Principles of Company’s Economy

Principles of Company’s Economy Building Industry as a Part of National 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 andsale • Exam Literature: Marková, L. a kol.: Principles of Economy of Building Firm, CERM s.r.o. Brno, 2002 Principles of Firm’s Economy

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 • New customers buying equipment and furniture for just finished building objects enter the products market Principles of Firm’s Economy

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 „clean“ technologies and materials in the production • Using of recycled materials, saving of nature resources Principles of Firm’s Economy

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

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

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 … Personalconsumption expenditure Ig …Gross private domestic investment G … Goverment expenditure on goods and services X … Net export, X) Principles of Firm’s Economy

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 bankmunicipalities regions Supreme control office Ministriesnext central authorities Principles of Firm’s Economy

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

Impact of Public Administration on the Range of Building Investments From the fiscal aspect A. State administration • Central government: state budgetState 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 RepublicLand 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

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

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

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

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

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

Standard classification of production Standard classification of productionis 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

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

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: 12345 6 sectionsubsection group classsubclass Section 1: Buildings 11 Residential buildings 12 Non residential buildings Section 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

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: 1. 2. 3. - 4.5.6.7. • branch • group • subgroup • construction and material characteristic • kind of building action Principles of Firm’s Economy

Example of Branches Principles of Firm’s Economy

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: 1.2.3.4. 5. • Group of building sections • Building section • Kind of construction or work • Detailed characteristics Principles of Firm’s Economy

Overview of Groups of Building Sections Principles of Firm’s Economy

Principles of Company’s Economy