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The market can be described as an understanding for buyers and sellers to get information and do business with each other. A simple example would be e-bay which facilities the buying and selling of goods. All markets share some common features, they bring producers and customers of goods and services together helping to reduce the transaction costs of buying and selling, they require the safeguarding of property rights by law for eg real property, financial property and intellectual property.
There are some typical buyers and sellers involve in construction industry such as , developers, firms that develop property for office and commercial uses, contractors, firms that add value to goods and services with knowledge and skills to construct the built environment, central government or local authorities, organizations that are responsible for works in the public domain such as highways, utilities, firms that manage the supply of water, electricity, gas and telecommunications, and consultants, the firms that utilize knowledge and skills to advise clients on the built environment.
Individuals chose the quantities of labour, land, capital and entrepreneurship to sell or rent to firms in exchange for wages, rent, interest and profit. Individuals also chose how to spend their incomes on the various types of goods and services. Firms chose the quantity of resources to hire and the quantities of the various goods and services to produce. Goods markets and resource markets coordinate these choices of individuals and firms.
Competition on Price:
How do prices match up the choices of buyers and sellers and achieve balance. Balance is a situation in which opposing forces poise each other, so there is no tendency for change market equilibrium occurs when the market price balances the plans of both buyer and sellers.
Price will adjust when there is a shortage or a surplus because it is beneficial to both buyers and sellers, shortage forces the price up and the surplus forces the price down.
When people freely make bids and offers and when buyers seek the lowest price and sellers seek the highest price, the price at which trade takes place is the equilibrium price, at this price the quantity demanded equals the quantity supplied. A change in price stalks from either a change in demand or a change in supply, It is the point at which resources are put to work to create the greatest possible value that point is called the competitive balance and is the most efficient use of resources, buyers and sellers each do the best they can for themselves and no one plans for an efficient outcome for society as a whole, buyers seek the lowest possible price and sellers seek the highest possible price.
The Economic Goal of Individuals:
With the normal constraints of modern living, most people go to work to earn sufficient income to do whatever they wish to do in their leisure time e.g. family, friends, sports, DIY etc. This assumes that part of their income will support their everyday needs in terms of housing, food, transport etc. The principal currency is time and we only have 24 hours a day 365 days every year.
Whichever organisation that you work for, your working life is an integral part of your total life and therefore apart from the economic necessity of doing so, you must consider the goals of your organisation and become a part of that organisation to achieve joint success. What individuals need to consider is how their work/life balance based on the economic value of their time matches their financial needs. Clearly individuals on lower salaries must work longer hours if they are to satisfy the same demands as higher paid individuals.
Individuals have many constraints in achieving their economic goal, but if their available time resource has a scarcity value then they are likely to achieve their economic goal sooner rather than later. Within the construction industry, there are so many public and private sector projects, being delivered, planned or discussed that it is unlikely that with the scarcity of skilled resources, we will see a return to the 1990s of redundancies and abandoned projects. The demand for graduates in the built environment is high and starting salaries are much improved as firms recognise the true value of professional staff as the market demand ascends.
It is a misnomer to assume that a firm talks about making a quality product or greater business growth or increased market share or job satisfaction of its workforce. Its sole goal is to maximise profit. A firm that does not seek to maximise profit is either eliminated or bought out by firms that do seek to maximise profit. Increasingly the economic goals of individuals and of commercial organisations are converging rather than diverging.
Following are the indications that give rise to this suggestion:
The scarcity of graduates working in the built environment
The positive lobbying of â€˜green issuesâ€™ as climate change becomes more readily understood
The better understanding of the work/life balance to counteract the pressures of modern living.
Developing, selling and supporting sustainable construction projects is now a fundamental part of most firms environmental policy and practice
The built environment must help sustain the natural environment we use 6t of building materials per person per year, 2.5t of which ends up as waste 60% of all timber used in UK goes into construction, most of the forest has been cut down, never to be replaced. The buildings we put up guzzle 52% of the nation's energy, if we donâ€™t get our environmental performance right; the construction industry automatically becomes the UKâ€™s worst environmental offender.
Saving the planet need not cost the earth, Contractors have clamped down on materials waste and their use of water and electricity over the past year, dual goals of environmental and commercial efficiency have been achieved in some cases by the conversion of car fleets from petrol to LPG which has lower cost and lower emissions
One contractor has created a form on their intranet that allows staff to share ideas about improving their home and work environments. There is mounting social responsibility to behave responsibly.
Developers are keen on environmentally friendly design and construction. Increasingly investors are looking at the long-term value of their assets, not just the initial construction cost, many are starting to anticipate possible future environmental legislation and want their buildings future-proofed. Realisation that charges can be made higher for buildings that perform to high environmental standards.
The construction market relies upon sensible pricing and a good supply of quality staff to achieve its goals. The economic goals of individuals and of commercial organisations in the construction industry are converging rather than diverging and sustainable construction is now much higher on the UK green agenda and is having an impact on the market. Probably now is the time for more construction professionals to exert greater influence in the boardroom to achieve economic success.