Potential Additional Costs Of Environmental Sustainability Construction Essay

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Since the late 1980s, environmental sustainability in construction projects has become one of the main research topics "Sustainable construction" could be generally interpreted as the creation, innovation and responsible management of a nature-friendly construction based on resource efficient and ecological principles (Tan 2010, p.4). The idea of contractors' responsibility to the environment comes to the fore while in 1994 the concept of sustainability emerged at a tactical level in the building sector. A considerable number of contractors believe this responsibility could mainly cause extra costs to projects. Therefore, it was practically neglected in two last the decades. Nowadays, however, the endorsement of environmental performance is becoming more widespread amongst construction companies, inducing cost savings and consequently, contributing to business competitiveness. Environmental performance can minimize negative effects of construction activities and maximize economic success. This essay will argue that environmental sustainability may result in extra cost but it could be feasible and sustainable activities can minimize negative effects of construction activities on the environment and maximize economic success. This standpoint will be supported by opposite views of scholars and the evaluation of a case study for each viewpoint.

The major argument against sustainable economic feasibility is that the current level of environmental protection activities often contradicts with the contractors' business objectives, particularly those of improving economic success. In many cases, environmental issues influence both costs and income of a company and therefore, have an influence on the economic success of a contractor. Schaltegger and Synnestvedt (2002, p.?) explain every environmental protection activity will reduce economic success. Based on this study, Wagner and Schaltegger (2003, p.?) propose a phenomenological relationship between environmental protection activities and economic success. They also argue that the sustainability performances reduce economic success and the purpose of environmental regulation rectifies negative externalities that consequently load firms with additional costs. Professor Carmichael of the University of New South Wales (2009, p.?) states sustainability practices are seen as an added cost or more regulations to follow by contractors. Nowadays, the above-mentioned relation is called the "traditionalist view of neoclassical environmental economics" by Tan, Shen and Yao (2010, p.?).

In some countries, particularly developing countries, sustainable activities by contractors would increase project costs. For example in Iran, recommendations encourage contractors to invest in environmental protection. To contractors, however, environmental protection is not of the highest priority. Consequently, there is no investment in sustainability at all. Moreover, the availability of cheap energy resources results in increasing numbers of gasoline-driven construction machinery. Therefore, in Iran it may not be feasible to achieve economic success following increased environmental performance and more regulations, as contractors do not incentive. The technology of recycling materials as well as investments in environment-friendly machinery and equipment are a necessity. Moreover, in some countries, raw materials are easily accessible, which tempts contractors to utilize cheap virgin materials instead of recycled ones. For instance in Hong Kong, 42% of the 16500 tonnes solid waste disposed of daily at the three municipal waste landfill sites consist of construction and demolition (C&D) waste. About 80% of the C&D waste landfilled is inert (e.g. sand, bricks and concrete) material, which could be better reused for land reclamation (Environmental Protection Department, 1998 & 2000, cited by Poon, Yu & Ng, 2000, p.158). Consequently, Hong Kong contractors are reluctant to implement on-site waste sorting as an environmental protection activity (Poon, Yu & Ng, 2000, p.171).

The accessibility of low-priced raw materials compared to recycled materials in a number of developing countries is a barrier to environmental sustainability performance by contractors who are naturally benefit oriented. In such circumstances, it is not feasible to expect small and medium sized companies to increase their project cost because environmental protection generates no additional benefit. However, pre-occupation in today's business, and pre-occupation in project costs savings, at the expense of the bigger and long-term perspective may lead to the contractor's business failure in business, such as environmental calamities as oil spills or hazardous substances. As a result, having traditional approach in business may generate profit in a short term, but it lacks sustainability, and due to the lack of environmental strategy, the long-term performance of a company remains vague and uncertain. Therefore, from the traditional viewpoint, preference of economic success to sustainability performance is held weak and poor. However, Carmichael (2009, p.?) asserts environmental sustainability performance would be a positive opportunity for economic success of contractors under new conditions. Consequently, it will be feasible if the above-mentioned weaknesses are eliminated and some shifts in regulations and policies are achieved.

By contrast, sustainability could be an opportunity capable to add value to the contractors and profitability to a business, independent of any moral, ethical or corporate social responsibility (CSR) concerns. In other words, the current level of environmental protection activities practiced by a company has a beneficial effect on its own economic success. According to Tan (2010, p.2), improvement in sustainable performance contributes to business competitiveness and properly environmental standards can prompts innovations to lesson the total cost of a product and helps improve its value. Such innovations enable contractors to use a range of more efficiency resources (e.g. raw materials, machinery and labors), therefore, it offset the costs of improving environmental impact and ends the stalemate and makes companies more competitive, not less. Tan (2010) acknowledges Porter & Van der Linde (1995) and Sinclair-Desgagné (1999) that improved sustainable construction is a potential source of competitive advantage results in more efficient construction processes, low costs of compliance and new market opportunities.

Regarding the last point of view, a case study on a contractor of demolition works and recycling of construction and demolition waste in the Netherlands is provided. In 2007, the contractor decided to incorporate adequate environmental measures into the recycling process by investing in dust control equipment. Following this decision, the Dutch government immediately issued a ten-year environmental permit to the contractor. While the initial investment of the equipment amounted to €25,000, the company increased its production volume from 14,980 tonnes of recycled aggregates in 2006 to 280,600 tonnes in 2009 (17.73% increase). Moreover, the gross margin of the activity increased from €14,980 in 2006 to €420,900 in 2009 (Janssen, 2010). In summary, the study shows that economic success can be achieved by means of improved sustainable performance. Hence, high environmental performance can be economically feasible.

As a consequence of this argument, however, several problems arise. The comparative advantage and the economic success depend on a variety of factors such as the level of technological development, the owner and clients' willingness to pay for environmental protection, the kind of environmental regulations in a country, etc. The ability of innovation and developing new technologies would be more important to sustain competitiveness than traditional competitive advantage factors (Porter & Van der Linde, 1995 as cited in Tan2010, p. 2). First of all, low accessibility of contractors (e.g. small and medium sized contractors' companies or region related such as Iranian contractors) to new technology and eco-friendly machinery, could be a substantial barrier to environmental practice. Although the feasibility of environmental sustainability related to availability of new technology enables contractors to address many issues of sustainability directly and reduce their own footprints, this new technology is not available to all companies. A significant number of small and medium sized companies may have obsolete and less environmentally-friendly technology, which can be considered a weakness of this view. Furthermore, according to Porter & Van der Linde in their 1995 study, due to the increase of investment in sustainable activities, the benefit of the investment in environmental protection decreases after the peak point (Tan2010, p. 2).

Another problem caused by enhanced resource productivity is strongly related to innovation that may not be easily available, anytime and anywhere. Therefore, sustainable construction may depend on innovation and having the in-house competencies and skills to adapt to future scenarios. As a result, it might not be approached by considerable numbers of contractors particularly in developing countries. Accordingly, Schaltegger (2002) warns there are only a few studies on how to improve contractors' competitiveness by implementing sustainable construction. Furthermore, the effectiveness of the sustainable construction manners has been limited in practice, where cost, time and quality are determining ensuring maximum benefits to the contractors who have profit-driven culture.

In conclusion, if it is accepted that economic factors and construction projects' cost play a significant role in the project feasibility, then environmental sustainability may result in extra cost but it could be feasible yet. This feasibility of environmental performance actually could be affected by the phenomenological relationship between construction sustainability activities and business competitiveness which may not be unique in the developed and developing countries. These sustainable activities can minimize negative effects of construction activities on the environment and maximize economic success. Many analysts such like above mentioned ones, now argue that the strategy of traditionalists has not been successful in global need. The revisionist argue that sustainability performance not only results in project feasibility but also cause to efficient processes and new market opportunities. The revisionist study would have been more convincing if they had considered less developed and developing countries conditions and procedures. Because, barrier to accessibility to the technology and innovation may have importance difficulties to small and medium sized companies in developing countries yet.