Course CONTRACT DOCUMENTS What type of economy you are notic

Course: CONTRACT DOCUMENTS

What type of economy you are noticing in the information below, strong or weak, why? Please discuss about it.

New Construction 60%

Maintenance and Repair 12%

Renovation and Remodeling 28%

Solution

With the given information the type of economy considering given details is STRONG ECOMOMY as new construction costitutes 60 percent and renovation and remodeling constitutes 28 percent total share of infrastructure development while mainteance and repair constitues only 12% which signifies that investment is being done on new infastructure or remodeling or renovaton in that area and capital is being invested in real estate. As construction industry is cyclic industry which mean that it gains strength during economic upswings or when the economy is strong which is the case in your question.

As the economy is about money, when the economy is strong or upswing it has the effect of raising incomes of people in that region and rising income reinforce demand with the confidence to spend extra money, due to which people will look to invest their money in property for future,

A construction company will take advantage of this and due to which new constuction will rises in the region where economy is strong as demand increases due to people willing to invest on newer property.  People who cannot buy new property they spends their extra money on renovation or remodeling which is 28% of your given data which also signifies in addition to new construction as strong economy as people are willing to spend money as invesment and it only happens when economy is strong, as i have discussed earlier that construction industry is a cyclic industry meaning that when the economy is buyoant or strong it gains strength which results in more new construction, as the demand for property increases with the rising economy due to increase in purchasing power of people and willingness to spend money on property for investment which gives confidence to consruction industry to persue new construction which is your case.

I would like to summarize that when the region shows rise in new construction it is only because the economy in that region is STRONG ECONOMY In your case it shows rise in new construction because of the trend that new construction holds more share than combined maintenance and renovation.