Why sustainability in the construction industry is the key to long term success

As we move towards the future, the issue of sustainability in construction is becoming increasingly important. With a growing world population, the need for urbanization, 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 that make smart decisions now and focus on innovation, end-user benefits, and sustainability, will be the ones who 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, Cost and Commercial Management at Arcadis. 

“Technological advancements in Building Information Modelling (BIM) 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.

One of the main issues that construction companies have to overcome is the belief that embracing the issue of sustainability and adopting a new methodology will cost them more financially. While this may initially be the case, in the long run, significant savings can be made by reducing waste, increasing resource 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 labor costs. However, once market demand and competition increase, costs will reduce,” Mackey said.

To highlight the cost of building in different parts of the world, Arcadis has released its 2019 International Constructions Costs report. This report provides clients with an unprecedented look at the relative costs of building around the globe. It details the relative cost of construction in 100 of the world’s leading cities and is the largest comparison of its kind. 

The report is based on industry-leading market knowledge and significant datasets. Apart from providing a comparative indexation of construction costs around the world, the report also offers market insights and recommendations on the factors clients should be considering in order to continue being successful in the future.

Arcadis developed its comparative cost comparison index for 100 cities, covering 20 asset types, based on a survey of construction costs, review of market conditions and professional judgement from its experts globally. The index incorporates local specification data used to meet the various 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 reducing by 3%, when compared to 2018. The reasons for this include a combination of currency and inflationary effects, resulting in these cities becoming closer together in comparative costs for construction.

Multiple factors influence a city’s position in 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 another important factor, namely the cost of labor in a city, which has a significant impact on the cost of a construction project. Not only that, but 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. Additionally, the cost of construction materials is another prominent factor, but globalization means that prices are not just based on location, as more and more globally-sourced materials are available to local and regional markets.

A city’s position in the index will also be strongly influenced by the quality, complexity and functionality levels that are typically expected within each city or region. Where projects are generally of a higher quality and complexity, and where specifications are usually more sophisticated, 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.

Despite the issue of cost, studies suggest that organizations that have leveraged existing and emerging technologies have pulled ahead of competitors. For the construction industry, which has been behind the curve, now is the time to fully embrace advancements in technology, as a means of overcoming global economic headwinds, by boosting productivity and cutting costs.

If construction companies want to continue to grow and prosper in the future, it’s imperative that all sectors of the supply chain - clients, designers, contractors, manufacturers, suppliers - focus on sustainability and respond to the needs of stakeholders in a prompt and effective manner. Construction companies that fail to do this will reduce their economic viability over time and most likely fall by the wayside.

Consumers are beginning to demand responsible approaches to design and construction. They are making choices based on how retailers and service providers are responding to the environment and utilizing natural resources. 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 said.

“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 to going to make value choices and business owners will have no choice but to follow the market.”

In order 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, the use of low flow plumbing fixtures and energy efficient lighting, and the use of locally sourced materials to reduce greenhouse gas emissions are beginning to have a positive impact on the environment.

At some point, whether they like it or not, increased regulation in areas such as carbon emissions and waste will force the construction industry to improve its processes and embrace the issue of sustainability. Right now, all levels of government are working hard to implement sustainable reform. With stricter government legislation, the construction industry will eventually be forced to change its processes and adopt a green mentality.

Community pressure will go a long way towards ensuring the issue of 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 the need for action and encourage community support for reform agendas.

The issue of sustainability in the construction industry is still in the early stages of development = even though it has been a topic of discussion for many years now. However, in the coming years, it will transform from a trend into a mainstream way of life. Looking ahead, market conditions will present both challenges and opportunities for construction clients. However, it’s important to remember that constructing sustainable buildings will not only allow us to use resources more efficiently, it will also improve the health and wellbeing of end users, and most importantly, reduce our impact on the environment. 

Matthew Mackey

Director - Cost & Commercial Ask me a question
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