Construction industry must get sustainable, or pay the price

Arcadis Pty Ltd

Saturday, 01 June, 2019

Construction industry must get sustainable, or pay the price

As we move towards the future, sustainability in construction is becoming increasingly important. With a growing world population, increased urbanisation and the effects of climate change being felt throughout the world, the demand for sustainable buildings is gaining momentum.

Based on data and studies of key global markets, it’s clear that construction companies making smart decisions now — focusing on innovation, end-user benefits and sustainability — will reap the most rewards down the track.

“The successful construction companies of the future will be the ones that meet customer demands, ease consumer pain points and deliver enhanced social, economic and environmental value,” said Matthew Mackey, National Director of Cost and Commercial Management at Arcadis.

“Technological advancements in building information modelling and data analytics can help companies design and construct innovative buildings. These intelligent spaces will help generate the technologies of the future and better meet the needs of their users.”

Constructing and operating buildings has a significant impact on the environment in terms of water and energy use, carbon emissions and waste. International efforts to combat the effects of climate change and to conserve natural resources are creating a higher demand for more sustainable buildings with features that will reduce negative impacts on the environment.

“As the number of sustainable solutions continues to grow, the construction industry has a chance to reduce its impact on the environment. With smart planning and decision-making, developers and construction companies will be able to position themselves as industry leading and gain a distinct advantage over their competitors,” Mackey said.

A key issue that construction companies must overcome is the belief that adopting new, sustainable methodologies will cost them more financially. While this may be the case initially, in the long run, significant savings can be made by reducing waste, increasing efficiency and promoting innovative new products.

“At the moment, the cost of sustainable products and resources is on the higher end due to a number of factors, including a lack of market competition, skills shortages, and increasing energy and labour costs. However, once market demand and competition increase, costs will reduce,” Mackey explained.

The cost of building in 100 cities

To highlight the cost of building in different parts of the world, Arcadis has released its International Construction Costs 2019 report, which provides clients with the relative costs of building around the globe, as well as market highlights and recommendations for success. The report, based on industry-leading market knowledge and datasets, details the relative cost of construction in 100 of the world’s leading cities.

Arcadis developed the index based on a survey of construction costs, review of market conditions and professional judgement from global experts. The index incorporates local specification data used to meet building functions and market needs. As a result, the index is a comparison of the relative costs of delivering similar asset types in each city.

According to the report, the index range for the ten most expensive cities has narrowed this year, with the average index value falling by 3% compared with 2018. This is due to a combination of currency and inflationary effects, resulting in cities shifting closer together in comparative costs for construction.

Multiple factors influence a city’s position on the International Construction Costs Index. To begin with, some cities are more or less expensive than others. Part of this is what economists call the cost of living in a city, which is the price of goods and services such as food, taxes, health care and housing. The cost of living also influences the cost of labour, which has a significant impact on the cost of a construction project.

The overall productivity of the construction industry as a whole also affects costs. In parts of the world where productivity is higher, the relative costs of completing a project will be lower. The cost of construction materials is another prominent factor, but with more materials being sourced globally, prices are less location dependent.

A city’s position on the index will also be influenced by expectations relating to quality, complexity and functionality within each city. For high-quality, complex projects with sophisticated specifications, construction costs will typically be higher.

“Combining market knowledge with in-depth data on the world’s construction markets and the use of digital tools can support smart decision-making. This allows greater predictability of outcomes, removes waste and generates value, not only now but also over the entire asset lifecycle. This is how developers and construction companies can gain a competitive edge,” Mackey said.

Studies suggest that organisations that have leveraged existing and emerging technologies have pulled ahead of competitors. For the construction industry, now is the time to embrace technological advancements to boost productivity and cut costs in order to overcome global economic headwinds.

If construction companies want to grow and prosper in the future, it’s imperative that all sectors of the supply chain focus on sustainability and respond to the needs of stakeholders promptly and effectively. Companies failing to do this will reduce their economic viability over time and may fall by the wayside.

The impact of consumers

Consumers are beginning to demand responsible approaches to design and construction, making choices based on how retailers and service providers impact on the environment. Everything from what products are made from to whether the packaging is recyclable to how companies dispose of their waste is currently under the microscope.

“Consumer voices are the one thing that will make construction organisations stop and take notice. If people truly want to make a difference they need to think about the products they are choosing, as what they buy and how they buy it can have a huge impact on all aspects of sustainable development,” Mackey stated.

“Consumers will have a more positive image of companies that support social and environmental issues. People are not only assessing their own individual impact on their environment but also the way business owners are supporting the environment. At the end of the day, end users are going to make value choices and business owners will have no choice but to follow the market,” he continued.

To be effective, suppliers, clients and end users need to consider sustainability at every stage of a building’s life cycle — from design to construction, to operation and demolition. Simple changes, such as better waste management, use of low-flow plumbing fixtures, energy-efficient lighting and sourcing materials locally to reduce greenhouse gas emissions, are beginning to have a positive impact on the environment.

Community pressure will go a long way towards ensuring that sustainability in the construction industry remains an important and relevant topic. By raising awareness and lobbying the government to stay on top of this issue, consumers will help expedite action for reform agendas.

Eventually, increased regulation of carbon emissions and waste will force the construction industry to embrace sustainability and improve its processes. Right now, all levels of government are working hard to implement sustainable reform.

Sustainability in the construction industry is still in the early stages of development. Looking ahead, market conditions will present challenges and opportunities for construction clients. However, it’s important to remember that sustainable buildings will not only allow us to use resources more efficiently, but will also improve the health and wellbeing of end users, and most importantly, reduce our impact on the environment.

Image credit: © Alexander

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