BUILDING ECONOMICS:

 Building Economics is a branch of general economics. It is based on application of principles of

economics related to construction industry

 Building Economics is concerned with:

 construction industry
 it’s economy
 role of construction firms
 role of designers and constructors (builders),
 processes employed and
 final building product

Present scope of Building Economics lays emphasis on

 Building Product and
 how to make it more economical, effective and efficient

IMPORTANCE OF BUILDING ECONOMICS:

 Need to introduce Economy in Building Project in early design stage

 Economy to be made integral part of project planning, construction and management

 Need to integrates design and economy in the building

 Helps in managing cost over-run

 Helps in managing time over-run through time management-

 Ensuring Building design completed within schedule time

 Provides complete picture of total cost of project

 Helps designer integrating aesthetics and economy

 Helps in meeting the clients needs within given resources

 Helps in meeting the clients needs within given Time

 Helps in creating product without sacrificing the quality

 Looks at the life cycle cost rather than initial cost

 Provides most economical solution to building in construction and operational costs

 Reduces maintenance cost to the minimum

 Provides value for money to the client

 Helps Architect to bring innovation in design and construction of building

 Provides highest building efficiency in design

  Helps in making planning choices bringing minimum wall and area ratio

COST OF BUILDING:

 Cost of building includes:

i cost of construction

ii maintenance cost and

iii cost of operations

Building cost is also evaluated in terms of -- Initial Cost

 Initial Building Project cost comprises of:

i Cost of Land, Land Registration, land survey

ii Cost of Designing , plan approval

iii Cost of developing Site

iv Cost of Construction

v Cost of Money

vi Carrying Charges

vi Government fees and Taxes

vii Cost of Advertisement

viii Legal expenses

ix Cost of Supervision
x Cost of Manpower and Security

xi. Cost of Equipment and Furniture

xii Transportation and Travel Charges

xiii Cost of Making buildings Green, Energy efficient

xiv Cost of Time

xv Contractor’ Margin

xvi Builder’s Margin

xvii Miscellaneous and Unforeseen Charges

Initial Cost of the BUILDING means the total cost spent on:

 land, planning, designing and

 construction

 till the time of occupancy.

The components of Initial cost include:

1. LAND COST:

Cost incurred in acquiring land and Registration.

It Includes( when land directly purchased from landowners)

--Cost of land
-- cost prior to registration
-- Cost of Documentation
-- Bank Charges for getting drafts made for making payment of land
-- Registration Charges of land
-- Other Charges and fees
-- Miscellaneous Charges
When allotted through any Government Agency
-- Allotment cost
--Interest Cost
--Documentation Cost
-Land Registration Charges
- Fees Charged by Authority

2. COST OF DESIGNING BUILDING:

Cost of Surveying

Cost of testing soil/ bearing capacity/water table

Fee of the Architect

Building Plan Approval fee/ charges

Building Plan Scrutiny fee

--Building Plan Security

--Malba Fee

-- Labour Cess

-Superseded Plan Scrutiny fee

--Revised Building Plan Scrutiny Fee

-- Cost of Structure Design

-- Cost of designing Public Health services

- Cost of designing Electric Services

--Cost of Designing HVAC

-- Cost of other Consultants-Green Rating of Building/ waste management etc

--- Cost of Feasibility Analysis Report

-- Cost of Environment Impact Studies

-- Miscellaneous

3. COST OF DEVELOPING SITE:

Cost of developing the site includes--

-- clearing the site,

-- providing temporary roads, water supply( water storage) lighting, fencing,

-- Cost of getting temporary water connection

-- Cost of getting Temporary electric connection.

---providing site utilities like-

-- site office for the project manager/staff and

-- other facilities -- office- stores,

-Cost of Providing space for Parking

4. COST OF CONSTRUCTION OF BUILDING:

i. total cost of construction of the building.

-cost of civil construction

 -- cost of Public health services- water supply, sewerage, storm water drainage

-- cost of electrical services

--cost of HVAC services

--cost of mechanical services- lifts, escalators etc

ii Cost of materials

iii Cost of labour

iv Cost of Transportation

v Cost of Hiring Equipment

vi Government levies/fees

5. COST OF MONEY:

 Amount of money involved

 Amount of money garnered from own resources

 Amount of money raised from market, financial institutions etc

 Rate of Interest of borrowed money

 Time duration of the projection

 Amount of Interest to be paid

 Penal interest to be paid, if any

 Interest charges on construction loan till the completion of project

 Contingency funds

 Cost of money involved will have to be kept low to promote economy in building

6. CARRYING CHARGES:

 Cost of owning of project

 Cost of maintaining site in order before / during construction like-
 site security,
 fencing
 security personnel
 Cost of services to be paid
 Electric charges
 Water Charges

7. GOVERNMENT CHARGES & FEES:

  Cost of approvals of projects

 Cost of obtaining licences

 Internal Development Charges

 External Development Charges

 Plan Scrutiny fee

 Registration Charges for land and Building

 Property Taxes

 Professional Taxes

 Labour Cess

 VAT

 Service Tax

 Income Tax

8. OTHER COSTS:

 Contractor’s Margin
 Builder’s Margin
 Cost of Advertisement
 Legal expenses
 Cost of Supervision
 Cost of Manpower and Security
 Cost of Equipment and Furniture
 Transportation and Travel Charges
 Cost of Making buildings Green, Energy efficient
 Miscellaneous and Unforeseen Charges
 Cost OF Time

The Sum total of all shall be called- INITIAL COST OF BUILDING