Design Economics for the Built Environment: Impact of Sustainability on Project Evaluation

Chapter 2Theories and Principles of Design Economics

Herbert Robinson and Barry Symonds

2.1 Introduction

A central problem in economics is scarcity of resources as human needs are unlimited whilst the means for fulfilling them are limited. Design decisions affect the built environment as there are economic, social and environmental consequences associated with construction projects, their use and performance. There is therefore a need to evaluate design not only from an economic perspective (incorporating capital and operating costs) but also in terms of the environmental and social costs to clients and other stakeholders (e.g. local people, businesses, communities and special interest groups). Factories, offices, housing, hospitals, schools, roads and airports are all essential for human development, industrial production and productivity to enhance socio-economic development. In the context of the built environment, appropriate design choices have to be made based on the resources available to meet the needs of owners and users which have to be balanced against the needs of society.

Understanding the theories and principles of design economics is fundamental in addressing this balance and achieving value for money and a cost-effective building requiring an optimum trade-off between economic, environmental and social costs. Environmental and social costs are important in design due to externalities associated with the construction process, use of buildings, growing resource problems, ...