Fall, 2006
School of Architecture, New Jersey Institute of Technology
David L. Hawk, Professor
Office: Dean’s Office, SOM/CAB   Phone: Work 596-3019

hawk@njit.edu

Tuesdays: 6:00 – 9:00 PM
Room: Weston Lecture Hall 1

INTRODUCTION & COURSE OBJECTIVES:

Arch 550/650 relates aspects of economic knowledge to emerging problems in building design and production. Two traditional methods of control in the building process offer the subject matter for the first ten weeks of the course. These are:

1. Building cost estimating (in a relatively simple, stable setting)
2. Life-cycle cost analysis (which move into external building production issues)

Both are methods in current industrial use. They come from attempts to formulate rigorous analytical methods that can seem to have aspects of science associated with them. These will be presented via lectures and, potentially, via video tapes.

The third area of study focuses less on current practice and more on future orientations for the profession. It may well have an important impact on your careers. The third area is emerging as a place of concern for the limits of practice as usual and a location for experimenting with the needs for improved future practice. It may well provide an area of future architectural competence.  The area calls for normative thinking (the difference between what is and what ought to be) and innovative approaches. This requires re-conceptualizion, re-evaluation, and re-design of what people do. In this world the limits of analysis become a concern for those who wish to move into the dynamics of the emergent. It transcends issues of building design and assembly to address concern for context. The processes for selection and procurement of what enters building production become noteworthy. So too do the what and how of building use. Its methods for occupying this third domain are fundamentally different from those of cost estimation and life-cycle analysis. is the focus is more on research and learning, and thus the most fundamental presumptions beneath the building industry.

While the third topic may be difficult to grasp, even after the course is finished (in that it is highly dynamic, ambiguous and threatening), there is a high probability that it will be significant in the future thinking of the industry.
All three topics are caught up in the fundamental changes now taking place in building design and production. Whether or not building design and production can or should be called an “industry” is a question for the course. On one side there is an argument that construction is a free-associated of small efficient units of production that form an industry. On the other side there is an argument that construction is composed of separated economic sectors that have little direct connection to each other. The second rationale is used to complain about the products of the industry, their high costs, and the generally low social esteem placed on those who make them, all the while having little impact on fixing these problems. The first rationale offers more room for optimistic improvements through change.
The role of economic ideals, ideas and processes in setting the tone for the industry will be an important topic near the conclusion of the course. These should emerge from your work on the concluding project for the course. It is hoped that course participants will find the contents and organization enjoyable.
Aspects of micro and macro economic theory and analysis from introductory courses in economics will be helpful, but are not essential prerequisites. You can quickly pick these up from reviewing introductory course-books. The first three periods will concentrate on the basics of economics and how it pertains to building production and use. This basis will then be used to describe how economic thinking informs/confuses/disrupts the building production industry.
Prior to the second class you should review at least one text on college economics. As you do so please consider what topics inform economic knowledge in the building industry.

COURSE CONTENTS:

After the introductory lectures the course content turns to the key issue of how best to estimate building costs as process of disconnected parts. The Means Cost Estimating Manual is essential to the early part of the course. You will find it in the reference section of the library. While there are serious problems in the accuracy of this base-line reference it has none-the-less become the standard for determining costs in the industry. The data used from this manual will later be used to look at the economic consequences of design decisions. The Means Manual is the closest the US building industry has to a standard of prices, costs and industrial organization.
From this basis a general theory will be presented for how to analyze some of the economic consequences of building design decisions. It will begin with discussion of why you can't rely on “means-based” types of theoretical frameworks. It will then move onto why you, or a firms in which you will work, will choose to go ahead and use it anyway. This ends in an important conclusion point for the course. The second stage of the course, on life-cycle issues is less limiting, but not by much. The last stage of the course will be much more expansive. It will involve consideration of the philosophical dilemmas of our traditions in analysis, economics and architectural practice. A way to discuss these limitations yet being able to move to a higher level of understanding is suggested by Second Law Economics. This will present that most challenging, and, hopefully, interesting part of the course.
You will be tested and evaluated relative to what you have learned through the course. This will be via assignments and a final project. The assignments will involve the terminology of the subject area. The project work will combine class presentations and discussions into a larger framework of your own selection. The over-riding course objective is to expose you to traditional and non-traditional ways of thinking in and about the industry. The organization of the course is to help you to experiment with how to do a better job within the traditional industry. It begins with an improved understanding of the smaller and larger economic processes that make up the building process. The first of these will be the process of internationalization.
You will be rewarded for learning to question and test assumptions. A first stage in this will be learning how to make your implicit assumptions more explicit. A final stage is to help you learn to question your assumptions in ways that encourage your results to be more beneficial to yourself and others.

SKILLS TO BE DEVELOPED THROUGH THE COURSE

* Cost-estimating. The focus is on use of building materials and labor resources. This includes standard pencil and paper accounting via means, plus mentioned of the Dodge Design Estimator Computer Program and Means Packages.
* Use of life-cycle costing. Here the parameters of four dimensional analysis are brought into the decision model of decision. This brings consideration of the long-term consequences of real-time architectural decisions into the production model.
* Modeling Second Law Economics. This deals with a means to rise above the limitations of formalized life-cycle costing routines and methods.

These relate to many aspects of design and construction. They include: selection of building technologies, materials and energy resources, and management of labor use. Within this there is an important distinction between production, operating and environmental costs. Concepts of General Systems Theory will be used as a general framework in the course.

This course is one of the two bridge courses for those working on the joint architecture and management degrees. As such a few pages of additional material are provided for your consumption. This relates to a web site and area of thought called “funky business.” I include it because its two authors work in the area between management and product design, and are struggling with finding innovative ways to do good things better. In addition, their central book on the subject is now the largest selling management book in non-English speaking countries (It is now in more than 30 languages.) The final reason to include it is that the authors are two former students.

REQUIREMENTS FOR COMPLETION

To successfully complete the course you will need to learn a great deal more about the total resources that go into production of buildings, how they come to be allocated, and how there are improved alternatives. This introduces the worlds of the "normative" difference between the "is" and "ought" and the role of technological, material and spatial design decisions in their creation. The central model of economics used in the course will be termed Second Law Economics, which assumes that a viable future economic system will come to be based on the importance of natural resources and their use.

Traditional economics concentrates on study of exchange functions, which generally assume and require stable settings over long periods. Few aspects of contemporary society have such stability thus alternatives are needed. An alternative offered in the course is based on extensive research into material and energy exchange functions. As such you will need to learn about these. You got a beginning in this from you building performance and ECS courses. This course builds on that beginning and points out why and who the building industry is being fundamentally transformed in contemporary society. The most normative element of the course is how you would reorganize the building industry so it would produce quality results more efficiently. This will be the core of your final reports.

Course evaluation will be based on responses to interim assignments (25%), mid-term exam (25%), and a final report (50%). The final report will be a well-organized, clearly presented document on a subject of your own interest that relates to the contents of the course.

GRADING:
25% Class participation
25% Class assignments
50% Final project and its formal presentation

REFERENCE:

Means Cost Estimating Manual, 2001 edition.

SUPPLEMENTAL TEXTS:

1. David Hawk, Building Economics Research Agenda, Washington, D.C.: National
Technical Information Service, l986.
2. "Towards a Paradigm of Building Economics," Hawk, David, Habitat International,
London, England: Pergamon Press,
3. Nickolas Georgescu-Roegen, The Entropy Law and The Economic Process, Harvard University Press, 1971.

GENERAL REFERENCES:

Braudel, Fernand, Capitalism and Material Life: 1400-1800, New York: Harper and Row, l967.
Emery, Fred, Systems Thinking, Middlesex, England: Penguin Books, l969.
Galbraith, Kenneth, Money, New York, NY.: Modern Library, l975.
Gold, Bela, Productivity, Technology and Capital, New York: Lexington Books, l979.
Heilbroner, Robert, and Thurow, Lester, Understanding Microeconomics, l984.
Heilbroner, Robert, and Thurow, Lester, Understanding Macroeconomcs, l981.
Kahn, Herbert, and Simon, Julian, The Resourceful Earth, l984.
Stone, P.A., Building Economy, 1963.

ADDITIONAL REFERENCE ARTICLES

p. 1 Definitions of Common Ideological Perspectives
p. 2 A Map of the World
p. 3 The Pursuit of Loneliness
p. 4 Asking Impossible Questions About the Economy and Getting Impossible Answers
p. 6 The Optimist
p. 7 Cost vs. Value
p.10 Home-Grown Imports
p.14 Scarcity and High Cost of Land Slow Housing
p.16 Land Costs Continue to Rise
p.18 Basic Dilemmas for Economic Forecasting
p.21 Construction and Construction Documentation
p.22 Macroeconomics in an Open Economy
p.27 Driven by a Rage to Accumulate
p.30 The Trap
p.31 Some Concepts of Ecology
p.40 Classics of Organizational Theory
a. Of the Division of Labour
b. The Principles of Scientific Management
c. The Causal Texture of Organizational Environments
p.59 Building Economics
p.60 Setting a Paradigm for Building Economics
p.78 Powering the American Eagle
p.87 Social and Natural Regulation Processes and House Design
p.96 Appendix: for Life-Cycle Costing of Energy and Materials

SCHEDULE AND ASSIGNMENTS:

Meeting 1 - Preface: Discuss course objectives and themes.

Meeting 2 - Introduction: Overview of architecture and economic issues. Discussion of course structures, requirements, outline of reading material, and basic concepts of building economics.

Problem 1: Choose 3 elements used in making a building.
· For each element locate prices from two different stores. The objective here is to maximize the difference in the prices. To be meaningful the elements must be the same make and model.
· Next, explain the difference in the prices: i.e., from where does it come? Next, offer a price-per standard unit of measure between the two elements. This opens up the use of concepts like price-per-pound, or price-per-square-foot, as used in the building industry?
· Assignment due at beginning of third lecture

Meeting 3 - Economics in Building: Looking for a conceptual framework for economic understanding of the activities involved in the building industry.
* Central economic concepts for the course.
* Outline of general rules of economic theory. "When things become scare their price goes up." Externalities are items that remind humans of the consequences of their activities.
* The role of the architect in economic decisions and the industry in general.
· Etc.

Meeting 4 - The Meaning of Building Economics: The context of economic exchange as dynamic change. This is seen in five environmental typologies and examination of whether or not prediction is possible? This leads to the evaluators of our industry. How do we know when the industry has done a good job: Is an "expensive" building a "good" building, or a "cheap" building a "bad" building, or do we need to find another way to evaluate the products and process of what we do? What is a life-cycle cost? How do you define life-span?

Problem Assignment 2: Select a building, secure the drawings, and carry out a pencil-and- paper cost estimation using the Means manual.

Due: Beginning of Ninth Meeting.

Meeting 5 - Methods: Utilization of Cost-Estimating Programs: What it means to use pencil and paper methods of estimating.
Problem Assignment 3: Select a building, secure the drawings, and carry out a pencil-and- paper cost estimation using the Means manual.
Due: Beginning of Ninth Meeting.

Meeting 6 - Life-Cycle Costing: What is a life-cycle cost? How does life come to be defined? Examples and General Issues are presented through looking at a typical US building, what it costs to produce a building, how price and costs vary, what this means for consumers, producers, the market, real estate concerns, and the architect. What will be the role of the architect in the future of these issues?
Perhaps show exerts of NBS film on use of life-cycle costing methods.

Problem Assignment 3: Modify previous assignment with a “design improvement,” based on what you have learned.

Due: Beginning of Lecture Ten.

Meeting 7 - Valuing: What is a "Value?" Value Engineering, Value Architecture, Quantity Surveying and Value Added. The past and future possibilities of these concepts. Responses to reading assignments.

Meeting 8 - Towards a General Systems Framework: Presentation of the central concepts of Systems Theory. The nature of wicked problems. How to produce economical buildings in an uneconomical world.

Problem Assignment 4: Modify previous assignment with a “design improvement” that improves the life cycle characteristics of the same project; e.g., add triple pain windows or more insulation to the envelop.

Due: Beginning of Lecture Twelve.

Meeting 9 - The limits of economic understanding: Review of course concepts. Presentation of Entropy Law constructs, concepts and choice of reading assignments.

Meeting 10 - Practice of Building Economics: Presentation of Building Economics as it is practiced by Leading Construction Firms. Presentations of Entropy Law reading assignments. Discussion of responsibilities in the building industry.

Problem Assignment 5: Final Project Assignment. Choose a subject area and team, and begin your final presentation.

Meeting 11 - An International Tour: Slide show of emerging and future international building economics and industry studies issues. Outline presentation of student project proposals.

Meeting 12 - How Others Teach Building Economics: Presentation of the Research and Practice in Building Economics at various universities including: MIT, Michigan, Carnegie Mellon, Michigan State, VPI, Tokyo Metropolitan University and University College of London.

Meeting 13 - Student led discussion: What was the course content, and how did it relate to other courses and how does it relates to what you would like to do upon graduation.

Meeting 14 - Reporting Out: Student Presentations on Topic Three, Questions and Reports.

Meeting 15 - Reporting Out: Student Presentations, Questions and Responses.

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