Construction Economics and

Procurement (MMK226174)
Student Name: Rehman Ali

Student Number: S2154694

Year of Study: 2022-23

Program Title: MSc International Construction Project

Management (GCU London) (FT)

Assignment Title: Assignment One Megaprojects

Introduction

Construction economies today have progressed into the influential bridge to state
development and economic growth thanks to their diversified influence in the
purchasing, labor, revenue, and transport sectors. The construction industry has a
significant role to play in the sustainable prosperity of any economy. This study
attempts to assess and evaluate the different impacts of the construction and
development projects that the current regime has planned, showing how they
would support the expansion of contributing to industry sectors like the oil, roads
and other transport networks, minerals, sourcing, and tourist industry. The five-
year economic growth plan's development measures are suggested to be carried
out, and the paper also serves to highlight the correlating trends for the first two
years of operation. The paper delves on to expound the unique characteristics of
past and potential financial growth trends using scientific proof and makes
recommendations to do so.

According to study and research findings, the state of Flyvbjergis in an optimal

situation for implementing development strategies that will lead to economic
development and state advancement contemporaneously. This is largely because of
its geostrategic viability, rich and diverse coastal terrain, resource-intensive
asthenosphere, and visually beautiful locales that are showcased tourism
attractions.

The Influence of Construction on the Economy

The Development Plan of the Government

The government is currently planning to start building and developing the area
along the coast through a commercially produced port that will inspire huge
increases, mostly in the shipping and export markets industry, a rail tracks as well
as roads network which will bring about an organizations plan trend in the
employment, manufacturing, and transport sectors, and lastly, an aerodrome new
facility that is projected to maximize profit and play a key role in the economic the
area's development.

Airport Construction
Today, the Flyvbjerg has done this to determine the Saint Paul airstrip that the
plantation owners especially created. The proprietors of the airport usually use it
for their own business, so an international airport is urgently needed to benefit
from the commercial operations that can use the runway especially, such as the
advantages offered by such a tourist-attracting hub. To leverage the expansion of
the region, the provincial government has planned for the building of an airstrip
with a new airport that will be employed concurrently with the airstrip at San
Sebastian and marketed. The Puerto Rico Secondary Airport, now under
development, will generate significant returns during its years of operation and
boost the economy.

Transport Network Development Plan

The underlying roadways infrastructures and the train system have building
projects planned by the administration. An extensive transport system that includes
the entire state would be extremely advantageous to Flyvbjerg, which is a major
tourist attraction. An expanded rail network could have positive effects on the
town's manufacturing, tourist, and business sectors, which are all crucial for
economic growth. The existing rail system will be upgraded, and additional links
between Puerto to Rioja will be constructed. A new road link is being developed
connecting St. Anthony and Puerto to help the city grow and flourish.

Seaport Construction

The economic growth plan calls for taking advantage of the town's coastal plain
terrain to turn it into a commercial area through the construction of a seaport that
will significantly develop the oil and gas sectors.

Funding Sources

For the execution of the planned construction initiatives that would promote
infrastructural expansion and business success, the city of Flyvbjerg's economic
development plan will benefit from DFI (Direct Foreign Investment). The site will
also get funding from PPP (Public-private partnership).

Methods and Techniques

Study methods and techniques aim to present reliable, legitimate statistical
evidence that sheds new light on the viability of programs, claims, and the
correctness of research facts. There are various qualitative and quantitative
modeling methods available to provide supporting data, but this particular research
utilized the Input-Output (I-O) Framework, which has been established by the
economics Wassily Leontief, winner of the Nobel Peace Prize (1906-1999).
Various world economies are using the concept to assess the viability of financial
factors in terms of customer demand and product flow between businesses.

It is a focuses on quantitative modeling technique that stresses the inter-

dependencies between different economic sectors and is most suitable for
socialism central planning. It uses a factor of production or physical quantities used
in sectors to define the optimal allocation of resources accordingly (Jeff Gavin,
2015). The modeling approach shows the inter-dependencies across industries
within the economy, allowing economically sound evaluation and planning. It does
this by showing how a total production from one industry can become an intake for
another related industry. This paper also uses the quality management systems that
have been noted, highlighting to the government and other relevant stakeholders
the viability of the development investment and the possibility that building
initiatives will be fruitful using crucial information and data gathered for study
purposes.

The Influence of the Construction Project of the Government on the Economy

The building project will greatly affect employment, income, GDP, and exports
and imports in the province of San Miguel, according to the tabular statistics
shown below. There will be a good growth trend in the economic field as a result
of the construction and infrastructure improvements in the transport network and
the railroads.
Table 1: The Impact of Construction on the Economy (Source: extracted/processed by the author)

Cost of Development

These development projects require a sizable investment, and the graphical report
suggests that the cost of development is expected to peak in 2018. By 2022, as
depicted in the start figure below, when development on these projects would have
conclusively proved and returns would start to pour in relative to the project's
operational years, this investment would have mainly been made concerning the
building of Puerto Rico's port city and airport terminal. The infusion of money for
the development of the road and rail network, ports, and the international airport is
responsible for the shift in economic trends demonstrated by the upward curve
between 2016 and 2022.

Direct Effects:

The collected data indicates how the construction project directly impacted GDP,
exports, jobs, and income over the development plan's five years (2016-2022).
Because of the capital injection at the project's commencement, the GDP and
related sectors saw a gain of 36% in 2016 and gains of 23% and 7.63% in 2017 and
2018, accordingly.
 Table 2: Direct effects of the construction project (Source: extracted/processed by the author)

Indirect Effects (Type 1):

The underlined data below illustrates how the Flyvbjerg Building project has partly
influenced GDP, labor, revenue, and imports. Based on a second-level hypothesis,
the study examines the estimates. The results from the direct effects are
transformed into inputs for the various industries in this in because. Based on the
figures, the GDP and related sectors grew by 38.8% in 2016 while witnessing
increases of 25.5% and 8.35% in 2017 and 2018, accordingly. (Table 3)

Table 3: Indirect Effects (Type 1) (Source: processed by the author)

The calculated results show that the government's development initiatives have had
a positive impact, especially on jobs, revenue, exports, and GDP. The construction
project will also result in a rise in oil exploration and mineral exports, which will
have a significant impact on the economy and business. The San Sebastian seaport,
international airport, and transport network may all be further enhanced to increase
economic stability, which is yet another huge benefit of future growth projects for
sustainability and growth. The growth of the area will also be expedited by the
building of new schools, health clinics, and universities for human resource
training. Development plans will increase employment figures and household
income levels, generating new jobs, while hiring experts and PPT-relevant existing
subcontractors would further boost economic strength.

Impact of the Increased Exports of Minerals and Oil

Because of the expansion of the rails and transport systems, as well as the
population increase, the development projects will lead to a rise in the exports of
minerals and oil. The government of Flyvbjerg can take advantage of the
increasing demand for oil in both domestic and international markets to accelerate
economic growth. According to projections, the initiatives would lead to a 10%
rise in oil exports by the year 2017 which will increase GDP.

Minerals and Oil Exports Estimations and expected Increase:

It is recommended that the government plan and grow strategies for efficient oil
export across the globe and also from the production site to the port in a timely
fashion. This is because the state will benefit greatly from the port city and airport
building projects with specific regard to a huge demand for oil export. Planning is
essential for complicated building projects like underwater pipes and efficient
ways for oil extraction via tankers from across the ocean and by land. These
methods would help in reducing operating costs, transportation costs, illegal taxes,
as well as pollution of the ocean and groundwater.

Demographic, Economic & Land Use Impacts

The Oresund Tunnel changed the way individuals travel and live in the area. While
the Swedish side saw high unemployment and cheap homes, the Danish side
suffered from a worker shortage. The Swedish team encountered more problems.
due to its reliance on manufacturing in the 1990s, adjusting to post-
industrialization. But since the bridge was built, Swedes have accepted jobs in
Denmark and Danes have moved to Sweden to take advantage of lower house
prices. Property values increased on the Swedish side as a result, and rates in the
Malmö area surpassed those throughout the rest of Sweden by about 20% between
1999 and 2006. There is still a sizable difference in price between Malmo and
Copenhagen. Strongly suggestive of the existence of one labor force, the
unemployment numbers that were disproportionally high on each side (3.6% on the
Danish side and 5.6% on the Swedish side in 2000) have begun to converge (2.5%
on the Danish side and 3% on the Swedish side in 2007).

The since bridge's construction, the bustling residential and commercial area of
Ore's tad in Copenhagen has rapidly expanded. In addition to the airport and the
downtown area, the new transit lines will provide services to this area. A critical
mass that is attractive for major investments has been created by the increased
integration between Copenhagen and Malmo. While Stockholm was once the
largest town in Scandinavia has been surpassed in population by the Result of
getting Region. This has enabled the area's industrial growth. In addition to some
IT operations, the Swedish side had also warehouses and logistics, both of which
expanded following the bridge's completion. Denmark has benefitted by using the
more easily accessible and far less expensive land in Sweden. As a result,
companies will establish a location in Malmö for distribution and storage while
maintaining their headquarters in Denmark. Thus, businesses that have faced
restrictions on their ability to expand in Copenhagen might shift a portion of their
operations to the other side to improve efficiency and enable growth. The since
bridge, there has been a notable increase in logistical activity in the Oresund
Region. With the bridge ready to open, the ports of Malmo and Copenhagen
merged. This has enhanced the region's status as a logistics hub for surrounding
nations and increased its competition level with the other regional hubs servicing
multiple countries. The Malmo side is a center for vehicles coming from the U.S.
and the Far East, while the Denmark side handles more containers. Massive
distribution facilities are drawn to the Swedish side due to the affordable property
prices. There are many other valuation operations performed in addition to
distribution. The seaport is now Toyota's main distribution base for Mainland
Europe.

The partnership between the university and university in the 2 nations has arguably
been the most major factor in regional integration. 12 schools make up Oresund
University, which has 150,000 students in addition to 14,000 faculty and
researchers. This is an institutional effect of the footbridge that has expanded to
also include effects on business and land usage. Before the bridge was built, the
colleges amalgamated, and since then, several companies have been formed to
make calls between industry and academia. Its Oresund Science Region, founded
in 2001 by Oresund University, works in sectors such as environmental
technologies, biotech, information systems, logistics, and food products. This
foundation wishes to encourage interdisciplinary events that bring together people
who wouldn't typically interact. This often entails navigating the cultural
differences between Danish and Swedish individuals, and one part of their culinary
research involves testing new foods and monitoring responses from folks of both
countries.
Medicon Valley, a biotech hub, has drawn new companies that may have looked
abroad, like Stockholm. Today, the Oresund Region is the home to 60% of both
countries' biotechnology industries. The Oresund Region has indeed been selected
by American company Biogen as its first location outside of the country. The
company stated that the high density of R&D and access to Copenhagen Airport
facilitated by the bridge was its main reasons for selecting the new location. When
fully operational, It should employ 1,000 people. The very first European
Spallation Source (ESS), which will study neutrons generated by high impact
velocity, is currently seeking a site. The Oresund Region is vying alongside
Hungary, Germany, Spain, and the UK for the honor. The universe has only one
such destination (Oak Ridge, Tennessee). With 6,000 researchers continuing to
work there, Europe's facility will be the greatest of its kind when it is completed.
According to a source, if the highway hadn't been built, the region would have not
decided to submit a bid for the project. The recent economic crisis has not spared
the Result of getting Region. For example, work has paused on an industrial estate
that was built near the airport on the artificial coast made again for the bridge on
the Denmark edge. Copenhagen also encountered financial damage as a result of
the high concentration of financial institutions jobs there, whereas Just on the
Swedish side, there are entire lots that must be shifted. Individuals are aware that
the region is less vulnerable to the crisis due to its assimilation, though. Without
the bridge, it is assumed that unemployment would have risen further and house
prices would have lowered more lately. Due to the complexity of the area,
evaluating the structure's economic impact is difficult. Although the footbridge
marks the elimination of an access barrier, its maximum potential impact is
restricted by the price of the cross. The price of public transportation across the
river is affordable, but the price of transporting individuals and goods in cars is
expensive. According to a professor who studied the effects of tolls, they cost $2
billion in lost GDP per year. According to a local study, the bridge, which created
between 30,000 and 40,000 jobs from its commencement in construction in 1994
to its completion in 2006, is accountable for about 20% of the area's population
growth.

Non-Transportation Factors
Its bridge has fostered growth in the area in combination with local and regional
factors. The recent GDP growth in European has been slightly surpassed by the
resend Region. Real GDP in the region has grown since 1995 by

24% as opposed to 23% for European states By reducing border security and
successfully lowering trade barriers between countries, the European Union has
also contributed to economic growth across the entire region. This has led to a
nearly frictionless flow of people and commodities across borders. The Oresund
Bridge allows passengers to traverse from Denmark to Sweden without having to
go through customs or passport control. To promote regional integration, the EU
has also funded cross-border projects which seek to encourage regional integration.
There are numerous advantages to living and working in the region. It is an
atmosphere that is ripe for development due to the large density of universities and
modern industry. High quality of life is also offered in the region. Copenhagen has
a wide variety of cultural offerings and a very low crime rate. The amenities that
Denmark offers for shopping and recreation, such as Tivoli Gardens, are now
readily available to the Swedes. Furthermore, the region has cooperated to boost
tourism. People who travel to Copenhagen for a conference can easily stay at
hotels on the other side. It is now possible to host the United Nations Climate
Change Conference in Copenhagen in December 2009 thanks to the addition of
accessible hotel rooms. Neither country is part of the European Currency Union.
This makes for disparities between sides with currency fluctuations. Recently, the
currency in Sweden (krona) has depreciated relative to the Danish currency
(kroners), which has helped export growth in Sweden but also made it cheaper for
Danes to live and spend their wages in Sweden. Differences in tax and social
security systems create uncertainty for people moving between the two countries.
The governments are w There are several benefits to living and working in the
region. It is an environment that is ideal for innovation due to the large
concentration of institutions and modern industry. A great quality of life is also
provided in the region. Copenhagen does have a wide range of cultural offerings
and a very low crime rate. The attractions that Copenhagen offers for shopping and
entertainment, such as Tivoli Park, are now easily accessible to Swedes.
Additionally, the area has cooperated just to promote tourism. People who travel to
Copenhagen for a conference can simply stay in hotels on the opposite side. It is
now possible to host the United Nations Climate Change Conference in
Copenhagen in December 2009 thanks to the addition of accessible hotels It is now
possible to host the United Nations Climate Change Conference in Copenhagen in
December 2009 thanks to the addition of accessible hotels working on coordinating
these systems. Because the Danish and Swedish languages are quite similar, Danes
and Swedes can understand each other, but cultural differences remain. However,
the bridge has created what one person called a “mental bridge” between Sweden
and Denmark.

CONCLUSION

According to the government's strategy development, the state of Flyvbjerg will

experience a vital growth phase with proven economic growth in the years to
come, as demonstrated by the data analysis above, which makes strong growth in
the construction sector with high-level effects on contributing industries like
mining, manufacturing, oil, public transit, and tourist industry. The five-year plan
will result in a critical phase of construction planning and execution, which will
produce positive economic growth and substantially increase the state's GDP
(Gross Domestic Product). The building of San Miguel's airport Terminal and
seaport would lead to an unprecedented increase in the country's GDP, as seen in
the tabular numbers below, which highlight future development in the oil and
minerals sector. As a consequence, investment in these sectors is possible and will
ensure positive returns, especially in the first two years of operation (2021–2022).
The building projects will directly affect the industrial and procurement sector,
raising household income levels and greatly increasing the government's rate of
employment.

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