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Sustainability 2015, 7(4), 3615-3636; doi:10.3390/su7043615

Challenges in Delivering Green Building Projects: Unearthing the Transaction Costs (TCs)

1
OTB Research Institute for the Built Environment, Delft University of Technology, 2628 BL Delft, The Netherlands
2
Building and Real Estate Department, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China
3
Faculty of Built Environment, Universiti Teknologi Malaysia, 81300 Johor, Malaysia
*
Author to whom correspondence should be addressed.
Academic Editor: Tan Yigitcanlar
Received: 9 October 2014 / Revised: 20 March 2015 / Accepted: 23 March 2015 / Published: 27 March 2015
(This article belongs to the Section Sustainable Urban and Rural Development)
View Full-Text   |   Download PDF [771 KB, uploaded 27 March 2015]

Abstract

Delivering green building (GB) projects involve some activities that are atypical in comparison with conventional buildings. Such new activities are characterized by uncertainty, and they incur hidden costs that have not been expected nor are they readily appreciated among the stakeholders. This paper develops a typology and chronology to examine the new activities that are associated with transaction costs (TCs) in the real estate development process (REDP) of green building. Through in-depth interviews with representatives from the major developers in Hong Kong who have experiences in GB practice, this study aims to unearth TCs involved at the critical stages of the REDP. Apart from reconfirming the early project planning stage as the most critical in the consideration of TCs, the study results also identified “extra legal liability risk of the GB product” as the major concern for any GB developer in Hong Kong. The key additional activities that bring significant TCs in developing GB are identified and compared to their traditional counterparts. In turn, project managers not only have to pursue overall cost management whilst winning more business, but they also have to pay particular attention to sustainability in order to minimize hidden societal costs. The study also provides a reference for governments and professionals that will aid in forming policy as well as advance the practice of the GB market by optimizing the societal costs. View Full-Text
Keywords: green building (GB); transaction costs (TCs); uncertainty; real estate development process (REDP); government policy green building (GB); transaction costs (TCs); uncertainty; real estate development process (REDP); government policy
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Qian, Q.K.; Chan, E.H.W.; Khalid, A.G. Challenges in Delivering Green Building Projects: Unearthing the Transaction Costs (TCs). Sustainability 2015, 7, 3615-3636.

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