1. Principles of Company’s Economy
Building Industry as a Part of National Economy

2. Principles of Firm’s Economy
Framework of a Subject
Building industry as a part of national economy
Building market, subjects of a building market, building company and its foundation, production, management, planning and organization
Investments
Company’s finances
Taxes
Accounting
Building production, material, machines and machinery
Building production, labor and wages
Prices of building works, prices of building objects, budgets
Cost management of a building order
Marketing, distribution and sale
Exam
Literature:
Marková, L. a kol.: Principles of Economy of Building Firm, CERM s.r.o. Brno, 2002
Principles of Firm’s Economy

3. Building Industry as a Part of national economy
Building industry as a part of national economy fulfils
following functions:
Supplier
Supplies of buildings
Supplies of building works for the realization of new building objects and for their reconstruction, modernization and repairs of existing objects
Customer
Suppliers become direct customers on the products market
Next new customers buying equipment and furniture for just finished building objects enter the products market
Principles of Firm’s Economy

4. Importance of Building Industry in the Frame of National Economy
Ecological
Negative influence
Positive influence
In areas of:
Creation of environment and its sustainable development from this aspect
Using of new technologies and materials in the production
Using of recycled materials
Saving of nature resources
Principles of Firm’s Economy

5. Importance of Building Industry in the Frame of National Economy
Economic
Mainly in the area of investments that enter all disciplines of national
economy, mainly:
Production – constructions for industrial and agricultural production and power engineering
Living – new house-building, modernization and reconstruction of a housing stock
Transport – road, railway and air transport constructions
Technical infrastructure – distribution of water, gas, energy, sewerage
Social infrastructure – buildings and equipment for services, education and health service
Recreation and sport – sport halls, sport grounds, buildings for recreation
Principles of Firm’s Economy

6. Principles of Firm’s Economy
Impact of Building Investments on the Economic Growth of National Economy
Investments can be defined as a sacrifice of certain present value on behalf uncertain future value
Building investments and their impact on the economic growth of
the country
Important indicator of the economic growth
Impact on aggregate demand and by this on national product and employment
They lead to the accumulation of the capital that increase potential national product and in the long time it support the economic growth
Principles of Firm’s Economy

7. Principles of Firm’s Economy
Impact of Building Investments on the Economic Growth of National Economy
Economic growth of the state expresses itself in the
rate of the growth of the Gross Domestic Product
(GDP)
GDP = C + Ig + G + X
where
C … Personal consumption expenditure
Ig …Gross private domestic investment
G … Goverment expenditure on goods and services
X … Net export, X)
Principles of Firm’s Economy

8. Impact of Public Administration on the Range of Building Investments
Impact of the public administration on investments:
Monetary policy (it influences the discount rate and by it also costs connected with capital)
Fiscal policy or budgetary policy
From the systematic aspect
Public administration
State administration Self-government
Central government Independent institutions
Constitutional court
Central bank municipalities regions
Supreme control office
Ministries next central authorities
Principles of Firm’s Economy

9. Overview of Ministries
Ministry of Industry and Trade
Ministry of Transport
Ministry of Finances
Ministry of Culture
Ministry of Defense
Ministry for Regional Development
Ministry of Labor and Social Affairs
Ministry of Justice
Ministry of Internal Affairs
Ministry of Foreign Affairs
Ministry of Health Service
Ministry of Agriculture
Ministry of Education, Youth and Sports
Ministry of Environment
Principles of Firm’s Economy

10. Impact of Public Administration on the Range of Building Investments
From the fiscal aspect
A. State administration
Central government: state budget State funds State fund of environment
Funds State fund of culture
SF for support and development of cinematography
SF of transport infrastructure
SF of housing development
National property fund of the Czech Republic Land fund of the Czech Republic
B. Municipal governments
Budgets of municipalities and regions
C. Supranational organizations
Structural funds of EU
Principles of Firm’s Economy

11. Overview of Technical Disciplines Used in Building Industry
In the building industry there are applied all technical disciplines connected with:
Preparation of building-up
Realization of building-up
Furnishing of the object during its using
Repairs, modernizations and reconstructions during use
Liquidation of the object
Construction process as a whole must be in the result finished in corresponding
quality. Management of the quality can be realized by:
Determination of technical parameters
Determination of optimal values of these parameters
Determination of technological procedures during building process
Verification of observance of technological procedures and achievement of asked values of parameters
Principles of Firm’s Economy

12. Overview of Economic Disciplines Used in Building Industry
Economic disciplines used in building industry allowing to manage
achievement of its efficiency are mainly following:
Project management of building construction (planning and organization of activities in the building industry)
Investment economics (recognition of the efficiency of building investments, rate of risk and assurance of the groundwork for decisions about investments)
Financing (financial assurance of the building production, management of cash flows on building orders, management of the financial efficiency of the company)
Valuation of basic levels of building works, valuation of building structures, building objects, sets of building objects, valuation of engineering and project activity and next activities connected with the preparation and realization of building construction
Marketing in the building industry (recognition of the situation on the building market, finding of unsatisfied needs of the marked and searching for ways how this needs to satisfy)
Principles of Firm’s Economy

13. Classification of Activities and Outputs of National Economy
In the frame of national economy there are realized economic activities with their
outputs in the form of:
products of physical character
activities or works of production character
services (activities of non physical character)
For easier and definite orientation in outputs of national economy there were
created classification systems sorting activities running in the economy and their
outputs.
From the time aspect it is possible to recognize:
classification systems used before 1990
classification systems used after 1990
Principles of Firm’s Economy

14. Classification systems created after 1990
Statistical classifications valid from the year of 1993 can be divided into
classifications:
economic
social
functional
others
Economic classifications were transformed as in the first phase
and there were created:
OKEČ Odvětvová klasifikace ekonomických činností
Sectoral classification of economic activities
SKP Standardní klasifikace produkce
Standard classification of production
CZ – CC Klasifikace stavebních děl
Classification of building objects
Principles of Firm’s Economy

15. Sectoral classification of economic activities
Category Title
A Agriculture
B Fishing
C Mining of raw materials
D Processing industry
E Production and distribution of energy, gas, water
F Building industry
G Business
H Accommodation
I Transport, communications
J Finances, banking, insurance
K Realities, services, research, development
L Public administration, defense, compulsory social security
M Education
N Health services
O Other public end personal services
Principles of Firm’s Economy

16. Standard classification of production
Standard classification of production is connected and compatible with the classification of
production of the EU. Subjects of classifications are:
physical products (goods)
all industrial, agricultural, wood and other product sold by producer for the next use
works of production character (working activities)
works focused on the production of new tangible property or its part
services (activities)
activities not focused on the creation of new tangible assets, as services, repairs, maintenance
Main classifying element is a section signed by code of two numbers, then follow next
numbers specifying the subject of classification more directly – group class, category,
subcategory.
For the building industry there is intended section 45 - Building works (works on new
structures, reconstructions, modernizations, repairs and maintenance)
Principles of Firm’s Economy

17. Standard classification of production
Section 45 – Building industry is classified in the following way:
45.1 Preparative works for realization
45.2 Fabric - building and engineering constructions
45.3 Building installations
45.4 Internal building works, finishing works
45.5 Lease of machines and equipment with stuff
45.21 Construction works on fabric of buildings and engineering structure
45.22 Roof construction, laying of roofage
45.23 Construction on fabric of communications and airports
45.24 Works on fabric of water constructions
45.25 Specialized building works
45.41 Parging works
45.42 Building locksmithing and joinery
45.43 Facing of walls, covering of floors
45.44 Decorating, lacquering and glazier works
45.45 Other internal works
Principles of Firm’s Economy

18. Classification of building objects
CZ – CC is harmonized with international classifications and from 2004 it is binding
classification for statistical survey
Scheme of a code:
section subsectionl group class subclass
Section 1: Buildings
11 Residential buildings
12 Non residential buildings
Sekce 2: Engineering constructions
21 Transport constructions
22 Pipage, telecommunication and electric conduction
23 Sets of building objects for industrial purposes
24 Other engineering constructions
Example:
Principles of Firm’s Economy

19. Classification Systems Used in the Building Industry before 1990
Jednotná klasifikace stavebních objektů (JKSO)
Integrated classification of building objects
national classification till now used in the Czech Republic for sorting of building objects and for the costs and prices of building objects assessment
For identification of building objects its used 7 numbers
Structure of identification code:
branch
group
subgroup
construction and material
characteristic
kind of building action
Principles of Firm’s Economy

20. Principles of Firm’s Economy
Example of Branches
Code
Title
BRANCHES OF BUILDING OBJECTS
801
Buildings of civil construction
802
Halls of civil construction
803
Residential buildings
811
Halls for production and services
812
Buildings for production and services
813
Towers, pylons, stacks
814
Reservoirs, tanks and bins
815
Special land objects
821
Bridges
822
Communications and airports
and others …
Principles of Firm’s Economy

21. Classification of Building Constructions and works
Classification of Building Constructions and Works (Třídník stavebních konstrukcí a prací – TSKP) sorts partial results of building production – building works and creates the base e.g. for the structure of budget that serves for the building construction price establishment
as a base of the sorting of building construction it was chosen the building section as a function part of a building object
Scheme of a code:
Group of building sections
Building section
Kind of construction or work
Detailed characteristics
Principles of Firm’s Economy

22. Overview of Groups of Building Sections
Number
Title of group of building sections
General construction and works 1
Earthworks 2
Foundations, special foundations 3
Vertical and complete constructions 4
Horizontal constructions 5
Communications 6
Construction of surfaces, floors 7
Associated building production (handcrafts, installations) 8
Pipage, conduction 9
Finishing works, demolitions
Principles of Firm’s Economy