Economic Factors Building

economic Factors structureEconomic and legislative chemical elements ferment the soma team and contractor throughout the building get wind from pedigree to extentIn this assignment, I am going to extravagantlylight the various factors which process the building forge from inception to completion in India. If we consider draw a bead on as angiotensin converting enzyme of the factor for edifice economics, it lead be coiffure as India as a country. in this assignment I am going to briefly describe a pestilence analysis and its influence on the project.IntroductionLets see what is Economics? Economics is the social accomplishment that studies the production, distribution and consumption of goods and services.(Wikipedia)The science which studies human behavior as a relationship between ends and scarce means which lead alternative uses(Lionel Robbins,1932).PEST analysis is one of the best tools describing economic factors. PEST analysis harp of following major factors which strongly influence on the building projects from inception to completion. PEST factors argon as follows- indemnity-making FactorsEconomic FactorsSocial Factors proficient FactorsSome of the other factors which has also strong influence on the building project miserliness can be as followsBuyer supplySupplier powerMichael Porters five force factors variant foodstuff murderIndustry outlookApart from the above factors we need to understand what is project and what ar the stages of projectProjectProject is the definition of think, organising and managing resource to add about the successful completion of specific project goals and objectives(Wikipedia)Following are the main stages in the grammatical kink projects1)Conceptualization2)Pre gimmick3)Construction and execution4)Post look and hand everywhere to the client.Indian Construction Industry ScenarioThe Indian plait industry recorded a consistent double digit year on year result of 12% during 2001-05 and is expec ted to grow at 25%-30 % during 2005-10.the key drivers of this growth are government investment in bag creation and concrete e produce demand in the residential and industrial sectors.The Indian construction industry has been enjoying a strong growth with the infrastructure and the commercial sectors are the forefront of this. India expects its economy to grow by 8.7% in the financial mop up March. Growth remains strong in the countrys services, construction and communications sectors. Indias economy expanded by 9.6% in the year ended march 2007.despite the prefigure of slower growth, India is still the worlds fastest growing economy after China. India has hold up a center for US and Uk firms that want to outsource services. European and US firms let flocked to India in new-made years attracted by its huge house servant market and well educated and productive workforce. The telecom and property sectors have seen the to the highest degree substantial foreign have-to doe wit h. Buoyant foreign investment levels have boosted stock markets and contributed to consistently strong economic growth in recent years.India has recorded the highest construction spending growth 2005, driven by infrastructure and real estate sectors. The introduction of REITS(Real estate Investment Trusts)by mobilizing capital markets will further accelerate real estate growth. Technological developments like ready-mix concrete, three-D Modeling and mobile computing are gradually being adopted.Construction activity is the integral part of the countys infrastructure and industrial developments. It includes hospitals, schools, townships, offices, houses and other buildings. The construction sector has major linkages with the building material industry since construction material accounts for sizeable share of the construction costs. These include cement steel, bricks/tiles, sand/aggregates, fixtures/fittings, paints and chemicals, construction equipment, petrol products, timbers, min eral products, aluminum, glass and plastics.The construction sector is one of the largest employers in the country. It employed a7.62 million workers in 2000-05.The sector has recorded highest growth in generation of jobs in last two decades, doubling its share in total employment.The share of construction sector in gross domesticated product(GDP)which was 5.4 %in 1990-91,came down to 4.4% in 1999-00.Subsequently it picked up and stood at 5.1%in 2000-05.clearly in that location has been a decline in the share of construction sector in the GDP. The main reason for this is reduced government spending on fleshly infrastructure in last decade due to fiscal constraints. though their has now been an increasing emphasis on involving the private sector in infrastructure development through public private partnerships and mechanism as build own operate(BOT),private sector investment has not reached the expected levels.Political factors include following issuesEcological/ Environmental iss uesCurrent legislation situation marketRegulatory bodies and processesGovernment policies.Ecological/environmental issuesEnvironmental impacts must be considered at several junctures in the planning and purpose of a building project. First environmental issues play an authorized role in the site selection. Once the site is selected and design commences, plant and site design must incorporate environmental controls that will minimize the impacts to the human and innate(p) environment during construction and operation.The environmental issues associated with building construction are, the site features, neighbour land uses and ecological conditions, specific facility components and design and level of connection interest are all factors determining the nature and extent of environmental impact review. The issue can range from minor considerations of land hitch to more significant environmental impacts caused by truck traffic or major alterations to sensitive ecological areas.Cu rrent legislation home markets new past temblors (Uttarkashi 1991,Latur 1993 and Bhuj 2001) have clearly exposed the vulnerability of building. So Ministry of theater affairs, Government Of India constituted the Techno legal regime in country which follows earthquake resistant features specified in Indian standards and Building Codes. Following are some of the central legislation/ guidelinesModel Town and Country planning ActVulnerability Atlas of India 1997National Building Code stir levels legislationIndian standard computesRegulatory Bodies and processesAs a causality of the building one has to consider the regulatory norms of national building jurisprudence and local municipal authority norms for the total buildup area.A building code is a document containing standardized requirement for the design and construction of or so types of building. Codes regulate building construction and building use in pasture to protect the health, safety and welfare of the occupant. Code ex press all aspects of construction including structural integrity, fire resistance, safe exits, lighting, electrical, energy conservation, plumbing, correct use of construction materials.Government PoliciesAs in any democracy, policy decisions are very much taken in India on purely political grounds, some of the policy change example which affects the building project areCeiling over agriculture landSpecial economic zone actcentury% investment of foreign money in SEZCement priced reduced for state infrastructure projects.Special Economic zone policy was announced in April 2000.this policy intended to make SEZ an engine for economic growth back up by quality infrastructure complemented by an attractive fiscal package, twain at centre and at state level with minimum come-at-able regulations.Economic FactorsHome economy situationGeneral taxation issues food market and trade cyclesInterest rates deepen ratesStock MarketHome economy situationIndia is projecting a 8.7% growth in curren t fiscal year. The government has set a target of 9%GDP during 11th five year plan(2007-12).This represents the declaration from the unexpectedly high growth of 9.4% and 9.6% respectively in the previous year. India is not bad as most developed nations economies are going down marginally. So from Building project principal of view Indias economy is good.General taxation rulesIn recent year India has imposed 12% VAT on most of the construction material. But has lifted the local octrio systems of the municipalities. In Special Economic zones Government exempted companies operating in these zones from sales tax. So these are important factor building construction to calculate the projected cash flows.Exchange RatesWith demand for foreign exchange not keeping tread with the supply of foreign exchange, the rupee appreciated by 8.9% against the US dollar sign during current fiscal years 2007+08.The rupee appreciation against the US dollar over past 12 months on year basis at a3.2% was even higher. Rupee appreciation is also one of the major factor in building project from material and sell point of view.Stock MarketsStock markets are an important instrument of financial intermediation. They saw from increase activity in 2007-08. primary market issue of debt and equity increase along with private placement. the secondary market too show raise trend. The Bombay stock exchange(BSE) sensex rose from 13072 at end March 2007 to 18048 as on February 2008 while the national Stock exchange(NSE)index Nifty 50 rose 3822 to 5277 during the same period. It shows the share prices are increasing and companies have good time to salt away money from the market through IPO to grab new project or investment in new projects.Interest ratesThis is one of the main economic factor from building construction project point of view. One has to calculate the ratio of investment in the project to increase generated from the projects. It is essential to decide whether project is economic al viable or not. otherwise it is better to put money in bank and get interest on it if rate are high than return rate.