Construction economics is the study of economic principles and methods as applied to construction projects and the construction industry, including cost analysis, investment appraisal and project financing.
It underpins much of what a QS does. At project level, it covers how decisions on design, specification and procurement affect capital and whole life costs, and how value for money is assessed. At industry level, it looks at how factors such as demand, workload, labour availability and material prices affect tender prices and inflation. Understanding these factors helps the QS to give reliable cost advice and to explain why prices move.
- Project level topics include cost planning, life cycle costing and development appraisal.
- Market level topics include tender price trends, inflation and industry capacity.
Related terms: cost benefit analysis, life cycle costing, construction inflation, development appraisal.
