BE - 3603 PRE CONTRACT MANAGEMENT

COMPARISON OF CONSTRUCTION INDUSTRY WITH OTHER INDUSTRIES

Demand and Supply

Similarities
Demand of construction industry originates from different sub-sectors such as public housing, publicsector non-housing, owner-occupied housing and private-sector industrial and commercial, rehabilitation, improvements, repair and maintenance. However, only housing, industrial and infrastructure sectors largely contribute to the demand of the construction output in Sri Lanka. As well as transportation industry originates from different sub-sectors such as railway transportation, road transportation, water transportation and aviation. But they each share the common goal of fulfilling a derived transport demand, and they thus all fill the purpose of supporting mobility. Transportation is a service that must be utilized immediately since it cannot be stored. Mobility must occur over transport infrastructures, providing a transport supply. Transport demand tends to be expressed at specific times that are related to economic and social activity patterns. In many cases, transport demand is stable and recurrent, which allows a good approximation in planning services. In other cases, transport demand is unstable and uncertain, which makes it difficult to offer an adequate level of service. For instance, commuting is a recurring and predictable pattern of movements, while emergency response vehicles such as ambulances are dealing with an unpredictable demand that can be expressed as a probability. Transport demand functions vary according to the nature of what is to be transported. When considering the Construction industry demand is stable related to the owner-occupied housing, since most of the Sri Lankans interested in building their own houses other than housing schemes. Construction demand is unstable and uncertain when considered to housing schemes, private sector industrial and commercial buildings. When the economy in a country is in a recession, the demand for those kind of construction become unstable. Government policies, political changes legal system of the country are deterministic factors in construction and transport demand. When the government establishes new taxes for construction related items, then the demand for the construction products decrease. In the same manner if the government increases taxes of importing vehicles or increase the prices of fuel the supply in the transportation industry decreases. Differences Transport supply and demand have much equal but asymmetric relation. While a realized transport demand cannot take place without a corresponding level of transport supply, a transport supply can exist without a corresponding transport demand. But we cannot say demand and supply has an equilibrium point. Although the numbers of passengers are insufficient for a trip of a train, airplane or a ship the trip cannot be cancelled. They should be travelled according to the scheduled time. Therefore the supply
DEPARTMENT OF BUILDING ECONOMICS PAGE | 1

BE - 3603 PRE CONTRACT MANAGEMENT

COMPARISON OF CONSTRUCTION INDUSTRY WITH OTHER INDUSTRIES

cannot be controlled according to the demand .When considering the construction industry, demand and supply has equal and symmetric relation. According to the clients needs, contractor does the construction. Therefore excess demand or excess supply is cannot be seen in the construction industry. One reason for that is the involvement of money for construction product is comparatively high. Generally, Transport demand is generated by the economy, which is composed persons, institutions and industries and which generates movements of people and freight. When these movements are expressed in space they create a pattern, which reflects mobility and accessibility. The location of resources, factories, distribution centers and markets is obviously related to freight movements. Transport demand can vary under two circumstances that are often affiliated; the quantity of passengers or freight increases or the distance over which these passengers or freight are carried increases. Not like the Transportation industry, the demand of the construction industry mainly generated by the personal needs of individual people or organizations or the government. Transport supply can be simplified by a set of functions representing what are the main variables influencing the capacity of transport systems. These variables are different for each mode. For road, rail and telecommunications, transport supply is often dependent on the capacity of the routes and vehicles while for air and maritime transportation transport supply is strongly influenced by the capacity of the terminals. On the other hand considering the construction industry the number of roads and size of the roads depend on the number of vehicles and the passengers. Demand and supply of private constructions influence by the clients requirements. Therefore the supply and demand of construction industry depend on the requirements of the people.

DEPARTMENT OF BUILDING ECONOMICS

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