Threats to the Construction Industry from Climate Changes and Policies

There are different kinds of industries that are often adversely affected from the climatic changes as well as the governmental policies to mitigate climatic change. Often the productivity of the business is deteriorated due to the climate changes. Examples of such industries are fishing industry, real estate construction industry, agriculture etc. The following report will study the fishing industry and examine how the climatic change affects it.

The residential housing complex construction industry in the United Kingdom has been successfully expanding and improving over the period of last five years, which in turn is supported by the different governmental policies in order to promote the housing market for the different classes of people.

However, during the economic downturn, the revenue from the housing industry have been seen to fall rapidly and the ever-changing climatic conditions and the governmental policies have caused great deals of difficulties for the construction business. By the end of the report, the reader will have a clear idea of the major challenges faced by the construction business due to climatic changes and the governmental policies of mitigating them. Recommendations will also be provided towards the end of the report regarding how to counterattack such barriers in the construction industry in the future, due to the inevitable climatic changes as well as governmental policies of mitigation.

Threats to the construction industry from climate changes and policies:

            There are different natural calamities such as fire, flood, storms etc. that can have adverse effects on the price of properties as well as the construction industry as a whole. Climate-related threats can adversely affect the real estate construction business by wither affecting the asset fast or it can even affect indirectly through the transition risks[1]. There are climatic hazards such as floods and natural, manmade fire etc., that can cause the market prices of the properties to fall down rapidly, or they can even cause the prices to be completely written off. On the other hand, the climatic issues such as emission of greenhouse gases and other governmental policies may drive the construction business owners to completely refurbish the existing building or reconstruct those using “green technologies” in order to make sure that there are no interferences from the government .

and it helps in attracting more “green customers”. This can again cause an internal competition among the construction companies since green construction can take the place of traditional houses and services of the mainstream construction business in the markets all across the United Kingdom. It can also drive the real state owners to come up with newer concepts such as “brown discounts” that may allow renting as well as selling of properties for lesser values in the markets. It has been found in a recent study that the prices of the real estate properties in Peterborough which is a flood prone zone across the eastern coasts, have seen a steep fall in the flood prone areas

since no customers have seen much interested of residing in flood prone areas therefore properties have been sold at very cheap prices as compared to the market. Such drop in prices are being shown in the regional maps by marking specifically the flood prone areas and the prices of the properties there. However many of the construction company owners do not disclose the flood map information to their clients at the time of selling the properties and the amount of loss incurred by the real estate manufacturing companies is location specific.

Innovations used in the Real Estate Construction Business

There are additional monetary and economic losses for the construction companies because of annual rainfall, hailstorms and storms since they cause considerable damage to the properties and it comes under the responsibility of the property owners to take care of such recurring expenditures. Additional expenses are also caused by climatic changes such as forest fires, lightning, heat as well as heavy precipitation. Often the electric circuits of the newly build real estate properties get damaged even before the clients acquiring the properties which in turn dissatisfied the clients and the companies tend to lose out on the sales.

A recent Intergovernmental Panel on Climate Change (IPCC) scenario that entails issues such as global ever increasing population, rapid economic growth need an ever increasing number of corresponding policies of insurance for the purpose of validation in the construction segment.  It has been emphasized that these kinds of tools for the purpose of validation should be available publicly that can exists within the insurance networks to meet the needs of the real estate manufacturing industry and the companies associated to it.

In a market situation, where the professional investors in the real estate business possess this kind of information whereas ordinary homeowners on a smaller scale do not have access to such information, there is little or no market transparency, which again is a big threat for the real estate construction company[2]. There is a difference of knowledge among the small house owners and the professional investors, about the threats that climatic change can have on the real estate manufacturing industry. This is due to the different levels of perceptions of the governmental law and policies on climatic change.

Another major threat to the real estate construction company comes from the climatic threats such as global warming and greenhouse effect. This is because of the strict principles and guidelines as stated by the UK government that the construction companies have to strictly comply with during the process of construction, failing which; their projects may be completely stopped or disallowed by the government[3]. Due to deforestation and other activities associated to the construction industry there have been increasing amounts of greenhouses gases such as carbon monoxide, sulphur dioxide etc. These gases are extremely harmful for the environment and have causes issues like extinction of different species of plants and animals in different parts of the world.

These adverse environmental conditions have caused the government to come up with such principles and guidelines. These are often difficult for the real estate owners to comply with and they lose many of their projects in this process. Irregular weather patterns and natural disasters such as rainfall, hailstorms have also delayed construction processes by not allowing laborers and workers to work on site for long times.

Innovations used in the real estate construction business:

            Innovations are needed in both management strategies as well as technologies associated to the real estate construction industry within the United kingdom in order to address the mitigate the threats associated to construction. Innovation theory is a theory that provides the different guidelines and theories that has to be followed by the experts while designing the innovations in technology as well as management operations[4]. They follow the guidelines in order to overcome the present threats faced by the construction industry as well as possible future threats. Four distinct type of innovations comes under Innovation theory. They are Disruptive innovation, Incremental innovation, Breakthrough innovation and Game Changing innovation strategies. They are briefly explained below:

Disruptive innovation:

In the real estate construction business, disruptive innovation is a market innovation that helps in creating a new potential market for the real estate properties irrespective of the present economic issues in the housing sector and helps in creating a value network[5]. Eventually the disruptive innovation can have the capability of successfully disrupting the existing market for real estate properties as well as value network, which in turn will displace the preexisting firms as well as services and other alliances and aim towards the achievement of the unified common goal of “clean growth” within the real estate construction industry of United Kingdom.

Incremental innovation:

Incremental innovation on the other hand, is a series of systematic improvements on a smaller scale aimed at specific parts of the construction business. It can also be aimed to upgrade the company’s pre-existing processes, products, services as well as methods. The innovations and improvements in the real estate firms can be seen as incremental in nature and the existing technologies and the management operation can be improved in a systematic way that should be aimed to achieve the common goal of the construction industry, which is “clean growth”[7]. It is one of the most efficient forms of innovations that can be applied to any businesses to ensure systematic incremental growth of the associated organizations.

Breakthrough innovation:

            Breakthrough innovation can be defined as an innovation from within a company that tries to push its products or services offerings to a next level altogether. This kind of the innovation can open newer avenues for the construction industry considering the ever-changing dynamic market conditions. The advantage of breakthrough innovation is that it can enable the patters in which the existing customers think and interact with the markets and allow a great deal of flexibility to the construction companies and they can come up with their own innovative management models as well as technologies.

Game Changing innovation:

            Game changing innovation is extremely important for the businesses especially the construction industry since it minutely analyzes and address the threats associated to the climatic changes. Close attention is paid to even the most minute preferences as well as avenues of generating new opportunities. Innovations are provided in segments such as online or web promotion of the real estate properties as well as raising customer awareness by the usage of campaigns as well as surveys.

Customers are made aware of the raw materials that are being used in the manufacture of the properties they are about to book. This in turn also given them a sense of satisfaction as well as indulges them in activities of social and environmental benefits. Apparently, impractical and unfeasible opportunities are also understood in depth in order to come up with “one of its kind” innovations in the market in order to attract more clients.

Disruptive innovations to address threats to real estate construction business:

            There are different kinds of disruptive innovations that can be deployed in the real estate manufacturing processes. For example in many sites, it has been seen that human operated cranes and other tools and devices are used in order to dig into the ground. There have also been instances wherein the workers have not been able to work on the construction projects for unforeseen times due to climatic hazards such as snowfall or hailstorms. In such cases, the construction work comes to a halt and often it takes a long time for the projects to successfully complete[10].

Climatic conditions and issues like acid rain are some of the naturally occurring phenomena, which can even corrode the exteriors of the buildings within few years of manufacture. Floods as well as forest fires can also cause immense damage t the real estate properties, which in turn can dissatisfy the customers to a large extent and even decrease the rand value of the construction company. These factors can cause the prices of the housing complex’s fall largely and reduce the revenues generated form the real state manufacturing companies in United Kingdom. Some of the disruptive innovations that can be incorporated in the construction industry are explained below in the following paragraphs:

Hydraulic excavators:

Considering the use of traditional cranes that were used at the construction sites, the use of hydraulic excavators gained popularity only after decades of its inception and todays it is being widely accepted and used by the real estate construction companies in all their projects all across the United Kingdom.

A hydraulic excavator or a digger is a medium sized to large sized vehicle that can be used in important construction tasks such as excavation as well as demolition. They consist of a chassis, boom, bucket as well as a move. They make use of tracker or wheels and can rotate 360 degrees. Different sizes of hydraulic excavators are available that are used to perform specific tasks in the construction sites and are often referred to as “mini excavators.”[11] This is one of the most widely acclaimed disruptive technology in the field of real estate construction. However, excavators that are cable operated are still used in large and complex construction projects.

Use of Plastic:

Raw material such as Bakelite as well as other earlier forms of plastics had limited applications in the field of construction. However, electric insulation as well as low cost were their main advantages. The newer forms of plastics had benefits over the conventional construction raw materials in the fact that they are transparent, combustible as well as elastic. Hard plastics have found their utility in the making of frames as well as structures in many parts of the construction and often act as good short-term alternatives to wood, metals and other materials.

Anti-corrosive plastics are also resistant to climatic factors such as acid rains and are often used to make exterior frameworks in different parts of the buildings that were earlier made using wood or other forms of raw materials[13].  The best part about using high quality climate friendly hard plastics is that it is a cost effective solution to replace the traditional raw materials in many parts of a construction project.

Installation of mini steel mills at construction sites:

            In many parts of the United Kingdom, the real estate firms have started adopting mini steel mills for the construction processes. The mini steel mill is an innovative facility that is used to produce steel products from metals that is obtained from different sources and then recycled. Scrap metal serves as the raw materials for the mini steel mills and they produce important products that can be used by the workers as well as the onsite engineers in the process of real estate construction in the different parts of United Kingdom.

Unlike the traditional integrated mills, that used iron ore for the blast furnace as the raw materials for producing steel, the mini steel mills make use refined and ready to use scrap steel and melt them to produce the required frameworks and tools needed in the construction sites. It uses the electric arc furnace or the EAF technology.

            The innovation in the usage of mini steel mills lies in the fact that the “slag” they generate is used in a very efficient way. Slag is the bye product that is generated in the process of production of metal. Slag is originally in a molten state quite similar to volcanic lava. The chemical composition of slag is quite similar to the chemical composition of the metal that is produced. The slag that is being produced by the steel mills are abundant and are often refined and exported to the other construction sites to be used as an alternate fill material.

Slag that is produced from the usage of steel mills from the electric furnaces as well as open hearths mainly consists of non-hydrated lime, which is primarily calcium oxide and some part of magnesium oxide. Lime is used as the fluxing agent during the production of steel since it has the capability of absorbing water for many years even after the creation of the slag[15]. They can produce expansions of volume of more than 10 percent. Slag that is located above the underground water table can cause moisture absorption as well as expansion of slag. Vaporized soil moisture is sufficient to cause hydration of lime for over years even decades in case of a properly planned construction process.

Disruptive leadership in the construction companies:

            This is one of the most important disruptive innovation that can be applied in the construction industry in the United Kingdome keeping in mind the goal of “clean growth” Clan growth ensures the usage of clean technologies that do not pollute the environment by releasing harmful greenhouse gases such as carbon monoxide, oxides of sulphur and nitrogen into the environment. These gases adversely harm the environment by causing issues such as greenhouse effect as well as global warming. Reducing the emission of these gases in turn ensures that there is no rise in the sea levels and therefore reduction I the floods and other natural disasters.

            A disruptive innovation needs a disruptive leadership. Presently the top management of the construction companies are the important decision-makers and many of such top-level employee are often corrupted. They are always after their own personal interests and end up adopting illegal means of deriving more business form the clients even at the cost of harmful climatic effects. That has to be stopped. The leadership including the some of the top-level personnel of the government environmental committees also have to be changed which can successfully help in ensuring that the environmental policies are being strictly designed and the construction firms are following them while undertaking real estate construction projects all across the United Kingdom[16]. There should be a transparency in the information flow.

Through disruptive leadership, not only will the construction industry by being able to counter attack the threats from climatic changes and governmental policies, but the personal growth of the top managers as well as decision makers can also be ensured internally within the construction companies all across the United Kingdom. It is an extremely powerful tool and helps the workers of different levels on sites as well as the top managers of the construction companies realize that any kind of disruption in the market in the field of real estate construction can be seen as an opportunity of further growth instead of a threat[17].

It helps in building leadership agility within the construction firms and result in future-proof leaders as well as workers and laborers in the construction industry in not just the United Kingdom but also across the world[18]. It helps in the steady improvement of construction industry all across the world (Refer to appendix 2). For instance if there is a new change or amendment in the environmental standards to be followed by the firms the private construction forms should come up with a counter technology that thinks in advance and just not complies with the new policy but also remain open to future modifications considering possible future change in standards. This requires a very transparent and disruptive leadership.

Early adopters of the disruptive innovations:

The main assumption in the disruptive innovation lies in the fact that Drylands Learning and Capacity Building Initiative has scaled up from its existing early adopters in the niche market compared to the entire real estate construction market in the rest of the United Kingdom. It has mapped its newer implementations to the construction companies that are based on the early adopters. The early adopters will be the younger people involved in the construction industry mainly the top level managers as well as the stakeholders of the construction firms who typically have a high social status and are well educated[19].

They informed about the threats that the construction industry is presently facing or may possible face in the future. They often have more financial lucidity and are quite socially ahead than the late adopters and are flexible in adopting the changes with a broad-minded mentality. They will be discrete in the choices of adoption and use judicious means of adopting the above-discussed disruptive innovative strategies in the real estate construction industry.

Reduction in greenhouse gas emissions due to the innovations:

Reduction from use of hydraulic excavators:

In a recent research on hydraulic excavators, it has been found that selecting the right engine spend as well as the bucket cut depth is just not a cost effective solution for the construction companies but it also helps in reducing the greenhouse gases emissions largely. The two main important parameters of the hydraulic excavators, which are its engine speed, as well as the depth of bucket cut, which help in determining its productivity as well as fuel efficiency. Combinations of these two parameters in different ratios can increase the productivity of the hydraulic excavators by almost around 30% and cut down the emission of greenhouse gases by 24%. This in turn can help in moving around 62% more soil or debris from the construction sites per hour, every hour for each litre of the consumed fuel.

Reduction from use of recycled plastics:

This is one of the most efficient ways to reduce the emission of greenhouse gases and therefore ensure efficient waste management and reduction in the generation of waste from the construction of real estate properties all across the United Kingdom. Both direct as well as indirect emission of greenhouse gases can be reduced by recycling plastic and other waste products. Direct sources of emission of carbon and other greenhouse gases include waste generation during the collection of waste as well as their transportation, during their pretreatment processes like sorting and crushing as well as in utilization processes.

Indirect sources of emission of greenhouse gases include production processes etc. Direct emissions can be reduced when the plastics are not disposed in the landfills or they are efficiently treated before disposal using advanced techniques such as combustion. Indirect emissions can be reduced by cutting down the consumption of energy in acquiring and processing the raw materials required for making tools of specific construction processes[20].

Virgin raw material can be substituted with processed ecofriendly plastic that has been recycled using efficient waste management, which reduces the emission of greenhouse gases in the process of the production of these raw materials[21]. Emission of greenhouse gases is also reduced by the usage of plastics over other raw materials that start producing harmful emissions directly in the phase of production (Refer to appendix 1).

Reduction form the use of mini steel mills:

There are different channels from which there is emission of greenhouse gases in the integrated steel plants, which are not needed in mini steel plants since much of the infrastructure needed in the integrated steel plants, is not needed in the mini steel plants.

Multiple interrelated processes take place in the production of steel in the large integrated steel plants across the United Kingdom. Some of those processes, which are often not needed within a mini plant, are coke and sinter production as well as iron production. In the integrated steel plants, there are also different stages as well as processes of production associated to semi-finished steel and its rolling and production of the final finished product. There are other units, which also produce greenhouse gases such as carbon, and sulphur emissions are power plants, air separation plant as well as the plant for lime calcining etc.[22].

Extensive use of transportation services in the integrated plants to transport the raw materials to the site of construction also produce greenhouse gases largely[23]. These are not needed in mini steel plants thereby reducing the emission of greenhouse gases largely.

Recommendations on deployment of innovation to a wider market:

            Better market analysis should be performed regarding the demand and supply of real estate properties in across the markets of United Kingdom. Proper risk analysis should be carried out and efficient promotion activities of the products and services of the different construction companies should be undertaken by the companies. The companies can effectively utilize internet as well as social media and other web platforms in order to better promote their properties and other service offerings and in turn a wider range of the target audience.

They can promote offers such as seasonal savings as well as discounts and the features of the exclusive housing properties for the common person to afford. This in turn will not only help in improving the brand values of the different real estate firms but also help in generating more revenue and winning the trust of the clients.

Figure 6: Trend of real estate property prices in UK according to a recent study[24].

Conclusion:

Therefore, it can be concluded from the above report that in spite of the fact that real estate construction is one of the most emerging lines of business across the United Kingdom. There are different avenues of improvement for the construction companies. Different innovative business models should come up, in order to meet the ever-changing needs of the customers as well as to counter attack the dynamic nature of the changing market scenarios. The governmental laws and guideline should be strictly followed by the constructions companies in order to make sure they do not face any ethical dilemmas in the future.

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