Will the real circular building provider and materials expert please stand up!

13325460_sI have had a strange dream last night.

On the sidewalk I almost ran into to a man who was looking really pleased at a newly refurbished façade. “What exactly do you see?”, I asked him. “A beautiful piece of craftsmanship”, was his answer and he told me how as a provider he had put up the building for an investor some thirty years ago with the agreement that he would also maintain the building. They had just replaced the windows and exterior doors, cleaned the façade and renewed the roof. He could tell me exactly which of the used products and materials were suitable for reuse and recycling. The man looks at me and says: “Thirty years ago I have promised the investor the best quality + efficiency for the long term + a positive contribution to the circular economy. When I was still a contractor I just could not make that kind of promise, because I had to work with other people’s plans and I left immediately after delivery. Those days are over!” He gives me a friendly handshake and disappears around the corner.

In amazement I followed him with my eyes, pinched myself and woke up. (As published earlier on the CircularCity website)

Unsustainable revenue models

The sooner my dream becomes reality, the better it is for your revenue model, the future of your company, and also for the circular economy. Why am I so convinced about that? Because your current revenue model is no longer sustainable, for a number of reasons:

  1. Now you have to strip your customers in a dishonest way to earn money on a construction project. The more mistakes you discover in the architectural plans beforehand, the lower your tender can be, so the better your chance in winning the project. And then the challenge is to mention detected errors just in time and fix them for extra money. That is how you make a living right now.
  2. Integrity is essential for today’s yong adults to commit to your company, especially the high achievers. How are you going to do that with this current perverse revenue model?
  3. You are contributing to the waste of resources and materials, and thus to their scarcity. That is going to cost you extra money. Moreover, the current way of working is, naturally, a catastrophe for the circular economy.

Contractor becomes provider

It is time for you to take on a different role and start delivering a building as a total living product: its design, construction, management and maintenance. Your business and the circular economy will have a bright future if we are to help you, the current contractor, grow into a provider of overall solutions, circular solutions. After all, you already have extensive knowledge and expertise in the field of logistics and organization of the construction site. That knowledge deserves expansion into reverse logistics and disassembly. As a provider you partner with materials and product suppliers. You will know exactly what the value is of the materials and products used in the building. You also know what their life cycle is and when and how you can get the best return for reuse or recycling. So you will grow into an expert that knows how to handle materials, products and buildings for the long term. This does not only change your way of working but also your revenue model. It will let you respond perfectly to the investor’s wishes for optimal return on invested capital, controlled from his laptop on the beach.

But make no mistake – this is a complex process of change.

What do we need to change in order to achieve this?

To give you the opportunity to grow into a provider of solutions, we need to organize some affairs differently in the building industry. I will mention the three major changes here:

  1. The building customer only specifies the context

The building customer no longer specifies exactly what kind of building he wants, but will give you the context. What function should the building be able to fulfill, and in which environment? From this question you will present the best answers in collaboration with other experts. The customer makes his choice from these options. With this working method you are immediately freed from a lot of conflicts that now arise from the contractual separation between the design work of the customer with his advisors and your work performance. That’s really good news for the circular economy. Fewer conflicts mean fewer changes and therefore less waste of materials and a reduction in waste.

  1. Distinguish outside and inside

We will divide a building into an exterior and an interior. The investor invests only in the exterior: the base building, foundation, structure, façade, roof and utility connections to each entrance or front door. The investor works directly and exclusively with a provider that specializes in base buildings. The user invests in the inside: the fit-out, starting with its ideal layout of the interior space, choosing installations that enrich the interior climate, kitchen, bathroom, and use of materials. The user deals directly with the provider of the fit-out. In the next article you will see how this benefits both parties and how this is already a winning formula in retail.

  1. Developing knowledge

It is imperative that we develop new knowledge in the construction industry together. This is only possible if we continue to build on the knowledge we have already gathered, as is common, for example, in aviation technology and shipbuilding. Instead of looking at a building as a unique project made by various craftsmen, we now regard it as a system of interlocking components. Those components are made in the factory and assembled on the construction site, near the base building and tailored to the unique location. This is certainly easy for the fit-out which you can systematize perfectly. So we are working towards an increasingly higher quality of buildings of increased value for decreased costs. The variety is endless. We do not need to be afraid of new boring Dutch Vinex districts. And this systematic way of working automatically also leads to less waste of materials and a reduction in waste.

Building world unraveled

So as a provider of overall solutions you can develop your own specialty: the exterior (the base building) or the interior (fit-out) of a building. You will serve one of these two customers: the investor or the user, a distinction between B2B and B2C. You will develop your own knowledge and skills in the use and recovery of natural and industrial materials. In this way we can unravel the building industry, make it transparent, create value in a new manner and reduce waste. A win-win situation for you as a provider, and also for government, investors, consultant, end-users, and ultimately for the circular economy.

 

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 as a provider to grow into a specialized provider of base buildings in the circular economy? Share it in the comments below.

To your health and wellbeing,

Remko Zuidema

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2 Responses to Will the real circular building provider and materials expert please stand up!

  1. Niz 16 March 2016 at 12:56 #

    First of all, that was one refreshing read on the subject with just enough story telling to keep things interesting and easy to grasp.
    On the matter of construction and circular economy, the business model presented in the article looks viable and with a great potential. BUT, in reality things get a little more complicated (as you pointed out) especially when the business model relies heavily on partnerships and collaboration with other businesses that are functioning with a traditional B.M. based on cost killing, maximizing profit and a short-term projection in time. That type of companies bases all their decisions on their net profit, for example, they won’t distinguish the outside from the inside because they make more margin by positioning their product as a high-end building when in fact some materials used are cheap but only imply luxury.
    Based on the real estate strategies and market trends in Casablanca, Morocco.

    • Remko Zuidema 22 March 2016 at 10:58 #

      Dear Niz,

      Thank you for your comment! Yes, existing business models are in the way. Many examples however exist and make it possible to systemise the fit-out, but only after scale is reached. And that is why in Japan and Korea the government intervened to create that scale. See for examples http://member.briqs.org/examples-open-building-in-netherlands currently being developed and examples of past decades. Examples of Finland and Japan you can find on following pages.

      When you are interested in the profitabel real-estate case I recommend the book “The Economics of Property Management” in English of the University of Eindhoven offered for the same price at https://www.briqs.org/shop.

      Looking forward knowing more of your experiences!
      All the best,
      Remko

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