Analysing the relationship between new housing supply and residential construction costs with the regional heterogeneities

New housing supply in Australia has been experiencing a low rate of increase in conjunction with a dramatic increase in residential construction costs since the 1990s. This study aims to estimate the relationship between new housing supply and residential construction costs with the regional heterogeneities. Based on a panel error correction model, it can be identified that there is a causal link as well as a significant correlation between new housing supply and construction costs in the Australian sub-national housing construction markets. The model developed in this research assists policy makers to better understand the nature of the supply side of the housing sector and then enact appropriate policies to improve the new housing supply in Australia.

New housing supply and residential construction costs in Australia : a panel ECM approach

The supply of new housing in Australia has been experiencing a low increase rate since the 1990s in conjunction with an increasingly strong housing demand. On the contrary, residential construction costs across Australia?s states maintained dramatic increases simultaneously. Economic theory suggests that new housing supply is correlated to the costs of residential constructions. However, few empirical studies have focused on examining this relationship for Australian housing markets. To comprehensively investigate the relationship between the supply of new housing and residential construction costs a function for new housing supply considering the effects of regional heterogeneities is introduced in this study. By estimating a panel error correction model (ECM) applicable for quantifying the correlation with regional heterogeneities, this research identifies that a causal link and a strong correlation exist in between new housing supply and residential construction costs in Australia.

Height and construction costs of residential buildings in Hong Kong and Shanghai

A widely recognised theme of construction economics suggests that the cost of construction per square metre increases as building height rises. However, after many years, research conducted regarding the height and cost issue have established a classic relationship between those two, well known as a U-shaped curve. This paper describes the study of height-cost relationship of high-rise residential buildings in Shanghai and Hong Kong. Initial findings indicated that the curved relationships of height-cost of residential buildings in Shanghai and Hong Kong exhibit different profiles. The differences suggest that, Hong Kong contractors have more expertise in multi-storey and high-rise construction than contractors in Shanghai. The dissimilarities also imply that different sets of criteria should be applied in the judgement of height affects cost in different locations. Many factors could be contributors, such as the history and experience in constructing residential high-rise buildings, location, linkage and relationships to the neighbourhood provinces, design and construction regulations, and government policy on residential construction.

Height and construction costs of residential high-rise buildings in Shanghai

A widely recognized theme of construction economics suggests that the cost of construction per square meter increases as building height rises. However, over a number of years, research conducted regarding the height and cost issue has established a classic relationship between the two factors which can be represented by a U-shaped curve. This paper describes the study of the height-cost relationship of high-rise residential buildings in Shanghai in terms of the total construction cost and elemental costs while considering the context and commonality of buildings. This research was developed as an extension of the previous work, which examined data for buildings in Hong Kong. Initial findings indicate that the curves illustrating the relationships between height and cost of residential buildings in Shanghai and Hong Kong exhibit different profiles. The dissimilarities indicate that different sets of criteria should be applied in the judgment of height that affects cost in different locations. In terms of elemental costs, the findings suggest that there are differences in the way these costs react to changes in the building height.

Drivers of the accuracy of developers' early stage cost estimates in residential construction

Purpose – Preliminary cost estimates for construction projects are often the basis of financial feasibility and budgeting decisions in the early stages of planning and for effective project control, monitoring and execution. The purpose of this paper is to identify and better understand the cost drivers and factors that contribute to the accuracy of estimates in residential construction projects from the developers’ perspective. Design/methodology/approach – The paper uses a literature review to determine the drivers that affect the accuracy of developers’ early stage cost estimates and the factors influencing the construction costs of residential construction projects. It used cost variance data and other supporting documentation collected from two case study projects in South East Queensland, Australia, along with semi-structured interviews conducted with the practitioners involved. Findings – It is found that many cost drivers or factors of cost uncertainty identified in the literature for large-scale projects are not as apparent and relevant for developers’ small-scale residential construction projects. Specifically, the certainty and completeness of project-specific information, suitability of historical cost data, contingency allowances, methods of estimating and the estimator’s level of experience significantly affect the accuracy of cost estimates. Developers of small-scale residential projects use pre-established and suitably priced bills of quantities as the prime estimating method, which is considered to be the most efficient and accurate method for standard house designs. However, this method needs to be backed with the expertise and experience of the estimator. Originality/value – There is a lack of research on the accuracy of developers’ early stage cost estimates and the relevance and applicability of cost drivers and factors in the residential construction projects. This research has practical significance for improving the accuracy of such preliminary cost estimates.

Architectural design and construction costs, tools towards territorial sustainability

This paper is presented in CIB: Management and Innovation Sustainable Built Environment 2011, as the study and analysis of the residential model of a rural area from the Iberian Peninsula, specifically applied to the case of the province of Cáceres, in the autonomous region of Extremadura, in Spain. To this end, from a database made up of building projects whose real costs are known, it is intended to establish the links of the different parameters studied through the corresponding functions of statistical analysis. One of the main objectives of this process is constituted by the possibility of establishing those design variables of higher economic importance, so as to keep an economic control of these parameters, generally geometrical and typological, from the very start of the project. And, in general, a higher optimization of resources in the construction of dwellings in the rural environment from their design is intended.

Current speculation in costing approach for Malaysian residential construction

The construction industry has been under pressure for many years to produce economical buildings which offer value for money, not only during the construction phase, but more importantly, during the full life of the building. Whole Life Cycle Costing (WLCC) is a relatively new concept for the construction industry especially on residential development and particularly for Malaysia. Discussing the speculation in using WLCC for the Malaysian residential constructions is the aim for this paper and it is one of the research questions on my research. This paper also wants to gather more speculation that may involve through others experienced. Basically, this paper is written to facilitate the current or future individual which will involve in residential property development sector with a new sensible approach to what at times seems impressively confusing especially in simplifying the operations and maintenance services and rehabilitation as well.

Using the Big Mac index for comparing construction costs internationally

This paper explores the use of purchasing power parity (PPP) in the comparison of construction costs between different countries, and whether the development of construction-specific indices will improve reliability.

The approach adopted is to compare the construction cost of a typical five star international hotel per square metre in each of ten major cities using a range of PPP methods and to comment on their variability. In particular, this paper looks at whether an index based on the price of a McDonalds Big Mac3 hamburger is a viable alternative when compared against the mainstream methods. The recent publication of construction-specific indices as part of the Eurostat-OECD joint PPP program is also compared against generic indices and the discrepancy is calculated.

The paper concludes with reflections about which approach is preferable when attempting to assess global construction relativities and what further research is needed.

Auditing construction costs during building design : a case study of cost planning in action

Building cost planning was originally developed in the framework of traditional procurement methods with conventional documentation, tendering and administration processes. With the advent of alternative forms of procurement with more fluid approaches to design stages and documentation, the need for sound cost planning does not appear to diminish. As a process established on solid theoretical foundations, cost planning should be robust enough to adapt and flourish in a variety of procurement environments. However, little documentation and analysis of transformed and adapted forms of cost planning appear to have been made. This case study of a design-construct company in Melbourne, Australia, presents and explores a contemporary form of building cost planning integrated into a design cost management approach adopted by a construction company experienced in alternative forms of procurement. The article traces this process on a design-construct project from inception to the end of the design development stage and tender. Whilst the fundamental framework of cost planning remains intact, the focus and detail in each of the stages are guided by the company's priority for greater financial control over the cost and value implications of design and other decisions. This recently established working model of design cost management in this company has been designed to deliver added value to the client through a better balance of time, cost and quality in each project.

Ventilation research on Australian residential construction

This paper applies established testing methods used to discover the ventilation performance of various residential building envelope construction in Australia. Under the definition of 'ventilation performance' we imply the building envelope leakage (or infiltration) the living space air change rates, the volumetric flow rates and the pathways of air flow between subfloor, room volume and roof spaces. All of the methods applied and discussed here are on-site, evidencebased performance of actual structures as tested by the Mobile Architecture & Built Environment Laboratory and Air Barrier Technologies.

Use of renewable building materials in residential construction : a review

The development of mass-produced environmentally-benign housing is one of the critical factors in the transition to global sustainability. Such housing will need to be constructed from renewable and/or recycled materials, be conditioned using minimal or no non—renewable energy, and be affordable. The universal need for such built environment resource stewardship is urgent. In developing countries, the requirement is to shelter growing populations, and in industrialised countries, there is a need for an alternative to the current resource and nergy-intensive material usage in housing. While there are some good surveys of building materials made from renewable resources, such as the BEDP Environment Design Guide Pro 11 by Gelder (2002), there does not appear to be a comprehensive database of these materials linked to abundant and reliable supply. This paper reviews the current availability and potential usage of renewable materials applicable to Australian mainstream residential construction. It concludes that the current state of publicly available information is dispersed and embedded in multiple sources with variance in detail, incomplete access and uncertain comparison across the sources.