Construction project economics

Construction project economics has historically been dominated by tools and techniques for optimising cost and financial value. These have been drawn largely from mainstream economics to support management of the economic problem of making optimal choices regarding allocation and use of scarce resources such as land, labour, capital, equipment, time, and management on construction projects. However, emerging global trends are driving a shift towards increasing emphasis on the environmental and social value contributions of construction projects. These trends include circular thinking, carbon, social and natural capital accounting, new procurement methodologies, and smart off-site manufacturing approaches, which are driving the industry towards a more product-based model. Whilst further research is required to develop the tools and techniques needed to embed these into standard practice, it is argued in this chapter that this offers an opportunity for construction to influence mainstream economics by offering fresh perspectives on theories like transaction cost economics.