Assessing the Market Potential of Second-hand Building Products

Abstract

By increasing the life-span of building products, the Reuse strategy has potential to reduce CO2 emission in the construction industry but it is observed that not many building products are reused because it is not economical. The government aims to overcome this issue by encouraging the development of reuse markets but it is not yet clear for which building products it is possible for markets to arise; how to determine whether a self-sustaining B2B market for reusing specific products can arise with government support is the main question of the research. From Exploratory interviews, it was found that there are several types of obstacles that make reusing building products uneconomical. Literature was reviewed in search for the effects of these obstacles on the costs of reusing but it turns out that literature on this topic is lacking. Because there is already tacit knowledge available from demolition contractors who disassemble and sell second-hand products in the B2C market, it is decided to focus on supply of second-hand building products in the research. A Theoretical Framework is developed to provide the metrics for answering the main question with a supply-driven approach. It is proposed that there must be a hypothetical middleman who buys second-hand building products from demolition contractors to temporarily store them and upgrade them in order to be able to provide products that compete with new products. The framework also contains a model that demonstrates which price E1 demolition contractors must receive from middlemen to make reuse feasible for them and whether a transaction is profitable when the price E1 and the middleman’s costs E2 are subtracted from the price that builders are willing to pay for the product. Another model then evaluates whether there can be a market size for which the total profit made from all transactions is large enough for the middleman to facilitate market development. It does so by proposing how the price E1 and E2 develop when production scale increases. In a case study about reusing toilets, a method is demonstrated for determining the prices E1 and E2 at different production scales. This method is referred to as the Market Assessment Method. The price E1, that demolition contractors need to receive for disassembling a product is determined for different situations where the product occurs by means of a newly developed tool referred to as the Purchase Costs Tool. This tool is synthesized on the basis of stories from 15 demolition contractors, gathered in semi-structured interviews. The tool is validated by linguistic analysis and by testing it in practice. The tool is considered the main deliverable of the research. The case study shows that it can in fact be determined whether a market for toilets can arise by using the developed method and tool. Based on the discussion, it is concluded however that focussing on supply alone is not enough to conclude whether a market may really arise based on the method because it is not realistic that a middleman can actually supply an old product in the same way as a new product. It is proposed to do follow-up research to the additional costs that a builder needs to make for reusing second-hand products. Although the developed method does not cover the entire scope, it is concluded however that the method forms a valid basis.