This blog is concerned with the organisation of the building and construction industry, in the economic sense of combining factors of production to create output. The modern industry's origins in the nineteenth century can still be seen in many of its characteristic features, and many contemporary issues are also found in projects from the past. However, like other industries, it is being reshaped by unprecedented rapid and widespread advances in materials, technology and capability. How those advances might affect an industry that has changed slowly over time is, I think, an interesting question.
To attempt to answer that question, and to to show the multifaceted nature of the industry, ideas from different fields of inquiry are applied to a range of issues. Such fields includes economics, particularly industry economics and industrial organisation, other management and organisation studies, psychology and behavioural economics, lean production, legal and institutional research, and transaction cost economics. As an example, economic theory can be applied to issues found in the procurement, contracting and management of projects. This is mainly an exercise in micro analysis, thus topics such as competitive and oligopolistic markets, auction theory, game theory and buyer and supplier power are relevant. An example from behavioural economics would be the role of optimism bias in major projects.
There are, however, grey areas between micro and macroeconomics. One is where the study of how economic activity is organized resides, and this is clearly an important consideration given that the premise of the blog is the economic importance of the construction industry in the modern economy. Another is the role of legal and regulatory structures, and institutional economics emphasises the importance of a stable and predictable environment for entrepreneurs and businesses, here taken to be the clients and contractors involved in the business of delivering projects. Because projects can be seen as a collection of contracts this is clearly significant.
The institutional framework leads to consideration of whether or what industry policy might be relevant. Although traditional interventionist policies are now rarely used, the macroeconomic environment of the industry, particularly the volatility of building and property cycles, is clearly important. So too are government efforts to improve procurement practices and outcomes. Thus the policy part of the blog considers the types of measures that are, or may be, undertaken and what some of the consequences might, or could, be.
Finally, the building and construction industry is part of the wider built environment sector, where we will need to develop policies that meet the significant challenges facing us in the coming decades. These challenges, arising from trends and major changes in demographic, environmental, economic and social factors, cannot be satisfactorily addressed in a piecemeal fashion. An integrated policy response is required. The sustainability and resilience of buildings and infrastructure, design and architecture for changing conditions, planning for public and green spaces and higher density living, appropriate training and skills, R&D and harnessing new and emerging industrial technologies, and providing resources for national and local governments are all essential parts of this process.