How the Construction Industry Economics Impacts the Construction and Development Process

Impacts of the Construction Industry Economics on the Construction and Development Process
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Impacts of the Construction Industry Economics on the Construction and Development Process
State of the economy and investment in construction and development in the UK
Construction involves economic activities in the construction processes, including producing raw and ready building components and materials and the provision of professional services such as project management, design, and the physical execution of services at construction sites (Pheng & Hou, 2019). Therefore, construction is viewed as an economic activity crossing primary, secondary, and tertiary economic sectors. At the primary level, the construction economy involves extracting natural resources. In contrast, the second level comprises the manufacturing of building components and materials and transforming the materials and components to finished buildings. At the tertiary level, construction experts such as architects, construction engineers, and project managers provide consultancy services to ensure the successful completion of construction projects (Pheng & Hou, 2019). From this viewpoint, construction can be seen to begin long before the physical work is done on sites in transforming designs and materials into finished facilities, structures, and buildings.
In the UK, the construction industry is diverse. It includes a plethora of activities ranging from forestry, mining, and quarrying to the construction of buildings and infrastructure, the manufacturing and supplying of building components and materials, and the operation, maintenance, and disposal of materials. It is estimated that the construction output in the UK is over £110 billion annually and contributes 7 percent of the country’s Gross Domestic Product (GDP). The private sector contributes three-quarters of the GDP while a quarter is from the public sector. The commercial and social sectors contribute about 45 percent of the construction economy, while the residential and infrastructure sector have 40 percent and 15 percent shares. About 60 percent of the total construction output is from the new buildings, while 40 percent is from maintenance and refurbishment. The construction sector in the UK accounts for about 3 million jobs, which is 10 percent of the total UK employment, and this includes both the service and manufacturing sectors. The contracting sector accounts for 2,030,000 jobs and 234,000 businesses, while the services sector contributes to 580,000 jobs and 30,000 businesses. The product sector has 18,000 businesses and provides 310,000 jobs (Designing Buildings, 2022). This shows that the construction industry is one of the leading sectors employed in the UK.
Differences between public and private sector developments
The key differences between the public and private sector development are based on the objectives, spending, and transparency (Umbrella Supermarket, n.d). These differences also impact the contractors and their profession. While the public sector is under the government’s control, the pr...