November 16, 2016 | Written by: Chris Gage
Share this post:
The circular economy will restructure the built asset value chain enabling companies to exploit new business opportunities whilst being environmentally virtuous.
Did you know that the construction and demolition of built assets are the biggest contributors to waste in the UK? Combined, they generate 120 million tonnes a year. Add this negative environmental impact to the expense of demolishing a building (it costs between £6,000 and £8,000 to break down and clear a small detached house) and it’s little wonder that companies are re-evaluating the way they design, construct and disassemble structures.
The circular economy is already changing industries across the world. The linear economic model of “take-make-dispose” is being replaced with a circular alternative, where products are created with reuse in mind from the start. IBM has for some time been the global leader in IT asset recovery and reuse. And now this shift is impacting the construction of built environments.
This is not just a fanciful idea. An EU proposal is targeting 70% of municipal waste to be recycled by 2030 and is set to make sending recyclable materials to landfill illegal by 2025. Companies must get on board. But applying circular economy principles to construction requires a significant shift in the way built assets are designed, created, owned and demolished.
Across the lifecycle
Circular construction processes start at the concept stage. Designing for deconstruction includes selecting reusable materials, reducing the amount of components required to build the asset and considering fittings that enable simple disassembly. These considerations have given rise to modular designs, with the various elements of a built asset arriving onsite pre-assembled and created with disassembly in mind.
Ultimately, when the asset reaches the end of its useful life, it is disassembled, minimising damage to the underlyling materials and components in order to retain value. And it is this residual value that makes the business model attractive. Why pay for your asset to be demolished and removed when you can you can recover money from it instead?
Incorporating detailed records of materials into the building information model is key to delivering an effective circular construction project. Deploying an asset lifecycle information strategy is crucial as it optimises the supply chain and gives participants a central platform from which they can gain complete visibility over a project.
Perhaps more important, however, is the ability to interrogate information such as which materials exist in the asset, their location within the asset, the ease of recovery, any contamination and quality levels.
These are just some of the factors that are likely to impact the ability to recover the materials and the value that will reside in them. The better the information, the more likely the materials will maintain value, not dissimilar to the benefits of a ‘full service history’ when selling a car.
Having access to this information will also enable building owners to have a clearer understanding of building health and the causes of failures which can then be used to predict and optimise maintenance and further capital investment.
New business models
When you have a granular understanding of what materials comprise a building you can start to think of them differently such as Buildings as Material Banks. Indeed circular asset lifecycles could even cause a radical rethink of the built asset value chain.
New business models may emerge where manufacturers supply materials ‘as a service’; i.e. leasing the materials rather than selling. Or perhaps more likely, new or existing leasing companies will step in to take this link in the value chain.
Inevitably there will be the Uber/Airbnb/Alibaba style platform to bring buyers and sellers of materials together and all manner of other players involved in disassembling, gathering and transporting materials to their new host.
One thing is for sure though: as more assets become circular, the market for re-use will strengthen. This will stimulate demand for circular assets which will incentive further supply- and so on.
From consuming materials as a service to optimising a building’s performance through advanced analytics, businesses can save significant costs by adopting a circular approach to built environments. This will form a sizeable chunk of the £452 billion the European Union stands to save by applying circular economy principles.
The environmental benefits are equally laudable. Nearly two thirds of materials consumption in the UK comes from the construction of built environments. By factoring in reuse from the start of project, there is an opportunity to make a significant dent in that figure, save money and create a virtuous circle – from design to disassembly.
To learn more about Circular Economy and how IBM can help you transition to a circular business model check out this video.