Treasury(2012)Plan for growth implementation update. Available [online]:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210095/growth_implementation_update.pdf  [Accessed 12th March, 2018]

HM Treasury(2013)Plan for growth implementation update. Available [online]:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/200019/growth_implementation_update_mar2013.pdf [Accessed 12th March, 2018]

HM Treasury (2008) HM Treasury Annual Report 2007-2008.(Alistair darling,Chancellor) Norwich:HM Stationery Office

House of Commons (2008) Construction matters .(Peter Luff MP).London:The Stationery Office Ltd

Howarth,T. and Greenwood,D.(2018) Construction quality management :Principles and practice.Second Edi.Oxon: Routledge

ONS(2016)Annual Business Survey ,UK non-financial business economy.Available[Online]: https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/bulletins/uknonfinancialbusinesseconomy/2016provisionalresults

[Accessed 11th March,2018]

R.Chris(2017) The impact of uncertainty shocks in the United Kingdom. Bank of England .Available [online ]:

https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2017/the-impact-of-uncertainty-shocks-in-the-united-kingdom.pdf

[Accessed 12th March,2018]

Milton Keynes Council(2018)Small business rate relief.MCC.[online].Available from :https://www.milton-keynes.gov.uk/business/business-rates/small-business-rate-relief [Accessed 26th April,2018]

Myers,D.(201)7Construction Economics : A new approach, Forth  Edition , UK:Taylor & Francis

The Economic Benefits of Construction industries and others important issues on GDP in the UK

Construction industries does relates with mesoeconomics whereas microeconomics does related with both individual and firm’s decision making aspects ;and macroeconomics does relate wide phenomena resulting from group decision making in entire market. (Myers, 2008,p.17) .The following figure does illustrate how a project interrelated with firm, industry and above all with economy.

Figure1 : A model for construction economics : a new approach (Myers, 2008,p.17)

The areas are related in construction industries particularly:  infrastructure(e.g. water and sewerage, energy, gas and electricity ,roads, airport, harbours ,railway etc), housing(public sector or housing associations, private sector or new estates ) ,public non-residential (e.g. educational institution, health facilities ,sports & leisure facilities ,different kind of services such as police, fire ,prisons),private commercial (e.g. hotel, restaurant, offices etc), repair and maintenance (Myers, 2008,p.19).

How does industry contribute in GDP and local economy?

The  economic contribution does represents “the gross changes in a region’s existing economy which does attribute to a given industry, event or policy’. There are different types of regional economic analysis  which does have direct affect ,also can be measured by expenditure and how those economic activities cycle through the region’s existing economy such as Gross Domestic Products(GDP),economic contribution and economic impact(Watson P.et al,2007,p.2).For instance ,if people does turn around for local golf course and spend 10 pounds for launch which does represent  ‘stemming from effect’ of golf course operation which does add value others economic components such as labour, taxes , and returns to capital .(Watson et al,2007,p.3). If the restaurant sells a £10 lunch to the golfer and deduct expense for purchase  £6 (for meat, bun and cheese to purchase), then rest of £4 pounds would be  value added by the selling of humbarger. How does it contribute in regional economy ? This £6 in intermediate inputs represents either expenditure to another local sector, which will be accounted for in the multiplier, or represent money paid to out of region suppliers, which would then not cycle through the regional economy. But if £4 would have not been purchased at least , it can be said that local economy would have been lost this adding opportunity into local economy as well as national economy (Watson et al,2007,p.3).Another example , if a local  stadium is renovated and subsequently generates an additional £120000  cycles through the regional economy  means additional revenue has come from local people (people within the stadium area). GDP can be defined as the sum of all value added at every stage of production within a defined region. A regional GDP analysis examines the fraction of the region’s total value added for which a given industry accounts (Watson,2007,P.4).

The following figure2 ,fig3 and fig4 where has exhibited the contribution of different industries in economy , economic benefit by regions across nationwide in terms of employment and the contribution of construction industries in the greater economy in particular.

Figure 2: Economic output of different industries in 2015 ,£billion (Rhodes,2016,p.7).

 

Figure 3: Economic output as a % of UK total (Rhodes,2016,p.7).

Figure 4: Employees by major industry in UK regions and countries(Rhodes,2016,p.8)

By fig 5 which has represented that the economic output of services industries was £1.3 trillion in 2015 , which was 80% of all UK economic output, Compared with manufacturing industries which had economic output worthy £162 billion ,which is 10% of all UK economic out, In construction industry’s output was worth £102 billion , 6% of total UK economic output. In comparison with the year of  2014 when services industries had contributed employment 23.8 million  which was total 85% of UK worker ,manufacturing industries had employed 2.4 million people which was 8%  of UK workers  and construction industries had employed 1.3 million people, 4% of the total.(Rhodes,2016,p.3).

Total £295 billion or 18% of the total UK output (Fig 6) has been contributed by largest services sub sector which is the government, health , education and defence sector in 2015 .In 2015, £11 billion which is 1% had been contributed by agriculture sector. On the other hand, professional and support services industry contributed £205 billion economic output, 12% of the total of UK economic. The finance and insurance services has contributed £120 billion, which is 7% of the total in 2015.Whereas retail and wholesale industries contributed $182 billion, 11% of the total.

Figure 5: Economic output of different industries in 2015 ,£billion (Rhodes,2016,p.7).

Figure 6: Economic output as a % of UK total (Rhodes,2016,p.7).

Figure 7: Employees by major industry in UK regions and countries(Rhodes,2016,p.8)

By fig 7 which has been represented that in the East Midland where 13% employees has been worked in manufacturing and 80% has been worked work in the services sector, in contrast in London where 2% of employees has been worked in manufacturing whilst 94% did work in the services sector .

Figure 8: Construction’s sector contribution to the economy ,Sources: ONS series KK13,KKP5,KL9D(Rhodes,2015,p.4)

By fig 8 also has been showed that construction industries GVA in 2011 prices and as share economy alone  had contributed £103 billion , 6.5% of the total economy which has lead to rose by 9.5%  in real terms, highest ever increase since 1990. In Fig 9 has represented how many jobs has been generated into the economic benefit  in Q2015 where were 2.1 million jobs which was 6.2% of the total UK economy (see fig4).

Figure 9 : Workforce jobs in the construction industries, Source: ONS Nomis Database, notes: Q2 each year(Rhodes,Q2 each year(Rhodes,2015,p.5)

What aspects of government work will have an impact on the work your company does and in particular its ability to generate profit (economic point of view)

Government and business both should take necessary steps to increase capital investment or increase foreign investment or increase spending in infrastructure and construction. If £1 pounds on construction out put generates a total of £2.84 in total economic activity (i.e. GDP increase,see figure 10).The following illustration can be exhibited:

£ 1 investment      in construction

=

£1 direct impact

+

£1.09 Indirect Impact

+

£0.75 induced impact

= £2.84

Figure 10: Figure : How single investment in construction output generates much more economic activities (Source: ONS(2002);L.E.K analysis (L.E.K,2009,p.10)

A Research has been carried out by L.E.K  in 2009 where the following aspects(see figure11 ) has been identified that £1 investment in construction does generate net £0.44 impact on expenditure which is treasury impact ,short term economy wide impact is £2.84 and long term benefits are  £1.03 – £2.20 ,which does mean total impact in economy would be circa £3.83 -£5.04.

Figure 11: Source:ONS; L.E.K. analysis (L.E.K,2009,p.30)

Fig 12 has illustrated construction sector does import low proportion of consumption 8%  than others sector such as motor vehicles which is 28%  and every pound invested in construction all of investment does retain in the UK which is important for national economy because of low import(L.E.K,2009,p.13)

Figure 12: Source:ONS; L.E.K. analysis (L.E.K,2009,p.13)

A business or employer does pay employer national insurance contributions, employee income tax, business rates, corporation tax, value added tax , stamp duty land tax as well capital gain tax which can be calculated into national economy as Gross value added. If governmental incentives scheme does help to business to minimise cost which might help to boost profitability on one hand  , business would help to increase employment which can help to increase economic activities on the other hand. In comparision with other EU Meber States UK has been providing a very competitive environment which did allow UK SMEs to maintain a high level of employment throughout 2008-2012 and did reflected on the economic outlook for 2014 ,did help to increase the number of SMEs, employment and value –added ,The European Commission’s SME Performance Review has been describe those analysis ( Ward et al.,2014,.p7).

If governmental policy does support small firm or enterprises reducing tax, implementing fair regulation system, reduce bureaucracy through any application procedures such as planning application in relation land ,environment or Health & Safety in construction trade ,business would grow and foreign investment would increase across the country, If small business relief can support a small business to grow for starting up, if financial fund or loan scheme ( e.g.Help to buy scheme) provided by government can support firm and they can continue their economic activities which would be added in national economy as GDP. If minimum wages can keep in standard level balancing between service provided (labour ) and manufacture(company )., if governmental different guidance does not increase hidden cost of any company such as keep below application fee, easy access to get information provided by government so that business can analysis cost benefit easily and that kind of support would lead to  invest capital which is better for economy as well as any further  investment might increase productivity and employment on one hand, business would get sustainable profit margin which would encourage to continue economic activities on the other hand .

What does mean profit? Myer(2008) has defined ,profit = total revenue minus total cost , another way economic profit can be formulated like economic profits = total revenues minus total opportunity cost of all inputs used which does emphasis resources allocation of  two areas  such as capital and labour, and also related cost accounting calculation .(Myers,2008,p.98).On one hand ,an investor would invest money for maximising their normal rate of return(NROR) which means maximising opportunity cost of capital ,on the other hand a labour would try to get maximum output of labour means would try to maximising opportunity cost of labour. Similarly the opportunity cost of running a business is that opportunity cost consists of all explicit (direct) and implicit (indirect) costs.The economic profits formula does allocate and calculate cost at two areas such as capital which is precondition for investment and other one is labour which is related with unemployment. If opportunity cost of labour and opportunity cost of capital would be calculated to get true economic profit as well as to get the opportunity cost of  running a business which consists of all explicit costs taking consideration of al inputs. Therefore, accounting profit can be figured out after subtract  all costs from total revenue(figure 13) (Myers,2008,p.98).

Figure 13: Simplified view of economic and accounting profit (Myers,2008,p.100)

What kind of resources does have scarcity in industries and how government and construction can maintain those scarcities to contribute into national economy

In 2008, BCIS (Building Cost Information Services ) has forecasted of tender price inflation ,was 4.8% with a rate of 6.5% in London because of some inflationary pressure such as construction demand was increased, supply of skilled labour was short  in terms of demand, shortage of materials such as steel ,copper ,timber cost had been raised which had lead to increase input cost .In that point of time material cost had been increased because of demand had been increased from other part of the world e.g. China, The Middle East (House of commons ,2008,p37-38).That kind of indication does increase construction price indices which ultimately related with small or medium or any size of business or firm or companies ,does have tremendous pressure for companies ongoing activities.

The confederation of British Industry(CBI) has said shortage of skilled labour is a key issues for almost two-third of firms in Construction UK, it’s slow responses contributes to a lower level of labour productivity to compared to the USA and France (House of Commons,2008,p.66). Hellebrandt(2000:104) has identified throughout the world only management expertise is one of scarcest resources of the construction industry (Myers ,2008,p.10). CITB(2011) did carried out a survey in 2011 where 13% has been defined no qualification in directors & senior managers level and 33% does have only level 4/5 qualification as illustrated figure 14.

Figure 14: Qualification of senior management team in construction industries ,sources: IFF research (CITB,2011)

Material shortage

A  shortage of bricklayers and bricks has been noticeable scarcity in the construction industries, Office for National Statistics (ONS) estimated that reason of those scarcity resources construction output had fallen 4% in November,2015 and also had been  echoed skill shortages too.(Allen,2014).Experian has carried out construction industry focus survey to find out construction activity constraints where  2 per cent and 9 percent respondents has express their recent constraints for material shortage and labour shortage in real time activities .(Experian,2018,p.5). Aggregate shortages in south England and mismatch between construction and demolition waste arising  with potential for recycling and demand for recycled aggregate (Roders et al.,2017). From an engineering perspective resources does represents materials or non material (e.g. land, water and energy )and manufactured resources (Roders et al.,2017).

Non material scarcity such as water scarcity can be taken into consideration ,the Climate Change Risk Assessment (CCRA) identified uncertainty about future water availability  ,with some risk of a deficit in most regions in UK (see figure ), has projected supply –demand deficits for England and Wales range from -15 to -3100 million litres per day(MI/day) for the period 2010-2039.In 1995 drought resulted estimated economic losses worth $180 million for agriculture, £96 million for water supply and £380 million for the retail sector and 2012 drought has impact on small business suffered in the horticulture ,swimming pool and domestic cleaning (Adaptation sub committee,2012,62).The following table would illustrate supply-demand deficit for water scarcity.

Table 1: England and Wales supply –demand deficit for regional projection by CCRA, sources: HR Waingford (2012c) for the Department for Environment ,Food and Rural Affairs (Adaptation sub committee,2012,62)

Therefore , necessary steps should be taken to increase efficiency in water use, company can introduce or encourage rain water harvest system in design principles etc .

Shortage of CRM(Critical Raw Material) and REE(Rare Earth Elements)

Critical raw materials are not only the reason for geophysical scarcity Lesser extent-environmental risk or reduce import dependencies., but also involve some other risks such as political decision to keep reserve some particular materials might create concern other countries in boarder sense of economic or industrial significance of other countries(table1)(Parker,2013,p.5).

Table2 : UK industries and the critical materials upon which industries depend on

A strategy for improving productivity has developed in Budget report in 2005 by UK government to focus on five key drivers which are encouraging investment, improving competition, supporting science and innovation ,promoting enterprise, , raising UK skills (Abdel-Wahab et al,2008). In November ,2016 The National Productivity Investment Fund(NPIF) has been announced by Hon’ Chancellor ,Philip Hammond in his Autumn Statement, £23 billion of investment would be added from 2017-18 to 2021-22 which would be invested in housing ,economic infrastructure, and research and development (R&D) (see the below table )

Figure 15: National Productivity Investment Fund(£million),Source: HM Treasury (Mor,2017,p.9)

Construction companies or manufactures can take steps to mitigate the effects of material scarcity  in the stage of designing primary supply structure, to find out substitution , dematerialise or use alternative of scarce material to have same level of functionality or replace existing technology to get same level of performance by one particular products which materials are supposed to have substitute  and increase reuse or recycling( Parker,2013,p.5)

Government has set three carbon budget in UK Low Carbon transition Plan to reduce Carbon Di Oxide emissions 26% and 80% by 2020 and 2050 respectively where construction industries does assist government to adapt and contribute to these targets in buildings, energy infrastructure and transport infrastructure and key technologies should be focused. For fulfilling governmental target construction industries does need to implement sustainable renewable energy technologies which are rely on critical materials though  such as for wind turbines does depend on materials neodymium iron boron and dysprosium , for fuel cells which can replace the use of  internal combustion engines , can be also used in combined heat and power system (CHP) which can increase pressure on the supply of platinum , ruthenium and yttrium .For Photovoltaic solar cells does require critical metals tellurium, indium and gallium .For lighting for low carbon technologies such as LED does require REE, gallium and germanium.(Parker,2013,p.28).So recommendation for UK government and business with focus of reducing import dependency and increasing resource efficiency of critical raw materials. Business does have free access to EU market’s reserve though ,because of brexit ,there should be taken necessary strategies by government and business to  develop a strategy to diversify their supply of critical materials to non –EU countries such as Chile, Uruguay and also consider stock piling. UK government should continue geological survey the ocean floor of the Pacific for new deposits for digging out rare earth elements to meet the future demand in our industries and business can help to develop further research by their fund and workforces.

Some aspects for price mechanism in the context of economy benefit

Price does play an important part in the working of the economic system as the mechanism which balances demand and supply (Hillebrandt,2000,p.15). There are difference between price and cost , what is price from one person’s perception can be cost to someone else. For example, builder does need cement to build, manufacture does need to sale cement. Builder does buy cement with price which is cost from manufacture’s perception .Builder does make demand for cement ,does pay price ,in contrast manufacture does ensure supply by their services as making or producing cement .In price mechanism where household supply their services via labour ,capital ,land and entrepreneurial skill to firms that demand them for production and in return price does pay in factor markets ,in contrast product market where firms supply goods and services to household that demand to firm by paying prices to have balancing item to determine distribution.(Fig 16 & 17).

Figure 16: Price mechanism at work (Myfers,2008,p.32)

Figure 17: Product and factor allocation via the price mechanism (Myfers,2008,p.46)

Figure 18 : The determination of equilibrium price (myfers,2008,p.52)

In regard price mechanism in any market, equilibrium price should have to exist where supply and demand curve does intersect each other .For example ,in figure 18 where equilibrium price for each new flat is £100000 against equilibrium quantity is 2000 units. When in market, the flat price is £15000 which is higher than market price, in that cases demand curve does need movement from H to E and a movement along the supply curve from h to E. These movements necessitate the price to fall .At prices below the equilibrium , there would be shortage ,means flats would be in excess demand and there would be a waiting list which would  rise price from £50000 in line with reducing the demand from F to E and supply from f to E .Finally then market would be settle it’s right price of £10000 which would touch in the point of  equilibrium price (myfers,2008,p.52).

Experian(2017) has forecasted regarding UK construction  in Autumn 2017 (see table 3) and projected some key macro economy  indices where Bank base rate would be raised up to 0.7 in 2019.

Table 3: Key macroeconomic indicator ,source: ONS, Experian (Experian,2017,p.5)

 

 

 

Annual percen  

tage forecast

 

Actual 2016

2017

2018

2019

GDP(at market prices )

1.8

1.6

1.4

1.8

Household Consumption

2.8

1.7

0.8

1.6

Government consumption

.8

1.3

0.6

.2

Gross Fixed Investment

0.5

2.2

.8

1.5

Bank Base rate (annual average )

.4

.3

.3

.7

Consumer price inflation (CPI)

0.7

2.7

2.4

2.1

Foreign direct investment into the UK has slowed and company margins will come under pressure as imported costs rise. Under this less favourable backdrop, firms could opt to put hiring decisions on hold or even cut back on headcount. Employment growth is expected to slow and could even turn mildly negative. The commercial construction sector is one flagged up as particular vulnerable to Brexit uncertainties as it is heavily reliant on business investment from both domestic and from overseas because  Investor and developer are having uncertainty over brexit  in the aftermath of the EU Referendum result which is really complicated .Some  financial services organisations might move some of their functions away from London might have negative impact .Total repair and maintenance (R&M) output which is very important for construction trade  is projected to remain stable over the next two years and then see some growth in 2019 though (Experian,2017,p.5). A sterling crisis has become a key risk on one hand , global trade growth also slows on the other hand as well as Brexit uncertainties stifle the anticipated improvement in business investment. Therefore government and business should be prepared to work hard in upcoming future to face any kind of uncertain challenges before and after Brexit to project national economy for the greater interest of nation.

References

Abdel-Wahab,M.S.,Dainty,A.R.J.,and Ison,G.S.,Bowen,P.,Hazlehurst,G (2008) Trends of Skills and productivity in the UK construction industry.Engineering,construction and Architectural Management.15(4),pp.372-382.

Adaptation Sub committee (2012) Climate change –is the UK preparing for flooding and water scarcity?(Chair: Lord John Krebs).London:Committee on Climate Change

Allen,K.(2014) Industry survey highlighted scarcity of materials as leading impediment to growth as ONS estimates sector’s output fell 4% in November.Gaurdian[onlne].Available from: https://www.theguardian.com/business/2014/jan/10/brick-shortage-threatens-construction-sector-recovery [Accessed 24th April,2018]

CITB -Construction Skills(2011) Manangement and Supervision Skills Research,IFF Research ltd

Experian(2017) UK construction forecast: Autumn 2017.Volume 23(4),pp.1-20.UK: Experience Economics Unit

Forum(2009)A global challenge for the engineering /Construciton industry.Leadership and Management in Engineering.9(3),pp.103-104

Hillebrandt ,P.M.(2000) Economic theory and the construction industry. Third edi. London: Macmillan Press Ltd

L.E.K.(2009) Construction in the UK economy: The benefits of Investment.UK constructor Group. Available[online]:

https://www.scribd.com/document/24218958/Construction-in-the-UK-Economy [Accessed 21st March, 2018]

Mor,F.(2017) Infrastructure policies and investment .House of Commons Library. Available [online]: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06594#fullreport

.[Accessed 23rd March, 2018]

Parker,D.(2013) The future impact of materials security on the UK manufacturing industry:Evidence paper 27 [online].London:Government Office for Science.Avialable from:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/283901/ep27-material-security-impact-uk-manufacturing.pdf [Accessed 24th April,2018]

Rhodes, C.(2016) Industries in the UK. House of Commons Library[online]. Available from: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06623#fullreport

[Accessed 23rd March, 2018]

Rhodes,C.(2015) Construction industry: statistics and policy. House of Commons Library[online].Available from : http://researchbriefings.files.parliament.uk/documents/SN01432/SN01432.pdf

[Accessed 23rd March,2018]

Roders,C.D.F.,Hunt,D.V.L.,Leach,J.M.,Purnell,P. and Roelich,K.E.(2017) Briefing : Resources scarcity and resource security –a suppressed civil engineering challenge. Waste and Resources Management.170(WR2),pp.49-52.

Stride, M.(2017)Autumn Budget 2017.(Phillip Hammond )House of Commons: HM Treasury

Watson,P.,Wilson,J.,Thilmany,D. and Winter,S.(2007) Determining Economic Contributions and impacts : What is the difference and why do we care ?.Regional Analysis & Policy (37(2),140-146.

A brief about Constructionaid UK and PAHD(Poverty Alleviation and Human Development) Foundation UK

Constructionaid UK is a volunteering   organisation in the UK ,registered in the England and Wales as Limited Company by Guarantee (09911688).Constructioanid UK is supporting to Poverty Alleviation and Human Development(PAHD) Foundation UK, which is also a non-for profit organisation.It is strong collaboration between Constructionaid UK and PHAD to make something change in the society and communities.Core objective for Construcitonaid UK and PHAD are providing  training for youth for construction trade to contribute into  national economy , to reduce benefit dependency  and to solve unemployment problem in the UK.

Find us on facebook : https://www.facebook.com/ConstructionaidUK1/

There are others activities is being carried out by Constructionaid UK and PHAD which has stated as below:

PAHD (Poverty Alleviation and Human Development)FOUNDATION,UK has started its journey 2009  in United Kingdom for exploring it’s operation across UK  and it  has been supporting  “Poverty Alleviation and Human Development Steps ,Bangladesh”  which has been  registered as “Non For Profit  organization (Charity Registration Number-S 9584/BG,P.2007/08-4440E) ,aiming to explore its activities ,vision and mission across the world and trying to making partnership with globally reputed organisation across the globe and emphasis its activities specially east and north Africa , Latin America and the Caribbean, Sub Saharan Africa, Asia and the Pacific along with some developed countries.

PAHD aiming to making partnership with research based global body along with reputed academic institution, international agencies ,stakeholders ,private sectors, different communities group ,youth  to share policy co-relevant research on chronic poverty that has been shared with government donors and civil society as well ,specially focus on the impact of government and NGO policies and programe of poorest and conducting poverty dynamics panel s surveys to inform policy makers on the cause of and solution to, movements into and out of the poverty.

PAHD  is a non for profit  &  charity organisation active in human rights development, social mobilization & poverty reduction and improvement of the quality of life of poor and disabled people, landless, homeless, vulnerable  across the globe.

PAHD determined  to help the poor and under-privileged people in the world . In order to create employment opportunity among the most neglected people, PAHD had established a micro credit scheme with 0% interest rate to help them in 2007 in Bangladesh. The men were involved in leather goods and women producing NakshiKantha (embroidery) and jute handicrafts. That was the beginning of PAHD.

The organisation since its inception has been working for building institutions of the poor with special emphasis on distressed and disabled people. Main thrust of PAHD’s program is to organised the rural poor women and men into groups in order to enable them manage and control for themselves, identify their problems and also find out solutions as assertive population. Through its committed work world became a leading organisation in the working areas of the world.

As a capacity of a reputed regional level organisation having linkage with many national, regional and international organisations, PAHD has demonstrated many gains and achievements over  the last few years, specially in the field of  children education, child rights, women rights, and empowering the under privileged with emphasis to disabled children and disabled adolescent girls. PAHD has also gained diverse range of experiences and lessons while implementing different development programs and has been able to give a strong organisational foundation in terms of its core management capacity, physical and other resources base and external network.

Our impact in Locally ,Nationally and Globally :

Constructionaid UK & PAHD team spent last few years delivering innovative ,challenging and fruitful  community development program ,helping communities not only targeted local communities but also across UK.

Constructionaid UK & PAHD trying to share with others organization to support a wealthy of groups and issues to including –the elderly, people with special needs, young people , the arts , faith groups, social enterprises ,heritage and ethnicity.

Constructionaid UK & PAHD is trying to supporting others organization pioneering innovative ideas in order to encourage leadership and mobilise action at a local level and after then sail it all over the world.

Constructionaid UK & PAHD team has been trying to get involved more volunteers, trustees, philanthropies those who are willing to contribute to British life (Recent statistics shows that the courts deal with 351,000 new claims and 11,000 hearing or trails. There are 300,000 households in the UK where none of the adults has ever worked and 300,000 children have parents with serious drug problems)improving social mobility ,helping troubled families turn their lives to acceptable condition , improving mental health ,reduce child poverty , implement different innovative ideas which can transform our societies by using power finance to tackle most difficult social problem like –sex abuse, drug abuse, child abuse, youth unemployment, homelessness, benefit crime or dependency ,alcohol related crime, anti-social behavior ,domestic violence, civil-family criminal matters ,crime against women and girls etc.

Honorable Former Prime Minister David Cameron had said-“Social enterprises, Charities and Voluntary bodies have often the knowledge , the human touch , the personal commitment to succeed where government so often fail”.

Our next five years project planning which would  lead and create 5000 employment across here in Britain  to tackle youth unemployment in line with the statutory frame work and following the guidelines of Government of United Kingdom .We would create awareness among the people regarding the government’s guided and instructed 47 topics and 223 policies –emphasizing ,focusing government’s core organisations and policy area  as stated below:

  1. The Department for Communities and Local Government.
  2. Local Government
  3. Housing
  4. The Department of Energy and Climate Change
  5. Energy
  6. The Department for Work and Pensions.
  7. Employment
  8. Welfare
  9. The Department for Business, Innovation & Skills, HM Treasury.
  10. Business & Enterprise
  11. Trade and Investment
  12. UK Economy
  13. Higher Education
  14. Further Education and Skills
  15. Science and Innovation
  16. The Department of Health
  17. Public Health
  18. Social Care

Visionary and dynamic leadership with strategic view to take the challenge ahead guides the implementation team of the organisation. The senior management team with huge track record in the field of development bears strong commitments for organisation and towards its vision….read more

Find us in facebook:www.facebook.com/PAHDGB.

Find us in Twitter:https://twitter.com/povertyallehd

Email:somonahmed@povertyalleviationhd.org

Constructionaid UK & PAHD FOUNDATION’S COMMITMENT AND SERVICES BY DIFFERENT SOCIAL DOMAIN OR ORGANIZATION:

Poverty Alleviation and Human Development Steps,Bangladesh

PAHD (Poverty Alleviation and Human Development Steps ,Bangladesh) which is registered Non For Profit  organization (Charity Registration Number-S 9584/BG,P.2007/08-4440E) aiming to spread its activities ,vision and mission across the world and trying to making partnership with globally reputed organization across the globe and emphasis its activities specially east and north Africa , Latin America and the Caribbean, sub Saharan Africa, Asia and the pacific along with some developed countries……read more

Find us in Facebook:www.facebook.com/PAHDBD.

Find us in Twitter:https://twitter.com/povertyallehd

Email:Somonahme@povertyalleviationhd.org

PAHD SCHOLAR

Our mission to help millions of students find accurate ,comprehensive and current information about how to apply to accredited colleges and universities across the world along with information about scholarships ,application procedures, standardized test requirements, student visas, financial aid etc.

PAHDScholar has been started its journey along with its mother organization  PAHD(Poverty Alleviation and Human Development ) in 2000 in Bangladesh and 2009 in United Kingdom , which is an educational and campaign organization , strives to foster different innovative thinking to serve the world . It strives to foster different innovative thinking to serve the world .

Find us in Face book:https://www.facebook.com/pahdscholar

Find us in Twitter :

Email:Somonahme@povertyalleviationhd.org

PAHD IT

PAHDIT  has been serving the communities ,informal volunteer group to building up their audiences, gear up social networking by making the website by its(PAHD) professional work forces in free of cost .

PAHDIT has started its jouney  in 2000 with its mother organization PAHD(Poverty Alleviation and Human Development Steps )and explored its horizon in Europe based in Great Britain   with its ambition of providing IT enabled services to institutions, government, education, supply companies, production companies, importers, exporters, hotels. It is a dynamically growing computer products and IT service company. In a short time we have more than 50 clients in Canada, USA, Italy, Pakistan, Belgium and Bangladesh. Our vision is to be recognized in the market we serve as a leading world-wide provider of technology and business solutions through innovation, commitment and talent. Putting new thoughts and ideas to hard work over the last decade , PAHDIT planning to  rapidly evolved to be recognized brand in the offshore software and web development industry all the the world.

Finding out the right choices of technologies for your growing business shouldn’t be a brain drain. No matter if your business is small or large. We love to serve everyone with precision and proficiency. After all, you’ve got more important things to think about – like running your business. The reality is that the scope of technology is growing, making it nearly impossible for you to be an expert for so many new hardware and software products. From technical to strategic, finding out how we can help you to move your business forward. That’s reason you should depend on IT Services.

We provide many types of IT solutions and working on web development, graphics design , internet marketing in Bangladesh. We believe in word “quality right before your eyes”, our programmers and designers devoted to work.Our web hosting plan and domain registration is the cheapest among the most hosting companies.With the dedicated and professional team of PAHDIT, we make sure that our clients must get the best of our technical service. PAHDIT, works with clients to understand their business , goals and market place.Our clients prefer what we do.Even though you are already involved with the running business , joining the PAHDIT, team is the best step you will ever make.By making a deal with us you will get 100% satisfaction. Soon you will watch why so many customers turn to PAHDIT, to increase quality IT service.

Email:Somonahme@povertyalleviationhd.org

For further information ,please do email to Md Somon Ahmed on to somonahmed@povertyalleviationhd.org

Somonahmed@constructionaid.org.uk

 

  • The current crisis for human rights has been created by politicians who are hungry for power for their own benefit, not to serve the public for the best interest of democracy. The public is being politicised by dishonest politicians around the world. We have to be careful,vigilant to ensure religious harmony for peace .....Engr Md Somon Ahmed BSc (Hons) GMICE, AssocRICS
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