May I introduce you to the entire circular elephant?

Circulaire Olifant YK 05.06.16-01Do you know the ancient Indian parable about the blind men and the elephant? Every man touches a certain part of the elephant and assumes to know what it is. The man touching the trunk says: “It’s a snake!” The man touching the ear says: “It is a fan.” So, the tail becomes a rope, the hind leg the trunk of a tree and the tusk a spear. Nobody is aware of and approaches the elephant in its entirety. The building industry is just like that and this is disastrous for the circular economy. That is what I have been trying to show you in the last five blogs. Would you like to discover what the entire elephant looks like? Then I have a great offer for you.

Parts of the elephant

We have seen that real estate is a cash cow for the government with a nice yield. Just try and change that! For investors a circular building is an investment that is not easily made profitable. They have to spend money on kitchens, bathrooms and other parts that only last for a relatively short period of time. So they are satisfied when meeting the minimum requirements. Which means the user gets a home or workplace that does not meet his personal needs for health, welfare and productivity. Created by a contractor who can only earn money by scrupulously duping both his customers. Because of all these different interests and the lack of teamwork, the circular economy suffers greatly. The building industry squanders materials big time and produces a ridiculous amount of waste. With 40% waste the building industry is the absolute top scorer. Being top scorer is only something to be proud of in sports. We need a new approach to delete the building industry from the top scorer charts. Would you like to know how we can achieve that? Then please read on.

How circularity in buildings connected with five very different economies

Circular economy for the Netherlands would be just another opportunity to let the crisis finally behind. The Circular Economy we can include connecting two qualities together: the great knowledge and extent of reuse of raw materials and logistics. During our EU Presidency in the first half of 2016 Circular Economy therefore is a card to draw. Then it is very important that it is clear where exactly we are talking about when we talk about the Circular Economy.

Where exactly are we talking about when we talk about circular economy? We’re talking about at least two concepts: circularity and economy. Circularly about resource use relative to consumption, we often have that clear. But about what economy are we talking about in this circular concept? As seen previously, we have in the built environment to include no less than five completely different economies. These five separate economies operate at the moment largely aside, but suddenly have to exchange intensively with each other inside the circular economy. Five economies of knowledge where many who deal with constructing or buildings have only one or two in mind, which at the moment doesn’t promotes the cooperation and coordination! This obviously poses new challenges of which we have often already existing answers, even in the Netherlands. Answers that ensure that we maintain maximum value over and over again and create new one. We need only to align them between themselves.

Notion 1: circular

In circularity it also involves a distinction between natural and technical cycles. By making a life cycle distinction inside buildings – such as Stewart Brand does in his 6-S method in 1994 – of course we can leave natural materials quietly cascading and keep technical materials valuable.Brand 6S

Brand distinguishes 1. Site (location, floor), 2. Structure (construction), 3. Skin (skin, wall, roof and ground floor), 4. Services (installments) 5. Space Plan (separating spaces within the building) and 6. stuff (furniture and equipment). For our story are especially focus on the part 2 to 5; construction, skin, installments and layout within the building are important because land, furniture and stuff is not officially real estate and therefore meet other rules.

Natural materials circulate in nature

If we talk about the consumption of materials and we can’t come back to re-use, for example in food which is eaten or shampoo and cosmetics that land in the wild, we can only use natural materials. Or engineering materials otherwise end up into nature. If we keep Cascading we can make maximum use of natural materials and delay and offset their natural degradation as long as possible. Completely prevented in the long term will be impossible. Sand, gravel and cement from rubble waste to be re-used in concrete is a successful example of this. After all (natural) stone, gravel, sand and clay are natural degradations of Swiss mountains washing through the rivers into the (North) Sea.

Technical and natural materials circulate through mankind

Technical materials we shall keep as long as possible in circles (loops), as a whole product or in parts. So we keep up maximal economical value and prevent the need for new, scarce raw materials ultimately. That, for example, succeeds reasonably well in steel and aluminum which is re-used over 95%. But demand is growing so fast that we still need much new iron ore and bauxite to process, and also we cannot make new steel from 100% recycled steel as this still requires a small percentage of new material. For natural materials this method is also useful by slowing the degradation as much as possible, thus postponing the ultimate form by natural regeneration as long as possible.

Valuable models

Within the circular economy of buildings we use, in addition to the Six-S method of Brand, other models to determine and to maintain value, like the ten levels of circularity of Prof. Cramer. In her proposed levels – and therefore also for buildings – we find in step one up to ten, that in each of the progressing steps on average less labor is needed; while simultaneously creating a higher loss of material at the same moment. In our current economic model, it is unfortunately true that taxation makes labor relatively expensive and raw materials have hardly any additional charge. Companies thereby cut down on the use of people and not on raw material use. It would be better to move the stimulus. Projects like www.extax.com take this further with the slogan: Tax resources, not labor! And ask for a quick integration in our national and European economy. This brings us naturally to the next.

Notion 2: economics

According to the economy definition of Prof. Heertje two variables are needed to make something economically valuable:

  1. It should provide prosperity for society, customers and / or the producer.
  2. It must be a good being scarce; something that cannot be delivered without value transfer or payment. Without transfer of value and earnings a company will not supply anything.

This general definition of economics by itself doesn’t do it all in the construction industry. We should really distinguish between five different economies because the interest, and thus the needs of various parties are so extremely different. And the hierarchy of these economies will also agree that they are not equivalent.

It’s about the:

  1. Economics of use in the primary process of the (end-)user;
  2. Exploitation economy from the fit-out expenditure;
  3. Building Economics from base building investments;
  4. Real Estate Economics from the value/money return of the investor;
  5. Public Economics from the various authorities as an important source of income.

In the previous five blogs I have described what they mean by this and developed.

The key to success

As I have argued in the five previous blogs, the separation of base building and fit-out, and thus between the construction economy and exploitation economy, is the key to success. With this separation we unravel the different interests and responsibilities of the parties involved in the building industry, and we make a difference between spending and investing, by which according to definitions only the latter it is returning your money. Everyone can do what he’s good at, will deliver quality and earns (back) his money in a transparent way. However, we have a lot to discuss with each other, before we get to that point – on site and in politics. Because we need new rules and regulations to enable this new way of collaborating and sharing of revenues and responsibilities. The separation of base building and fit-out is the basis for this new way of working together.

Take the next step and share your experiences

Do you want to take a next step? Come to the FREE* Masterclass. We will work with practical tools to instantly implement the actions of my ebook in your organizational, fiscal or financial projects and organization.

Join the conversation

Do you know how to build that new way and what you need? What exactly do you need to grow into the circular economy? Share it in the comments below.

To your health and wellbeing,

Remko Zuidema

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