Development of Construction Economics
Construction Economics Since the 1970s
In the opening paragraph of Economic Theory and the Construction Industry Patricia Hillebrandt says construction economics (CE) is “the application of the techniques and expertise of economics to the construction industry”, a definition that has been broadly endorsed for nearly five decades.
The book was, and is, an important milestone in the development of CE. It was the first time CE had been presented as a distinct form of industry economics, a branch of economics that had a burst of development in the 1940s and 1950s, and it linked an extensive, well-developed body of work on the macroeconomic role of the construction industry with the prevailing economic paradigm of the time, the neo-classical synthesis.
Her analysis of the demand and supply sides of the construction industry explicitly incorporated four characteristics: the physical nature of the product; the structure of the industry and organisation of the construction processes; the characteristics of demand; and the method of price determination, either by tendering or some form of negotiation. Hillebrandt concludes “In view of these unique characteristics of construction, there is a need for the development of a new theoretical economic analysis, or at least for adaptation of existing theory, to assist in the understanding of the workings of the construction process, the construction industry and the construction firm.” (1974: p. 9).
"The Development of Construction Economics Since the 1970s" is an assessment of how those challenges were met in the following decades.