Efficient Management of Material Resources in Low-Carbon Construction

Abstract

The sustainable implementation of resources and the transition to low-carbon construction is on the world’s daily agenda. This paper describes the development of criteria for the efficient management of material resources in low-carbon construction. Net income, gross profit, balance sheets, and equity are proposed as indicators that serve as criteria for assessing the efficient use of resources. Nonlinear regression models were the methodological basis for the establishment of cause-and-effect relationships of the volume of construction of transport structures. It was established that since construction companies do not purchase materials for storage, the cost of materials for use in low-carbon technological construction work is directly proportional to the cost of construction. The volume of production in the construction industry is determined by construction costs. More efficient use of low-carbon materials reduces cost and construction waste. In this paper, we have established the relationship between the indicator of efficiency for the functioning of the construction enterprises in Ukraine and the use of low-carbon materials for the construction of transport structures. The practical value of the obtained results for low-carbon construction management lies in proving the relationship between the performance indicators of the construction enterprise (net profit, gross profit, output volume, balance sheets, and equity capital) and the use of low-carbon material resources. Our results form the basis for future research into the use of a cost-based model for low-carbon economy transition in municipalities and regions.

1. Introduction

The main goal of the European Green Deal was the support of climate-neutral measures in the economy. The promotion of energy efficiency and the use of renewable energy in the European construction sector supports the prevention of climate change [1]. Essential factors in the development and intensification of construction are the stable supply of material resources (raw materials, materials, components, and energy carriers) and their rational use.

In addition, sustainable development, climate neutrality, and energy efficiency of buildings are included among the areas of activity. In particular, in 2019, the European Commission adopted the “Clean Energy for all Europeans” package, which focuses on the energy efficiency of buildings and renewable energy [2].

The United Nations Climate Change Conference in Paris recognized that construction is a key sector and that, without radical changes, it would be impossible to reduce, by 2050, global carbon emissions by 60% compared to 2012. Article 9 of the EU directive on the energy functioning of buildings requires member states to ensure the transition of the construction industry to a mandatory “building with almost zero energy consumption” standard. For new residential buildings, this transition was to be from 31 December 2020, and for public buildings, from 31 December 2018.

The actual international task in construction is to use a systems approach in the conversion of managerial tools and low-carbon development. In this way, the green advantage provides training and certification for construction-industry personnel using international standards. Such activity is devoted to increasing skills “to deliver state-of-the-art, high-performance, healthy buildings” [3]. Moreover, low-carbon construction development is related to the sustainability of urban development. Green city transition is predicted to lead to the construction of buildings using low-carbon material resources and low-carbon engineering technologies. In particular, Vilnius is the EU’s greenest city, and its council has introduced measures for low-carbon construction using low-carbon material resources.

In this context, urgent research must be devoted to the transition to green construction by increasing the efficiency of the use of natural resources and developing criteria for efficient management of material resources in low-carbon construction enterprises. A carbon-emission calculation method of material resources in construction, which is a standard system for calculating material resources in construction based on climate neutrality, will need to be developed [4]. Given this, for the effective management of the use of low-carbon material resources in construction, it is necessary to introduce the following main tasks:

• Control of the efficient use of low-carbon materials in production;
• Analysis of the company’s availability of low-carbon material resources;
• Determination of the efficiency of using low-carbon materials;
• Regulation of the enterprise’s availability of low-carbon material resources.

For the sustainable operation of an enterprise, it is vital to observe the optimal value of all types of low-carbon reserves. Otherwise, if there is a lack of these reserves, productivity quickly falls. Due to a significant deviation in the value of the stock from the optimal value, the information content of the enterprise’s performance indicators is violated; in particular, with excessive reserves, the balance and equity capital do not reflect the actual financial performance of the enterprise, but, rather, items that are not related to productivity in the construction industry.

2. Related Work

The stock’s centralization advantages are expressed in the balance of providing construction with material resources, the full use of vehicles for their transportation, the development of direct links between the organization of the materials and the technical base and construction and installation organizations, the use of automation in warehouses, and the process of inventory management.

Decentralized resource management in construction-site warehouses is less efficient. This should be used when the cost of moving materials from central warehouses to construction sites is higher than their delivery and storage in on-site warehouses.

To reduce the embodied carbon content of construction, the following strategies have been developed: a design for durability and “renovation of aged buildings” [5,6]; modeling assumptions on the modernization of buildings based on low-carbon development [7]; recycling of building waste “for eco-friendly asphalt pavement industry” [8] and through a carbon-trading policy [9,10]; replacement of raw materials with low-carbon materials [11,12]; use of “building equipment in diverse climatic conditions” [13]; integration of the environmental technologies in the production chains [14,15]; and environmental assessment of the construction system [16]. Xi and Cao [4] proposed the carbon calculation method for buildings. Low-carbon smart building management systems are presented in [17]. The impact of low-carbon city construction on air quality is exploited in [18,19].

High levels of greenhouse gas emissions result from the construction industry’s activities. In view of this, there is a special need to use low-carbon building materials [20,21] based on using digital technologies in construction [22,23]. Alaux et al. examined the impact of using energy efficiency and bioenergy technologies in construction at the level of GHG emissions [24]. In the context of the correlation of energy and construction of low-carbon materials transition, the integration of climate management in green energy supply change [25] and diversification of renewable energy sources need deepening intersectoral cooperation [26].

To determine how the organization is provided with material resources, it is necessary:

• to determine the transportation of material resources;
• to examine the calculation procedure and the validity of contracts for the supply of material resources and terms of delivery;
• to determine the nature of product inventories and their structure change;
• to check the validity of the norms of inventories and the need for material resources;
• to identify opportunities to reduce inventories and needs in material resources;
• to create measures to reduce excessive stocks of materials.

Therefore, the goal of the paper is to study the low-carbon impact of material resources management on the main performance indicators of an enterprise’s construction activities.

To reach this goal, the research objectives were stated: (i) to develop models for determining the indicators of economic efficiency, productivity, and technical regulation of the use of low-carbon material resources; (ii) to establish the relationship between the indicator of efficiency for functioning construction enterprises in Ukraine and the factors of using low-carbon materials for the construction of transport structures; and (iii) to analyze the innovation and low-carbon activity of construction enterprises.

3. Materials and Methods

3.1. Methodology

The paper studied the low-carbon impact of material resources management on the performance indicators of its activities based on the example of a construction enterprise. When analyzing the performance of construction enterprises, the task was to investigate how the performance indicators (net income, gross profit, balance sheet, equity) are affected by the structure of the materials acquisition necessary for low-carbon buildings. To analyze the influence of the total inventory components on the enterprise’s financial performance, the linear models [27] of the values’ dependence on the low-carbon inventories’ functions were built:

$$\begin{array}{c}{Y}_i\left(M\right)={\sum }_{j=1}^k{b}_j·m_{i,j},\\ i=1,\dots ,N, \mathrm{k}=1,\dots ,6,\end{array}$$

(1)

where $Y_i\left(M\right)$ is characteristics of the company’s profitability in the i-th series of dynamics; $m_{j,1}$ is the cost of low-carbon raw materials and materials; $m_{j,2}$ is the cost of low-carbon fuel; $m_{j,3}$ is the cost of low-carbon containers; $m_{j,4}$ is the cost of spare parts; $m_{j,5}$ is the cost of low-value items; $m_{j,6}$ is the cost of low-carbon construction goods; and N is several series of dynamics for constructing the model.

We have singled out, with the help of a linear model, the main components in the enterprise’s general material supply that affect its profitability. A linear model can be used to determine the significant factors of influence through the analysis of coefficients, which determine the weight of each factor in the model. After training the model, coefficients are evaluated. Factors with large absolute coefficients are considered to be important influencing factors. Based on the obtained factors, production functions were constructed in the form of multidimensional power polynomials of the following form [27]:

$$Y\left(m_1,\dots m_n\right)=a_0+\sum _{i=1}^n{a}_i·m_i+\sum _{i=1}^n\sum _{j=1}^n{a}_{i,j}·m_i·m_j,$$

(2)

where $m_1,\dots m_n$ are factors selected based on coefficient analysis.

3.2. Case Study

In Ukraine, there is generally a positive trend in enterprises’ innovation activity in the production of construction materials (

Table 1. Innovation and low-carbon activity of construction enterprises in Ukraine. Source: [28].

	2016	2017	2018	2019	2020	2021
Enterprises that carried out technological innovations, the total number of enterprises, %.	9.4	9.4	9.6	9.4	9.3	9.6
Enterprises that carried out organizational innovations, the total number of enterprises, %.	3.2	3.5	3.5	3.7	3.4	3.5
Enterprises that implemented low-carbon innovations, the total number of enterprises, %.	2.3	2.5	2.6	2.4	2.5	2.5

). At the same time, we observe a low level of integration of low-carbon innovations in construction.

“Special Construction Equipment” [29] is a Ukrainian company that provides the following industrial and commercial construction services: construction and repair of highways, construction of residential and industrial facilities, and production and sale of cement mixtures [29]. The enterprise is currently working on an innovative approach to the efficiency of construction materials, in particular, the reduction of carbon emissions. This applies to the modernization of housing, which will improve the economic efficiency and energy efficiency in contraction. According to the construction plan, the enterprise needs to develop models to determine the indicators of economic efficiency, productivity, and technical regulation concerning the use of low-carbon material resources.

As an experimental basis for developing criteria for the efficient management of material resources at the low-carbon construction enterprise, the reported data on the volume of material purchases by the “Special Construction Equipment” enterprise were taken. The results of construction models (1) in MATLAB are shown in diagrams reflecting the distribution of coefficients for obtained models (Figure 1) [30,31].

As can be seen from these diagrams, the enterprise’s income and gross profit are most dependent on the consumption of $m_2$—fuel, $m_4$—spare parts, and $m_6$—construction goods. The balance depends on the cost of containers ($m_3$), spare parts ($m_4$), and low-value items ($m_5$). The equity depends, first, on the cost of fuel ($m_2$), spare parts ($m_4$), low-value items ($m_5$), and goods ($m_6$). It should be noted that the above conclusions relate to the indirect dependence of productivity on the balance of commodity stocks. At the same time, productivity depends primarily on these goods. Therefore, the above indicators reflect the indirect impact of the amount of reserves on the enterprise’s financial performance.

Graphs of the obtained low-carbon production functions (2) are shown in Figure 2.

As can be seen from Figure 2a, the gross profit of the enterprise decreases at small values of certain types of reserves (in particular, $m_2$—fuel, $m_4$—spare parts, $m_6$—construction goods) and begins to grow with a simultaneous increase in all types of reserves to a specific optimal value. The maximum coordinates on the graph indicate the value of the latter. With a further increase in the stock’s value together with one of their types, the enterprise’s gross profit begins to decrease (see Figure 2a).

Moreover, suppose there is a shortage of any type in a large volume of total reserves. In that case, profits decrease quickly (see Figure 2b), i.e., the violation of the structural optimality of the value of inventories leads to a very significant decrease in the enterprise’s productivity (Figure 2b). It also shows that the productivity decrease is affected by the general deviation of the reserves cost of certain types and the divergence of their total price from the optimal value. Moreover, in almost all cases, the lack of stock leads to worse consequences than in the case of excessive stock, although the latter also causes a significant decrease in productivity.

Comparing the graphs of the dependence of profit and balance on the structure of reserves, we note that the area of maximum productivity, corresponding to the optimal values of certain types of reserves (and their total value), coincides with the size of sustainable values of the enterprise’s balance. It can be seen from the plateau characteristic (see Figure 2c) that if the structure of reserves is close to optimal, then the balance remains at a more stable economic value and is less dependent on changing market, technological, and production circumstances. As can be seen from Figure 2c,d, the growth of the balance due to the accumulation of reserves is accompanied by an imbalance in the system of indicators—the enterprise’s financial performance is sharply declining while its balance is growing. This is how the essence of the enterprise changes up to its transformation into a wholesale trade base.

From the graph of the dependence of the amount of equity capital on the size of certain types of reserves (see Figure 2e), we may note that if resources that the company uses are in significant volumes, there is a tendency to reduce the amount of equity capital with low reserves consumption. If the reserves reach a particular value, the amount of equity begins to grow slowly as a convex value. This is how the effect of capitalization of material reserves is manifested: the growth of the profitability multiplies to a specific stable value when the stock reaches its optimal value. Equity capital begins to overgrow with a further increase in the reserve size.

The optimal value of the stock is visible as an inflection area on the graph (see Figure 2f); when the highest productivity of the “capitalization of the stock” turned into a “commodity increase in the stock in the warehouse”, in which equity capital no longer reflects the profitability of the consumed stock, but funds, which stored in warehouses.

Consequently, the value of certain types of inventories has an optimal value at which the highest performance of the enterprise and the highest profitability of its fixed and current assets are achieved. Under these conditions, the enterprise’s balance becomes more or less stable, and the main indicators of its activities comprehensively reflect its economic condition.

Since a construction enterprise buys stocks not for their storage but to spend on low-carbon technological construction operations, the value of the stock is directly proportional to its costs. Consequently, the optimal value of stocks indicates the optimal data of production plans for the value of the prices of construction materials and other reserves.

Numerical values of the optimal stock value correspond to the coordinates of the maximum low-carbon production functions, which are established by experimental values, reflecting the activities of real enterprises.

The transition to low-carbon development in construction is considered in the context of the organization of production processes and the technological and ecological aspects of using construction materials [17,20]. Thus, the added scientific value of the proposed method is the examination of the impact of low-carbon management of material resources on the main efficiency indicators (net profit, gross profit, volume of production, balance sheet, and equity).

It was established that since the construction company purchases materials not for their storage but to spend them on low-carbon technological construction works, the cost of materials is directly proportional to its costs. In addition, the cost of low-carbon stocks has an optimal value in achieving high efficiency and profitability of fixed and working capital. Under these conditions, the company’s balance sheet becomes stable, and its key performance indicators comprehensively reflect its economic condition.

In view of this, it is proposed to take into account indicators such as the volume of production in the construction industry. In particular, in the construction of transport structures made of low-carbon building materials, the indicator of the volume of production can be formed based on various parameters and indicators. The analysis shows that the volume of production can be determined by financial factors such as construction costs. This may include total project costs, materials, labor, equipment, and other expenses. Rising prices for construction materials can increase the cost of construction of transport facilities and affect the volume of production. Construction costs may be sensitive to changes in the prices of key low-carbon building materials such as glass, steel, asphalt, etc. Changes in job price indices, which take into account changes in the cost of labor and construction services, may also affect construction costs. Using more efficient (low-carbon) technologies and methods can help reduce the impact of rising material and waste costs. More efficient use of low-carbon materials can reduce the cost and construction waste. Therefore, it is advisable to study the cause-and-effect relationships of the volume of production in the construction industry [28], in particular transport structures and the above factors. (

Table 2. Initial data for modeling. Source: [30].

Year	Average Price for Asphalt Concrete Mix, UAH/Ton	Price Index for Construction and Installation Works, %	Mineral Waste from the Construction and Demolition of Facilities, Thousand Tons	Volume of Manufactured Construction Production (Transport Facilities), Thousand UAH
2015	2421	121.9	897.5	7232.9
2016	2154.94	110.2	935.8	9819.5
2017	2386.92	116.3	974.1	19001
2018	3110.17	125.4	1023.1	27,428.3
2019	3417.95	103.3	919.4	33,532.4
2020	3467.84	103.5	873.2	67,489
2021	3731.96	139.4	827	88,790.4

).

To establish complex cause-and-effect relationships, it is advisable to use nonlinear regression models [27] in the following form:

$$y\left(\overrightarrow{x}\right)=a_0+\sum _{i=1}^m{a}_i·x_i^{b_i},$$

$y\left(\overrightarrow{x}\right)$ is a modeled indicator, $\overrightarrow{x}$ is a vector of factor values, $a_i$, $b_i$ are the model parameters.

Because of the result of using the MATLAB R2023b Update 4 software, we obtain a nonlinear regression model in this form:

$$y\left(\overrightarrow{x}\right)=\mathrm{15,926}+1.0197·x_1^{1.4016}-1.7·{10}^6·x_2^{-0.729}-242.85·x_3^{0.937},$$

$y\left(\overrightarrow{x}\right)$ is the volume of manufactured construction products (transport structures), million UAH;$x_1$ is the average price for crushed stone-mastic asphalt mixture for the construction of Ukrainian roads, UAH/t;$x_2$ is the price index for construction and installation work with transport structures in Ukraine, %;$x_3$ is the mineral waste from construction and demolition, including mixed construction waste, thousand tons.

The results of modeling and verification of the macro-model based on the assessment of the relative modeling error are illustrated in Figure 3. Therefore, the developed model adequately reflects the relationship between the performance indicator of construction enterprises in Ukraine and the factors of the use of low-carbon materials by construction enterprises.

As can be seen in Figure 3b, the maximum relative modeling error does not exceed 0.13 (13%). Therefore, the developed model adequately reflects the relationship between the performance indicator of construction enterprises in Ukraine and the factors of the use of low-carbon materials by construction enterprises.

4. Discussion

Governments are targeting concrete, steel, glass, and asphalt—the materials that make up the bulk of construction structures and components. For example, the US Federal Emergency Management Agency (FEMA) now defines “low-carbon materials” as concrete, asphalt, glass, and steel that have a lower global-warming potential. Similarly, the Australian government aims to reduce emissions from construction materials by at least 25% by 2030. They are encouraging manufacturers to develop new low-carbon product lines, like architectural precast concrete surfaces that are made of geo-polymers, fly ash, and recycled materials, like blast furnace slag or construction waste aggregates, low-carbon concrete tiles and slabs, recycled steel beams and solar glass panels [32].

The transition to low-carbon development in construction is considered in the context of the organization of production processes and technological and ecological aspects of the use of construction materials [17,20]. Since 2011, there has been an increase in the production of innovative goods, works, and services in the total volume of sales in the Ukrainian market (Figure 4). At the same time, it should be noted that the innovation expenditures of all types of small enterprises in 2020–2021 exceeded those of medium-sized enterprises. In addition, there was an increase in the share of innovation expenditures of small enterprises by almost 1% per year [33].

When justifying the specific features of the low-carbon activities of construction companies, it is necessary to take into account the specific features of the construction industry in Ukraine, in particular, the long life-cycle of facilities and change of ownership. There is the need to comply with many poorly systematized regulations and standards, high construction costs, the lack of a direct correlation between innovation and the cost of facilities, and the lack of clear mechanisms for promoting innovative products.

This paper examines the impact of low-carbon management of material resources on the main indicators of the efficiency of the construction enterprise (net profit, gross profit, volume of production, balance sheet, equity). In particular, in the construction of transport structures with low-carbon building materials, it is advisable to take into account the indicator of the volume of production, which can be formed based on various parameters and indicators. The analysis shows that the volume of production can be determined by financial factors such as construction costs. Construction costs may be sensitive to changes in the prices of key low-carbon building materials such as glass, steel, asphalt, etc.

Using more efficient (low-carbon) technologies and methods can help reduce the impact of rising material and waste labor costs. Based on the results of nonlinear regression modeling, the relationship between the indicator of efficiency of functioning of construction enterprises in Ukraine and the factors of using low-carbon materials for the construction of transport structures has been established.

The European Union Emissions Trading System has set limitations on the total amount of carbon dioxide (CO₂) and other GHGs [33]. In this context, the introduction of low-carbon and energy-efficient building materials and technological innovations are the priority for the development of the construction industry in both the European Union and Ukraine. Sustainable materials like low-carbon concrete, recycled steel, and reclaimed wood are renewable and recyclable [32].

To determine the share of construction companies implementing low-carbon innovations, we conducted a sample survey based on the data of the State Statistics Service of Ukraine. The results of the survey showed that out of 10 sample construction companies, 5 companies implement low-carbon innovations. The results of the analysis show that the share of low-carbon innovations in the structure of innovation activities of small construction companies is between 70% and 81%; low-carbon innovations prevail in the structure of innovation activities of medium-sized companies (41–58%). In general, small and medium-sized construction companies have implemented between 64% and 72% of low-carbon innovations.

More types of low-carbon inventories have values close to optimal. The more stable the condition of the enterprise, the less its financial results deteriorate, and the less the information content of economic activity indicators deforms when the amount of one or more reserves deviates from the optimal value. Although sustainable building costs more up front, it saves money in the long term through lower utility bills and maintenance. It also raises property values as eco-friendly homes become more desirable [32].

The effect of growth in profitability and the approach to the optimal inflection point in the value of equity (Figure 2) shows that low-carbon material resources perform a function involved in the emergence of profit. They are capitalized, like other types of resources. Another thing is that the capitalization of inventories is manifested only when their quantity approaches a good value from the left. When separating to the right from a good bargain, their capitalization indicator falls, losing the corresponding economic weight when the price of equity capital depends significantly on the value of inventories.

Hence, the practical implications of efficient management criteria of material resources at the construction enterprise are the base for the use of a cost-based model for low-carbon economy transition in municipalities and regions. In particular, the Fairtrade minimum-pricing model calculates a minimum price that ensures the average costs of the low-carbon projects [33].

Economically justified management of construction enterprises’ material resources is carried out with the help of economic and mathematical modeling [34]. In the conditions of the low-carbon transition, the use of modern methods makes it possible to optimize the need for material resources, the volume of their supplies, the intervals between related supplies, the calculation of the reserves of each of their types, the transport costs for the construction materials transportation, the economic activity of the warehouse, which contributes to the construction rhythmical operations. Mathematical models help establish the limits of the organization’s effectiveness concerning the stocks’ centralized content in stationary warehouses and construction sites [27].

5. Conclusions

For the sustainable operation of an enterprise, it is vital to observe the optimal value of all types of low-carbon resources. The theory on which this study was based was the concept concerning the integration of the environmental approach in construction resources management. Such a concept leads to green construction development and climate change prevention. The paper carried out a study of the low-carbon impact of material resources management on the performance indicators (net income, gross profit, balance sheet, equity) of its activities based on the example of a construction company.

The theory backing up this study has been validated with the research outcome. Research has shown that the optimal value of an enterprise’s low-carbon stocks is important for achieving maximum efficiency and profitability of its fixed and current assets. More efficient use of low-carbon materials reduces the cost and waste of construction. Based on the results of nonlinear regression modeling, the relationship between the indicator of efficiency of functioning of construction enterprises in Ukraine and the factors of using low-carbon materials for the construction of transport structures has been established.

The theoretical contribution of the paper is the determination of criteria for the efficient management of material resources in low-carbon constructions. The results of nonlinear regression modeling have shown that the maximum relative error does not exceed 13%. The innovative added value of this modeling is the use of the production volume, which can be determined by financial factors such as construction costs.

The practical value of the obtained results for low-carbon construction management relates to proving the positive impact of the structure of the acquisition of materials necessary for low-carbon construction on the performance indicators of a construction enterprise (net profit, gross profit, output volume, balance sheet, equity capital). The cost of low-carbon stocks has an optimal value in achieving high efficiency and profitability of the fixed and working capital. The recommendation for practical implications of efficient material resources management in the construction enterprise is the usage of a cost-based model for low-carbon economy transition in municipalities and regions through the creation of cross-sector clusters of the producers of low-carbon material (for example, biomaterials) and construction enterprises.

In the future, authors are going to investigate the development of supply chains for low-carbon construction materials.