Construction Economics applies economic theory, concepts and analytical tools to the construction industry, the companies and organisations comprising it, and the projects it undertakes. Over time, the field has been extended beyond the minimisation of capital cost on projects to include life-cycle cost considerations, the idea of value, sustainable construction and climate change, and applications of technology. Attention has also included consideration of companies and organisations, and strategic, industry-level considerations involving the economy and construction markets, government policy, and international finance and economics.
The Elgar Research Companion on Construction Economics provides an overview of current research and a critical examination of issues in the field. It also provides the opportunity for some new or under-explored issues in the field to be discussed. Each chapter analyses the existing knowledge on the topic, compares the various views on it, and presents a reference point for further advanced research leading to further development of the subject. The book has 24 chapters authored by recognised experts on their topics. This is an influential collection which represents a relatively complete work on the field of construction economics.
This important milestone in the development of construction economics is published by Edward Elgar. Details on the contents and contributors can be found here.
Updated: Jul 22
Building Standards and Codes
The regular revision and upgrading of building codes and product standards is a policy area where governments, usually through regulatory agencies, have influenced and directed industry development. This is a more complex proposition than the use of BIM mandates because there is often no specific policy or set of policies that would qualify as an industrial strategy. Nevertheless, the use of building codes to influence industry development has a long history with some notable successes, because buildings are designed and delivered in conformance with those regulations. The building code of 1676 for the rebuilding of London after the Great Fire of 1666 classified buildings into types with specified materials and levied fees that paid for inspections. A new building code in 1844 included regulations for height, area, and occupancy of buildings.
Standards and codes establish allowable tolerances and how much variation is allowed for products and processes. They underpin quality control and are the basis of inspections to verify work being done, so a standard is a document structured around requirements for conformity and measures that certify meeting those requirements. During the late nineteenth century governments and insurers began raising the standards they set in building codes for access, light, safety, amenity and appearance, significantly improving the design and construction of buildings.[i]
The first standard was agreed in Paris for the International System of Electrical and Magnetic Units in 1881, and the International Electrotechnical Commission was established in 1906 to develop and distribute standards for the units of measurement used today. The British Standards Institution was founded in 1901, as were French and German institutes. In the US the Underwriters Laboratory was founded in 1894 by William Merrill, an electrical engineer, to provide testing of building materials for insurers, and the 1897 National Electrical Code on electrical wiring and equipment installation was the first US modern code. Insurers led the way in developing standards and methods for fireproofing the steel framed buildings that were becoming common, issuing a model building code in 1905 to reduce fire risk. Also in the US, the American Society for Testing Materials goes back to 1898 with their standard for the steel used to fabricate railway tracks. In 1902 it became the American Section of the International Association for Testing Materials, which eventually became the International Organization for Standards (ISO) in 1947. The American National Standards Institute was formed in 1918.
The ISO now has more than 22,000 different standards covering every aspect of organization management and production control. National testing and standards institutes are members of the ISO, they meet annually to review programs, and countries fund it in proportion to their trade and GDP. There is a six stage process for getting a standard published, typically based on research from the member institutes, and each standard has a guide for developing and maintaining it. Multiple standards are being combined to make them easier to manage.[ii] Although agreeing new standards is a lengthy process, they are universally accepted and applied because of the rigorous scientific and engineering research they are based on. Therefore, an important element in a strategy to increase innovation in construction of the built environment is to increase funding for testing laboratories.
Building characteristics like materials, access, ventilation and fire safety are regulated by standards and codes. The International Code Council produces a series of model International Building Codes that are widely used.[iii] Accreditation for standards like quality control, project management and digital twins for contractors are often required by clients. The performance of the built environment is to a large degree measured against the baselines set by standards for health and safety, energy and environmental management, and process control. When natural disasters like earthquakes, floods and hurricanes reveal shortcomings in existing standards, they lead to new standards and building code revisions.[iv] The higher standards improve resilience and drive improvements in the performance of buildings and structures. This is seen when rebuilding after fires with more fire resistant buildings due to code changes, or after earthquakes with updated standards and more durable designs. Seismic code provisions first appeared in Italy and Japan in the early twentieth century, and in the US in 1927.
Building codes establish a baseline for quality and performance. They protect buildings and people from collapse, fire, wind and other extreme events. They regulate structural integrity, electrical, plumbing and mechanical systems and safety, accessibility and energy efficiency. Codes thus underpin the work of architects, engineers, contractors and developers. Architects and engineers must ensure their building designs meet or exceed minimum code requirements Local authorities review plans before construction and issue permits. Inspectors verify the project is compliant.
Through revisions to building standards and codes innovations and new products are introduced in an incremental but typically slow process. While that reduces risk for designers and contractors, it also affects the rate of built environment product innovation and improved building performance. Revisions can be opposed or delayed, for example by residential builders worried about increased costs in a price sensitive market or by product manufacturers protecting market share. Nevertheless, a regular review and update process like the US three year cycle for building codes keeps them relevant and focused on the key issues of building quality, energy use and embodied carbon emissions from construction of the built environment.[v]
Built Environment Decarbonization
The role of building standards and codes in decarbonization,[vi] reducing energy use and cutting greenhouse gas (GHG) emissions is well known.[vii] A carbon budget for both the construction[viii] and operation[ix] of the built environment is required. The UN produces an annual Global Status Report for Buildings and Construction that says: ‘Cutting building-related emissions by improving energy efficiency is a crucial aspect of meeting net zero by 2050 climate change goals. Building energy codes provide a tool for governments to mandate the construction and maintenance of low-energy buildings.’[x]
To do this, the energy use of buildings must be monitored and managed, and buildings must be built and retrofitted to use less energy, and a global standard for determining greenhouse gas emissions for cities is under development.[xi] There are many startups in building energy management. Although many countries, particularly in Africa, have not yet got compulsory energy codes, countries with codes have been moving toward electrification of building operations, particularly for heating and cooking. This is a necessary requirement to reach net zero by 2050 because residential energy use accounts for around 40 precent of total emissions.
The EU is committed to net-zero carbon emissions by 2050.[xii] EU countries’ national climate plans outline how a country intends to address energy efficiency, renewables and GHG emission reduction and meet EU targets. The Energy Efficiency Directive (EED), the framework for energy-efficiency policy in the EU, was established in 2012 with a 20 precent energy-efficiency target by 2020 and revised in 2018 with a 32.5 percent non-binding energy-efficiency target for 2030, with an increase to 39 percent proposed. The EED also targets government buildings, requiring renovation of 3 percent of the floor buildings owned and occupied in line to minimum energy-performance requirements.
Legislation is based on the Energy Performance of Buildings Directive (EPBD). The 2018 amendments aim for full decarbonization of Europe’s building stock by 2050 while focusing on how to modernize the existing stock. The EPBD requires Member States to develop national long-term renovation strategies, outlining how a country aims to decarbonize the building stock by 2050. To reach the ‘2030 climate target of reducing GHG emissions by at least 55% compared to 1990, and climate neutrality by 2050, the EU must significantly increase its rate and depth of renovation, reduce GHG emissions from buildings by 60% compared to 2015, and by 2030 increase the deep renovation rate to 3% annually, up from the current 0.2%’.[xiii]
There is no national energy code in the US, where state, county and city authorities all play a role in setting standards and codes. Model energy codes are developed through the International Code Council and the American Society for Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE). Residential and commercial buildings typically reference a version of the International Energy Conservation Code, but California and Washington have their own codes. Codes are typically decided at local or municipal level, then adopted by the state level. York City will phase-out fossil fuel combustion in new buildings from 2024., as will San Francisco and more than 40 other cities in the Bay Area.
More than three-dozen US cities have benchmarking policies where owners report energy data annually to local government. Some also have building labelling, which requires owners to display an energy score or ranking based on benchmarked data.[xiv] Building performance standards set energy or emissions targets using a range of metrics, including energy intensity, GHG emissions intensity, or third-party scoring (like an Energy Star rating) for existing buildings. They get stricter over time, and as well as metrics and a target they include a plan of steps to be taken to reach the target. In 2022 eight US jurisdictions have implemented them. The graph below shows how improvements to the ASHRAE energy code are expected to close the gap to the 2030 target.
Figure 1. Energy efficiency and ASHRAE codes
Source: Institute for Market Transformation, 2022. Mapping US energy policy on energy efficiency in buildings[xv]
In many other countries sub-national local or regional authorities have been leading on climate change, for example in Australia the Federal Government’s reduction 26 percent target for 2030 greenhouse gas emissions is significantly lower than State Governments’ 50 percent target. California is another example. It was the first US state to introduce an energy code in 1978, with the three year review and update cycle used in the US. Major updates included electric vehicle charging measures in 2015 and a rooftop solar mandate in 2020. California’s 2022 building code update is considering all-electric construction, meaning buildings must use electric heating and cooking appliances, with no option to use gas.[xvi]New York City in 2016 required benchmarking of energy and water use and from 2020 buildings had to display their grades (from A to F) in their entrance, based on the US Energy Star system.[xvii]
[i] Pfammatter, U. 2008. Building the Future: Building Technology and Cultural History from the Industrial Revolution until Today. Munich: Prestel Verlag. Davis, H. 2006. The Culture of Building, Oxford: Oxford University Press. [ii] For details and a history of the ISO, and for several standards, see Rich, N. and Malik, N. 2019. International Standards for Design and Manufacturing: Quality Management and International Best Practice, London: Kogan Page. [iii] https://codes.iccsafe.org [iv] Miao and Popp studied innovative responses to three natural disasters: earthquakes, flooding, and drought. Based on the frequency and location of natural disasters and a panel of patent data from 1974-2009, they find that a billion dollars of damage in a country from natural disasters increased innovation by 18 to 39 percent. Miao, Q. and D. Popp. 2014. Necessity as the Mother of Invention: Innovative Responses to Natural Disasters. Journal of Environmental Economics and Management. 68(2): 280- 295. [v] The effectiveness of standards encouraging the use and diffusion of environmental technologies like renewable energy and energy efficiency are reviewed by Vollebergh, H.R.J. and E. van der Werf. 2014. The Role of Standards in Eco-Innovation: Lessons for Policymakers. Review of Environmental Economics and Policy. 8: 230–248. [vi] On the importance of sustainability and the contribution construction economics can make to decarbonization see Myers, D. 2017. Construction Economics: A new approach, 4th Ed. London: Spon Press. [vii] For a comprehensive review see Popp, D. 2019. Environmental Policy and Innovation: A Decade of Research. CESifo Working Paper No. 7544 (on SSRN). This updates the earlier review: Popp, D., R. Newell and A.B. Jaffe 2010. Energy, the Environment, and Technological Change. In Handbook of the Economics of Innovation: vol. 2, Hall, B. and Rosenberg, N. (eds.), Academic Press/Elsevier, 873-937. [viii] Armstrong, A., Wright, C., Ashe, B., and Nielsen, H. 2017. Enabling Innovation in Building Sustainability: Australia's National Construction Code, Procedia Engineering, Volume 180, 320-330. [ix] Leibwicz, B. D. 2017. Effects of urban land-use regulations on greenhouse gas emissions, Cities, 70, 135-152. [x] United Nations Environment Programme. 2021: 59. Global Status Report for Buildings and Construction: Towards a Zero-emission, Efficient and Resilient Buildings and Construction Sector. Nairobi https://globalabc.org/sites/default/files/2021-10/GABC_Buildings-GSR-2021_BOOK.pdf [xi] https://www.citiesalliance.org/draft-international-standard-determining-greenhouse-gas-emissions-cities [xii] In Europe national building codes set energy requirements to induce innovation. One study found positive effects from policies to improve energy efficiency in new residential buildings, such as energy-efficient boilers and improved insulation, lighting and materials. Prices were found to have an effect on innovation for visible technologies such as boilers and lighting, but not for less-visible technologies such as insulation that are installed by builder. Noailly, J. 2012. Improving the Energy Efficiency of Buildings: The Impact of Environmental Policy on Technological Innovation. Energy Economics. 34: 795-806. [xiii] https://www.imt.org/wp-content/uploads/2022/02/SPIPA_EU_rev6_508.pdf. p. 11. [xiv] https://www.imt.org/resources/mapping-us-policy-on-energy-efficiency-in-buildings/ [xv] https://www.imt.org/resources/mapping-us-policy-on-energy-efficiency-in-buildings/ [xvi] https://www.forbes.com/sites/energyinnovation/2020/12/02/a-powerful-yet-underused-climate-tool-building-codes/?sh=567e3d0ed978 [xvii]https://www.energystar.gov/buildings/benchmark/understand_metrics/how_score_calculated
Updated: Jul 22
There are three methods for 3D printing: stereolithography, patented in 1986: fused deposition modelling, patented in 1989: and selective laser sintering, patented in 1992. It didn’t take long before research into 3D concrete printing (3DCP) began, focused on developing the equipment needed and the performance of the materials used. Twenty years later there were over a dozen experimental prototypes built, extensively documented in the 2019 book 3D Concrete Printing Technology: Construction and building applications,[i]which also has details on the materials science required to identify successful mixtures and admixtures. The information needed to create a 3D blueprint is generated during design, and it is a relatively small step to move from a BIM model to instructions for a 3D printer.
By 2022 the commercialisation of 3DCP was underway, with two types of systems available. One using a robotic arm to move the print head over a small area, intended to produce structural elements and precast components, the other a gantry system for printing large components, walls and structures. The Additive Manufacturing Marketplace had 34 concrete printing machines listed, ranging from desktop printers to large track mounted gantry systems that can print three or four story buildings. Companies making these machines are mainly from the US and Europe, and the table also has details on the type and size of a selection of machines. There are also several companies offering 3DCP as a service at an hourly or daily rate.
One of the most advanced 3DCP companies is Black Buffalo, a subsidiary of South Korea’s Hyundai group based in New York. Their NexCon gantry system takes around 11 hours to build and eight hours to take down. Using a proprietary ink developed over a few years of research involving a lot of trial and error (and getting approval for building codes), the machine can print up to four stories with a crew of five people. One person is required to monitor the nozzle and insert stiffening frames every few layers to provide structural strength, the pump needs two people and a helper, plus a site foreman or engineer. As well as walls it will print floors and precast elements. Black Buffalo expects to sell over 100 of these printers in 2022-23, and they are available for rent at $1,000 a day.
Some companies making 3D concrete printers
Concrete printing is only one part of the development of additive manufacturing. In mid-2022 the Additive Manufacturing Marketplace listed 2,372 different 3D printing machines from 1,254 brands. The number of printers and materials used were: 364 metal; 355 photopolymers; 74 ceramic; 61 organic; 34 concrete; 24 clay; 20 silicone; 19 wax; and 19 continuous fibres. Many of these printers could be used to produce fixtures and fittings for buildings. Producing components onsite from bags of mixture avoids the cost of handling and transport, and for large items avoids the load limits on roads and trucks. There are also printing services and additive manufacturing marketplaces being set up. These link designers to producers with the materials science, specialised equipment and print farms capable of large production runs and manufacture on demand. Examples are Dassault Systems 3DExperience, Craft Cloud, Xometry, Shapeways, 3D Metalforge, Stratasys and Materialise.
Additive manufacturing is a major part of a broader system of production known as digital fabrication. Neil Gershenfeld described digital fabrication as turning ‘bits into atoms and atoms into bits’ using fabrication laboratories (fabs) producing ‘assemblers’ that provide the cutters, printers, millers, moulders, scanners and computers needed for designing, producing and reproducing objects. These tools include traditional subtractive ones for cutting, grinding or milling, but the focus has been on research into new methods of additive manufacturing using different methods of layering materials using 3D printers. Printing of metal, ceramic and plastic objects from online design databases is spreading from hobbyists and initial users to industry applications and wider acceptance.
Gershenfeld, who founded the first fab in 2003, defined digital fabrication, as ‘the seamless conversion of design and engineering data into fabrication code for digitally controlled tools.’ The definition in a Construction 4.0 book is less focused, a ‘method or system which relies on digital fabrication entirely or to a significant degree, either in prefabrication or on-site construction. Examples of digital fabrication processes in construction include robotic fabrication and assembly, large scale additive manufacturing, and the use of specialized automation systems for material processing in areas ranging from advanced fabrication of metal or timber assemblies to various forms of concrete processing to the fabrication of multi-material composites.’ The chapter on digital fabrication has over a dozen examples, with many of the projects shared with other chapters in the book on 3D concrete printing, robotics and automation.
At is broadest, digital fabrication is any means of turning design information into physical products using automated processes. There is a well-established global maker movement behind the growth of digital fabrication. In 2009 the Fab Foundation was established at MIT as a non-profit with annual conferences and providing educations and training. The Foundation coordinates an international network of 1,500 fabrication laboratories (fabs) in 90 countries, many in university design and architecture schools, and the ‘FABLAB Movement’ is an even broader collaborative effort that includes hobbyists and tinkerers working on digital design and fabrication code. This network takes existing technologies used in fabrication like cutting, milling and rolling done by numerically controlled machines, which have been around for decades, but uses them for design, which is new. The digital linking of design to fabrication is the beginning of another stage of development. The World Economic Forum also has a network of 14 Centres for the Fourth Industrial Revolution, and Autodesk has three BUILDSpace laboratories. The 2017 UK industrial strategy included funding for a manufacturing hub and along with aerospace and automobiles targeted construction, 3D concrete printing and OSM.
Gershenfeld argues digital fabrication will follow a similar exponential development path as digital computers, with the number of fabs doubling every two years and their cost halving, making local production of many objects and items possible. Gershenfeld suggests the technology is now ready to become widespread, and is at a similar stage to PCs in the early 1990s:
Digital fabrication shares some, but not all, of the attributes of communication and computation. In the first two digital revolutions bits changed atoms indirectly (by creating new capabilities and behaviours); in the third digital revolution, the bits will enable people to directly change the atoms …. Across the global network of fab labs, we can already see a steady stream of innovations around cost-effective models for individuals and communities to make clothing, toys, computers and even houses through designs sourced globally but fabricated locally.
Digital fabrication is at or close to the tipping point, as its use extends from hobby to experimentation and adoption. Just as concrete in the early 1800s moved from the fringe toward the centre of construction as the underlying technology and equipment improved, fabs can follow a similar path over the next few decades of the twenty-first century. Although Construction 4.0 concluded ‘Today, industry adoption of digital fabrication is still very limited and is not deployed at scale in the industry’[vii], the technology is advancing rapidly and many demonstration 3D concrete printing projects have been completed successfully. In a 2020 report that has many examples of current use, ARUP argues: ‘The opportunities unfolding with digital fabrication not only demonstrate new techniques in full-scale pavilion fabrication, but also provide new methods to solve design, business and societal challenges. Arup is one of a number of specialized consultants providing digital twins and design to fabrication capability on projects.
Onsite and Nearsite Production with Digital Fabrication
Digital fabrication is a technology whose use has a high probability of becoming ubiquitous. In construction, the focus so far has been on 3D printing of concrete, with experimental systems by the early 2000s,[ix] and by 2019 there were over a dozen examples of buildings completed using the technology.[x] However, the potential of 3D printing in construction is not limited to concrete. Once a BIM model of a project has been created it can be used to provide instructions for production of both structural and decorative components of a building. Mobile digital fabs in shipping containers can produce some of those components onsite. Local firms offering manufacturing on demand from print farms can produce large runs or specialised components, a nearsite form of production rather than OSM.
The combination of digital twins and digital fabrication would be transformational if it allows onsite and nearsite production of some or many building components, by fundamentally altering existing economies of scale in the industry. As well as 3D concrete printing, other materials like steel and plastic can be used to make components and fittings on or near the building site. A modular fab in a container customised for construction, or even a specific construction project, can be set up onsite to produce components as the schedule requires. Large sites might need a fleet of fabs. Restorations and repairs can be done with replacement parts made onsite from scans of the original.
Mass production will always have a role, but market niches currently occupied by some or many manufacturing firms may be replaced by new production technologies based on BIM, linking localised digital fabrication facilities with online design databases. Combined with robotic and automated machinery and assemblers, digital fabrication and standardised parts opens up many possibilities. Adding new materials to the 3D palette through molecular design and engineering, or upgraded versions of existing materials, may unlock other unforeseen design and performance options.
If this eventuates some, possibly a great deal, of the current construction supply chain based on mass-production of standardised components will become redundant. For example, an onsite or nearby fab with printers and moulders might produce many of the metal, plastic and ceramic fittings and fixtures for a building during its construction. These parts might be delivered by autonomous vehicles. The digital twin of the project, which might be outsourced, can link the design and fabrication stages to the site and the project. Digital fabrication produces components and modules designed to be integrated with onsite preparatory work and assembled to meet strict tolerances. Project management would become more focused on information management, and the primary role of a construction contractor might evolve into managing this new combination of site preparation work and integration of the building or structure with components and modules, some of which may be produced onsite in a fab if economies of scale permit. The strength of this effect will be determined by those economies of scale. Beyond site preparation other site processes may be restructured around components and modules that are designed to be assembled in a particular way, and machines to assemble those components and modules can be fabricated for that purpose.
If onsite and nearsite production becomes steadily cheaper the industry would, perhaps slowly, reorganise around firms that best manage onsite and offsite production and integration of digitally fabricated parts. Contracting firms would become more vertically integrated if they are fabricators as well, reinventing a business model from the past when large general contractors often had their own carpentry workshops, brick pits, glass works and so on. With outsourced business processes and standardized site and structural work, that fabrication and integration capability would be a key competitive advantage of a construction firm. Firms will be integrating automated production of components with design and construction using offsite manufacturing and onsite fabrication, using platforms that coordinate building design and specification with manufacturing, delivery and onsite assembly. Open platforms will be like new digital ecosystems. Closed, internal platforms will be developed by larger, vertically integrated firms with the resources to manage the system.
Industrialised materials like concrete, steel and glass affected the organisation of onsite processes as they were improved with incremental innovations. The development of digital fabrication should follow a similar path to concrete, where over decades the machinery (mixers, pumps), processes (formwork systems) and materials (reinforcement, concrete strength, setting agents) were developed. Growth in digital technologies is faster than analogue, so instead of the many decades of innovation taken for concrete technology to develop, it might take a decade for digital fabrication to become cost effective if the cost of fabs falls and the supply chain of raw materials develops as it did for personal computers in the 1990s. Contractors would become more vertically integrated as they also become fabricators, managing a combination of onsite and nearsite production to deliver projects.
ARUP, Designing with Digital Fabrication, 2020: 8. Gershenfeld, N. 2012: 45. How to Make Almost Anything: The Digital Fabrication Revolution. Foreign Affairs, 91(6), pp. 43–57. Gershenfeld, N. 2017. The Science, and The Roadmap, in Gershenfeld, N., Gershenfeld, A. and Cutcher-Gershenfeld, J. Designing Reality: How to Survive and Thrive in the Third Digital Revolution, in New York: Basic Books. 95-116, also 159-182.
Kaseman, K. and Graser, K. 2020: 187. Digital fabrication in the construction sector, in Sawhney, A., Riley, M. and Irizarry, J. (eds.) Construction 4.0: An Innovation Platform for the Built Environment, Abingdon: Routledge. Sanjayan, J. G., Nazari, A. and Nematollahi, B. 2019. 3D Concrete Printing Technology - Construction and Building Applications. London: Elsevier.