the elephant - briqs...elephant rumbles through the circular city, is difficult. people feel ropes,...

insight into the five economies, view on renewed ownership

Remko Zuidema

the Elephantrumbles through the Circular City

the Elephant rumbles through the Circular City the Elephant rumbles through the Circular City

Consumption and financing demand control over products and materials in the new circular world of construction, with ownership as a logical resource. Both customers of buildings – the investor and the end user – have fundamentally different ideas about value. On the supplier side, translating buildings into customer oriented services has hardly even started. How can what the construction world offers effectively and specifically provide for that and what bottlenecks make that such a challenge? The writer identifies the major economic changes and then the benefits to investors, end users, society and the construction world. Where the dogmatic Dutch definition of real estate ownership forms an extraordinary stumbling block for both customers.

“If inhabitants have no control, then uniformity and rigidity result. If the community has no control, chaos and conflict result.”

(John B. Horowitz, Ball Sate University)

about the author

Raised in the world of architects, builders and contractors, Remko Zuidema graduated as a Construction Engineer from the TU in Delft and now has 25 years’ work experience in the field. He has worked as a principal, manager and engineer on off-shore, office, educational and residential building projects. It became increasingly clear to him how the interests of the end users differ from those of the owner.

As former local politician, strategic consultant, founder and president of the BRIQS Foundation, the author is directly involved in coordinating natural resources, materials, products with the lifecycles of buildings.

www.briqs.org

ISBN: 978-94-92383-54-9

Remko Zuidem

a

Table of Contents

Foreword 3

About BRIQS Foundation and the author 5

What is the significance of the Circular Economy for the construction world? 8

What does Circular mean in the Circular Economy? 12

Which Economy is the Circular Economy of buildings? 18

Legal aspects of the Circular Construction Economy 24

Financing a building project in the Circular Economy 28

Ownership relationships and business models in circular buildings 34

Administration and politics discover circular buildings 42

The financial world and its view of the circular buildings 45

Use of buildings from the principle of the Circular Economy 49

From work contractor to solutions provider in the Circular Economy 52

Health, wellbeing provider and productivity in building use 56

Summary 59

Acknowledgements 63

References 64

Colophon 66

2the Elephant rumbles through the Circular City

Foreword

Never before have we lived in a time where developments have followed each

other in such rapid tempo: the circular society is making its entrance. And as far as

I am concerned it can’t go fast enough. Things need to change. Only then can we

guarantee our children, our grandchildren, a healthy, prosperous future.

Because that future: is already there. No doubt about it, and more and more people

have the same vision. An increasing number of people, at all levels, in all situations,

see the use, necessity and the many opportunities of the circular society.

However, seeing the entire elephant, as Remko describes it in this book ‘The

Elephant Rumbles through the Circular City, is difficult. People feel ropes, snakes,

fans, trees spears, but no-one sees the big picture: the elephant. And it is precisely

that bigger picture, in other words: collaboration, that is needed to build a circular

society.

The circular society is composed of many elephants: energy elephants; raw materials

elephants; economy elephants; education elephants. Remko Zuidema’s elephant is

a building, a circular building. As a member of a construction family, which includes

architects, construction engineers, financial experts, contractors, lawyers, clients

and builders, it was inevitable that he would become a construction engineer.

During his work – which includes housing, education, healthcare and office

projects and later as politician and sustainability consultant – he discovered that

where there’s a will there’s a way, but that the necessary overview and knowledge

was lacking. So, in Remko’s opinion, it was time for a book about an elephant, the

circular elephant.

As wrote above: developments can’t come fast enough for me. I am a believer; I am

genuinely convinced of the success of the circular society. To put all the pieces of

the elephant together, really only one thing is required: partnership. Connections,

collaboration, sometimes conventional collaborations, sometimes unconventional.


Because that’s where innovations come from: in the area of materials, production,

construction, use, business and revenue models, financing models. Oh: of course it

takes courage too, people must dare to dream and more particularly to act.

In this book, Remko Zuidema has put together an elephant for construction.

Because there is an enormous amount to be gained there. In my municipality of

Haarlemmermeer, you can already see how that elephant can look: Park 20|20 is the

first fully contiguous cradle to cradle business park in Europe. That’s the location

people want for their organization.

So read this book. Touch the elephant, see the big picture. And build circular.

John Nederstigt

Alderman Sustainable Economic Development

Haarlemmermeer

the Elephant rumbles through the Circular City 4

About the BRIQS Foundation and the author

“I should have built my enemy’s house first, and afterwards my friends’ and last of all,

my own house.”

I remember my father saying that quite often. You are in fact most critical of your

own house, your home. When you yourself are the major stakeholder, you want

reality to reflect the dream as much as possible. It is a different matter entirely when

you are working on someone else’s home or their workplace! Quite confrontational.

I grew up around urban designers, architects, contractors and numerous clients. My

father was an urban designer for the Rijks Planologische Dienst (National Planning

Department) and an architect. First he doubled the size of the family home and later

at his next home did so again long after I had left home. My parents’ neighbor was

a contractor, so there was a workshop literally around the corner. We were always

rebuilding something and I remember that at ten years old I was already helping

to lay foundations. My mother was also an architect and ran the architect agency.

My mother’s father was the youngest son of a contractor who was married to a

skilled lawyer. He was also a construction engineer and when he retired he was

Chief of Public Works of a municipality in the center of the country that had

grown significantly. As a civil engineer, my uncle had taken over the family marine

engineering company from my grandfather’s older brother. And on the other

side of the family my grandfather was an accountant and his father an electrician.

Construction is in our blood, also the legal and financial aspects of the construction

industry.

Our home was constantly filled with clients, contractors, engineers, lawyers and

architects, and as I child I got to look around every building site they discussed. I

learned to deal with the different disciplines at an early age, to speak the various


‘languages’ in the building world and to make connections. It came as a surprise to

no-one when I chose to study engineering, but from a broader perspective.

I had the chance to work four times on my own house: as a child I did some

plastering and carpentry, and as an adult I worked on my father’s house again, then

twice on both my student house and my current home. In addition, I have helped

friends and acquaintances with the design and execution process on numerous

occasions. Pre-planned or unplanned either during or as a result of an emergency

situation. Unfortunately, in traditional construction the latter is all too common.

You expect to be able to handle things yourself, even when you are unfamiliar with

the building world but then suddenly you get lost in the specific ‘etiquette’ of the

building world. What a headache! At times like that it’s useful to have a guardian

angel in your circle of friends and acquaintances to come to the rescue!

I also hear similar stories from one-time contractors of utilities buildings who have

difficulty managing their building projects.

Why the BRIQS FoundationAfter graduating as a Construction Engineer from the TU Delft, I gained 25 years’

experience in various positions in the construction industry. I have worked as client,

manager and engineer on off-shore-modules, in housing, education, healthcare

and office projects. For private companies. I also worked as department manager

infrastructure for a large municipality. I often found myself positioned between the

different interests of building user and owner, for example, the municipality that

financed the social real estate. Later, as a local politician and strategic sustainability

consultant, I was directly involved in matching the natural resources, materials and

life cycles of the build on the one hand, with the interests of the user of the building,

the demands of the investor and society on the other. In combination with the rise

and necessity of the Circular Economy, new specializations in my profession grew

from these experiences.

I increasingly discovered that circular work and better alignment within the

construction industry are possible almost everywhere, but that a good overview

and knowledge are lacking. After decades of technical and organizational project


management, the time was ripe for me to make that practical experience available

to clients in the construction industry (users of buildings) and the construction

industry itself. Years of working on and studying the research and reports for

governments and universities led to the realization that the same issues were

always the cause of all the misery of clients and society:

• First, some habits and revenue models were simply not beneficial to the

interested parties or the client! And I discovered that many of those revenue

models could easily be changed since the construction industry wanted to be

rid of them.

• Second, I noticed that the needs of residents change fast. That seems to

contradict the interests of financiers and investors, who benefit from long term

continuity. That’s a problem which often leads to residents and other users not

getting what they want and need. In addition, there is a lot of capital destruction

because changes in the demands of users are not taken into consideration. As

a resident/owner of a property, how do you then manage to get what you want

when you are dependent on the construction industry, which takes insufficient

account of changes?

• Third, it occurred to me that the only way to still get what you want, is to build

yourself. But, that’s somewhat strange, isn’t it? Why do I suddenly have to do it

myself and why am I unable to just ask for and get what I want? Insight into how

users will use their buildings is lacking and the construction industry has no

direct interest in knowing this precisely or in responding to it. Even worse, the

construction industry doesn’t even have direct contact with the user!

That is why I decided to do my own research, which gave me a lot of answers. All

three points above can be solved. The missing links, in addition to the tendency,

brought about by the economic crisis, to be suspicious of improvement, can

therefore be resolved.

Remko Zuidema

Chairman, the BRIQS foundation

www.briqs.org


http://www.briqs.org

What is the significance of the Circular Economy for the construction world?

Let me introduce you to the Circular Elephant - in its entirety Are you familiar with the old Indian parable about the blind men and the elephant?

Each man touches part of the elephant and assumes he knows what it is. The man

touching the trunk says: “It’s a snake!” The man touching the ear says: “It’s a fan.” The

tail becomes a rope, the hind leg the trunk of a tree and the tusk a spear. Nobody

sees or treats the elephant in its entirety. It’s the same with the building industry;

and that is a disaster for understanding the Circular Economy. That is what this

book will attempt to show you. Would you like to get to know the Circular Elephant

in its entirety?

Splitting up the elephantReal estate is a cash cow with an attractive return for the government. So keep

your hands off! Investors also love real estate, however, homes are an investment

that does not yield an easy profit. Remember, the investor has to put money into

kitchens, bathrooms and other items that have a relatively short life span and

meeting the minimum requirements is seen as good enough. So the user gets a

home or workspace that does not fulfil his personal health, welfare and productivity

needs. But, how much choice do you really have to rent, buy or build in popular


cities? Not enough by far! Users have no choice but to take what they get. It doesn’t

make the building sector happy either. Sometimes contractors are only able to

earn money from building projects by unscrupulously fleecing the customer. That

has to change. Due to all these different interests and the lack of collaboration the

Circular Economy has to pay the price. The building sector wastes raw materials

and produces a ridiculous amount of waste. With 40% waste it is an absolute top

scorer! But that’s only something to be proud of in the world of sports. We need a

new approach to remove construction from this waste hit list. Would you like to

know how we can achieve that? Then you’re in the right place! We will look in more

detail at the concepts of circular and economy in the context of construction.

The building as a means in the production, operation and application processEvery building has a

functional purpose, for

example, for a household

to live in, for a factory to

manufacture, for an office

to deal with administrative

processes, for a hospital to

nurse people, for a school

to educate students, for a

shop to sell products or for

a catering establishment

to give people a venue to

go out. For the building

owner, the profitable

primary process that takes place in the building, must lead to a profitable operation.

After all, it is ultimately the rent or the value of the use with which building owners

are paid. And the construction production process is paid from the earnings of

building owners. Approximately ten percent of the combined assets of our society

is invested in construction. After stocks and bonds, real estate is the world’s number

three investment category. It is therefore logical that the real estate sector and the

financial world are closely linked.


Building production process

Real estate acts as the link between the user (left) and investors (below) on the one

hand and the government (top) and the production processes (right) on the other:

firstly, the production process with the base building realized from a long term

vision and secondly the production process with the fit-out as outcome, designed

and realized based on short term consumption.

The government influences these two processes by means of permits and therefore

co-contributes to the form of the buildings and the space they realize for the

primary processes of users. The focus of the government is aimed at safety and

usability of buildings, but think also of aspects such as internal living environment,

energy-efficiency and sustainability. The requirements for this area of interest

must be translated by construction designers and builders in their production

process. After all, they are the ones who select the materials and products for use

in buildings. Ultimately all efforts of a large number of the concerned parties in the

production processes for buildings lead to the realization of sustainable buildings

that also serve the long term interests of investors in the form of value retention,

return and risk reduction.

Changes as the only constant in the use of a static buildingThe consumption of the building lies mainly in the use or consumption by the user.

From the point of view of managing and maintaining a building, including cleaning

and repairs, adjustments are constantly taking place because of changing use of

the spaces. For shop owners, or restauranteurs, it is a real challenge to oversee

the next five years, in healthcare, the time that can be overseen is no more than

ten years. Also when it comes to offices, hotels and buildings meant for industrial

applications, overseeing the use for the first ten years is also a challenge, even

though, in terms of the outside of the building, they can remain standing for much

longer.

Houses in particular, seem to undergo only limited changes on the inside and

outside in the first twenty years, with the exception of houses sold and where a new

owner carries out the first alterations. However, due to the relatively low price per

square meter, homes especially have a much longer payback period. The question


is whether the difference in the needs between residents and owners is important

enough for the owners to consider for the utilization. Because the housing market is

most strongly regulated by government, very limited possibilities apply in relation

to rent, selling price and conditions.

Both the primary process and the utilization process in the building process have

objectives for making a profit and increasing value, based on process-specific

cultural values, customs and norms. From the point of view of the building owner,

the utilization process forms the center of decisions and power in this package of

processes. At the same time, it is often precisely the utilization process that lacks

transparency. The total utilization period for a building – in which several users

come and go – quickly spans a few decades. That means that the investor must

take decisions about the expected utilization demand within that period based

on the information about costs and revenues within that life span. The building is

here a quite static means of production, albeit adaptable to a limited degree, while

user demand is constantly changing. The balance between short and long term

interests of user and owner of a building therefore determines the value of the

real estate. To prevent real estate (unmovable asset) becoming a ‘real mistake’ it is

advisable to introduce user-sensitive components such as loose estate (movable

asset). This directly impacts the opportunities offered by the circular economy,

allowing a new risk spread between user and investor/owner to emerge with the

help of construction suppliers. You will read more about that in following chapters.

Split Incentive


What does Circular mean in the Circular Economy?

How we in the building industry can protect raw materialsNatural resources: these are a problem in construction. Did you know that the

construction industry is a major user of materials and for years has been the largest

producer of waste materials? The amount of waste is truly enormous and the price

extremely high, both financially and ecologically.

If we learned to use natural resources and materials instead of consuming them,

we would save a lot of money and we would not exhaust the earth as fast. To

achieve this, the building process and the way in which parties work together

need to change drastically. Just think of the huge amount of natural resources that

flow through a building during use, e.g. drinking, rain, sewage and heating water,

ventilation and exhaust fumes and natural gas.

From linear to circular

Existing construction and real estate organization


With the exception of a few innovative examples, the building process progresses

in a linear way: we use natural resources and materials in products and what we are

left with during and after building, we throw away. By contrast, in a circular process

the products and materials do not turn into waste. Products and materials are

reclaimed and re-deployed. In current construction, three factors make it difficult

to treat raw materials in a circular way: poor transfer of information, fragmentation

of interests and mixing of products and materials.

1. All different interestsThere are numerous different parties and what’s more they all have a different

stake in the building. The providers of raw materials are active in the global natural

resources market. They deliver to the manufacturers of building products. They

then sell their products directly, or through the wholesalers, to the contractors.

Those contractors process the building products in a building according to the

demands of real estate investors and housing corporations, on the advice of

architects and other consultants. Contractors are monitored during the building

process by overseers who following clients’ orders, but days after completing a

project these contractors are no longer responsible for what was not specifically

written down before. Therefore, the clients - the real estate investors and housing

corporations – specifically want to secure their investments in advance. They see no

financial interest in the processed products and materials. Then there are the users

who live, work, provide care or are educated in the buildings… they are completely

unfamiliar with this subject.


2. Loss of information about natural resources in materials and products

Circular organization of construction and real estate

The needs and revenue models of all these parties are to divergent to be able to

achieve a meaningful exchange of information. Parties often only work once with

each other on a project basis. In this system, the collaborating parties do not learn

from each other or from the process. That is, to say the least, not very useful if you

want to apply what has been jointly learned next time for maximum value. That’s

how valuable information is lost and we get stuck at the same level. But it doesn’t

have to be like that, if those who deliver the solutions stay involved during use.

3. Natural resources are mixed A lot of natural resources come together in a building. During the building process

these are then mixed in materials and products. For example, we place installations

in the floor and then pour cement on top of and around them. Materials are

therefore fused with each other. Yet installations are excellent products for recycling

because they consist of materials such as copper, various plastics, aluminum and

stainless steel but without any consideration for the different lifespans of these

processed building products, they are lumped together in one monolithic whole.


Furthermore, during the making of a building, no one pays any attention to how all

those products can be separated from each other again. Finally, the registration of

all the applied materials and products is extremely limited.

The solution: let the lifespan be leadingTo achieve a circular natural resource economy, we must fundamentally change

how we think about buildings. We have to step away from monolithic thinking. After

all, a building is made up of different parts, each with its own lifespan. Technically,

the support structure of a building, for example, can last a hundred years, while the

fit-out (the inside) lasts a lot less long. Users want to be able to change the fit-out

easily. That is why renovation is much more common than new-build. So, for every

building, we should separate the long term world of the owner from the short term

world of the user. By seeing the base building separate from the fit-out, the user-

part can contribute to a circular natural resource economy. And later, much later,

that will also apply to the base building when it is finally demolished.

Circularity means distinguishing between natural and technical cycles. By making

the distinction in lifespan inside buildings – as Stewart Brand does in his method,

the 6-S sequence of a building (1994) – we can allow natural materials to cascade

while we retain the value of technical materials.

6-S sequence, Stewart Brand


Natural materials eventually circulate back into natureWhen it comes to consuming materials that cannot be reused, it would be smart

to only apply natural materials. Otherwise technical materials – materials that have

become unnatural by being processed by people – end up in nature resulting not

only in damage to nature, but also in loss of these materials. If we allow natural

materials to cascade, we can make maximum use of them. We can postpone natural

degradation as long as possible. However, avoiding this entirely is not possible in

the long run. A successful example of this is the renewed use of sand, gravel and

cement debris. After all, (natural)stone, gravel, sand and clay are ultimately natural

degradations of Swiss mountains, through the rivers into the (North) Sea.

Thanks to man, technical and natural materials circulate For technical materials it is important that we keep them in the circle (loop) as

long as possible, as a whole or as parts. This is how we sustain maximum economic

valuable consumption and ultimately avoid needing new, scarce natural resources

and materials. We are managing to do that quite well with aluminum, for example,

where more than 95% is reused. However, on the one hand demand is growing so

fast that we still need new iron ore and bauxite and on the other, we still haven’t

managed to make new steel 100% from old steel. It still requires a small percentage

of new natural raw materials. This technical circle is also useful for slowing down

the return to the ultimate form of regeneration by nature as much as possible.


Valuable modelsWithin the Circular Economy of buildings, besides Brand’s previously mentioned

6-S sequence, we also use other models to determine and maintain value, like the

ten levels of circularity from Professor Cramer. In this method, which is certainly

also relevant to buildings, at each level an average of between one and ten less

labor is required while more loss of material occurs. In our current economic model,

wage tax makes labor relatively expensive, while there is hardly any additional tax

on raw materials. Primarily, businesses cut back on the deployment of people and

not on the consumption raw materials. It would be a good thing to shift the fiscal

incentive towards supporting labor intensive reuse. Projects such as The Ex’tax

Project Foundation (www.ex-tax.com) take that further with the motto: Tax on

resources, not on labor! This principle requires a rapid embedding in our national

and European economy.

And so, we almost automatically come to the second concept to be discussed:

economy.


http://www.ex-tax.com

Which Economy is the Circular Economy of buildings?

How circularity in building is linked to no less than five very different sub-economiesCircular Economy might just be the chance the Netherlands needs to put the

crisis behind it. In the Circular Economy we can actually link some of our country’s

qualities with each other: the extensive knowledge and scope of recycling raw

materials and logistics. Therefore, during our chairmanship of the EU, in the first

half of 2016, the Circular Economy was our national calling card. It is then extremely

important to be clear about what precisely the Circular Economy entails.

What economy are we referring to when we talk about this concept in the world

of construction and real estate? As we saw earlier, even when it comes to just

the construction world, there are five totally different sub-economies. Five sub-

economies that currently function to a great extent separately but that are suddenly

closely related to each other within the Circular Economy. Since many of those

associated with construction or building are really only familiar with one or two

of these five sub-economies, it does not stimulate collaboration and coordination!

Of course this presents new challenges, for which we do in fact have existing

answers, even within the Netherlands. Answers that ensure we continue to retain

maximum value and create new value. We ‘just’ need to mutually coordinate those

values… Let’s identify them first!

According to the definition of economy given by Professor Heertje, it requires two

variables to makes something economically valuable:

1. It must deliver prosperity for society, the client and the manufacturer.

2. It must relate to something scarce item; an item that cannot be delivered

without an exchange of value or payment. If there is no exchange of value and

no revenue model, a company will not be prepared to invest and deliver.

This general description of economy of itself will not suffice in the construction

industry. We also need to make a real distinction between the five different sub-


economies as the interests, and therefore the needs, of the different parties are so

extremely different. In addition, the hierarchy within these sub-economies means

they are not equal.

This is related to the:

1. economy of use in the primary process of the (end) user;

2. exploitation-economy from the perspective of fit-out expenses;

3. building economy from the perspective of base building investments;

4. real estate economy from the perspective of returns for the investor;

5. government economy from the perspective of the various governments as an

important source of income.

This will be discussed in more detail in later chapters.


The key to successThe separation of the base building from the fit-out is an important key to success

for the Circular Economy. That separation helps us unravel the different interests

and responsibilities of the parties involved in construction and renovation by

connecting the building economy to the exploitation. Furthermore, we make a

distinction between spending and investment, where according to the definitions

it is only in the latter case that invested money can be earned back, generating

returns. Everyone does what he is good at, receives quality and earns his money

(back) in a transparent way.

But before we get that far, there is still a lot to be discussed in relation to the

construction work floor and politics. To allow this new form of collaboration and

distribution of incomes and responsibilities, we need new rules to play by. The

separation of base building and fit-out is the basis for this new way of collaborating,

as construction consists two very different sides.

Fix or just prevent the ‘split incentive’?The interests of the user are linked to the fit-out, the interests of the investor/ owner

mainly to the base building. This clear division of responsibilities immediately

solves the problem of the ‘split incentive’. Or should I say, the new models prevent

the ‘split incentive’; better interpreted as conflicting interests! After all, now the

burden of costs incurred often fall to another party than the one receiving the

benefits. When you buy something, you want value for money! That means that

you want a say in what is delivered to you, don’t you? As a consumer you have that

influence everywhere, except in construction. There, as the buyer or renter, you

have a whole battalion of people between you and the manufacturer of the fit-out

of your premises or home. And all of them have their own opinions and interests...

So what exactly is Open Building?These are a number of rules of the game surrounding both the powers between

the owner/investor on the one hand and the user of the building on the other. It

emerged in the 60s as a reaction to mass housing in our country and the resulting

uniform and impersonal housing fit-out. It was at the root of the current Building

Act that was introduced in 1992; and in utilities construction it is already common


to form agreements between landlord and tenant that deviate from the standard

distribution of ownership between the real estate party and use. Open Building

allows a different distribution of knowledge and responsibility between the use,

the financial responsibility and the building industry. Remember, a lot of money

and specific knowledge is involved in construction, and let’s not forget the fact

that, for the user, the result is usually personal. From a practical point of view, when

it comes to the client, Open Building looks separately but in coordinated manner

from the perspective of the base building (also known as Casco or carrier) and the

fit-out and includes the distribution agreements between the owner/landlord and

resident.

Open building levels

The NeigborhoodThe neighborhood, the environment, determines

the type of building that fits into

it: high, low, big, small, to live, to work. How houses,

streets, pavements, gardens, squares, shops, green

and so on fit together, determines how you feel in

that environment. Usually the municipality decides

over an empty plot of land and you may make some suggestions, but it is always

a joint decision of the group of stakeholders. If you want to renovate an empty

building or monument for the purpose of living there, then the environment is an

important precondition for your choices.


The Base BuildingThe base building, also known as carrier or Casco,

can best be looked at from the outside in. It includes

the foundation, construction walls or columns,

floors, roof and facades, shared stairway(s), gallery

and/or lift, building installations and utilities as far as

your front door. This can be either a new or existing

building within which your home is located.

A ‘smart’ base building has a solid, spacious carrier structure and open spaces in the

inside that can be easily divided up later into separate parts. Are you building your

dream house completely yourself, separate from other homes? In that case the

base building is your choice and your responsibility. If the building is designated

for multiple homes, i.e. apartments, then an investor or housing corporation may

also be responsible for the base building. In the latter situation you only have to

spend time, money and energy on the fit-out.

The Fit-outThe best way to look at the fit-out is from the inside

out. It consists mainly of the design of the interior

space: where does the user want to live, eat, sleep,

shower, sport, work etc. What type of kitchen and

bathroom suite does the user want? What needs are

there when it comes to light, air and warmth and

what installations does that require.

In short, how is living and working interpreted precisely? With Open Building this

is entirely the domain of use to fill in, separate from other homes/shop units or

offices, next to, above or below. Besides utilities building an increasing number

of homes are also being designed this way, to be adapted easily, repeatedly and

personally by you. This also makes renovation much easier.


FurnitureIn general, furniture is not officially regarded as

part of the home at the time of purchase or rent.

Any curtain rails or sunscreens from the previous

resident will be listed separately on the contract.

As movable assents, these are not formal elements

of the term property ownership. But the kitchen

layout and even the bathroom accessories may be

purchased and mounted by the resident and may

be part of what you rent, as you would expect from furnished rooms and homes,

short stays and hotel rooms. But you usually have little input about the rest of your

house... If it is a house that you will be living in for a longer period, you can choose

to rent expensive furniture from somewhere other than your lessor, for instance,

from the better shops for shorter periods. Just like the art you hang on your wall is

on temporary loan from the art library.

Project or system?Every entrepreneur can approach his work professionally in two ways: either as

a project or as a system. If it is an ongoing activity or something you do more

than once, then it is better to create a system. If it is a unique, on-off job with a

definite goal, a beginning and an end, then tackle it as a project. In order to deliver

a top performance as a specialized provider in construction, there is an important

adjustment you must make to your business model. That is: to choose whether to

work systematically or on a project-basis.

I am surprised that this distinction is hardly ever made or identified in construction,

‘systemized’ working is rare. This is what successful entrepreneurship is all about.

Successful businesses do not continuously reinvent the wheel. They continuously

develop, install and improve systems in their company and are in addition, involved

in a limited number of projects to get the maximum out of their systems.

The choice to work in projects or to follow a system not only has an impact on the

level of efficiency but also on legal issues! I will go into this in the next chapter.


Legal aspects of the Circular Construction Economy

Suppose you are planning to buy a new boat. You have a budget and even know

which brand you want and which you don’t. You have a preference for a specific

type and accessories, but you still want to just look around at what is on offer. You

set off well-prepared and after a number of visits to dealers and trade fairs you find

the ideal boat. But look what happens when you sit down with the sales rep: “You

will have to monitor the production process yourself, otherwise you receive no

guarantee on the boat. The other option is that, at an additional cost, we monitor

the production process for you – oh, by the way, with no additional guarantee.” Of

course, that’s totally unacceptable! And unrealistic. Although… It works in a similar

way when you have a house built in the Netherlands. Therefore, let’s look at how

Dutch building law turns things upside down, how the customer bears the risk and

pays the bill…

Legal system associated with constructionWhen we decide to build systematically, that leads to a whole other offer for the

building user than when we work on a project basis. It involves other guarantees

and insurances, such as a purchasing contract instead of a building contract. Why is

that beneficial to the user? Producers are subject to European Law (caveat emptor

= buyer beware). Contractors, architects and many other parties with whom the

user now has dealings, fall under Dutch building legislation. This is based on the

Latin caveat venditor, translated as ‘seller beware!’ A warning to be taken seriously!

Not many people know that the construction industry is subdivided into two

groups of organizations with entirely different responsibilities and powers. Dutch

building law applies to construction and real estate parties, such as financiers,

project developers, agents, managers, architects, consultants, overseers, installation

companies and contractors. The Ministry of the Interior and Kingdom Relations

provides the relevant legislation. What other parties are there? In terms of turnover,

more than half of everything made for buildings! According to that legislation, the


primary partner for these companies is the Ministry of Economic Affairs. European

law protects the user as consumer and sets demands on all suppliers of natural

resources, materials and products, also in construction. But the national legislature

only protects the customer to a very limited degree and hardly at all when it comes

to non-private clients.

That sometimes creates strange situations, namely that manufacturers remain

responsible for their products for a long time, while contractors and installers, who

are in fact in direct contact with the customer and have entered into a contract

with them, are no longer responsible once the building has been delivered. So

their responsibility often stops before the building is actually deployed!

Construction Guarantees, even when buying existing property An acquaintance of mine bought a house that was almost twelve years old. There

was moisture between the panes of double glazing of the large, floor to ceiling

windows. According to the previous owner, it has always been like that. Apparently

nothing could be done about it. My acquaintance called the contractor who had

built the house: “Oh, sorry, but that is not our responsibility.” And that’s what the

project developer said, too. There was no documentation. My acquaintance was

able to read the name of the glass supplier in the space between the panes of glass.

He found his telephone number on the internet. And as it turns out, there was a

twelve year guarantee on the glass. It was February and the guarantee expired in

March…

The glass supplier was not happy with the telephone call or with the polite claims

letter that immediately followed. No-one had ever made a claim on the product

guarantee even though there were more houses in the neighborhood with the

same problem (or previously had). After the contractor’s and project developer’s

refusal to do something about it – unless at an exorbitant fee! – the inhabitants of

the neighborhood had let the matter drop because current Dutch legislation gave

them no other option (yet). Or they had paid for the windows to be repaired out their

own pockets. My acquaintance knew what rights he could claim from the supplier,

who is bound by European law. That made all the difference. The supplier replaced

the leaking window at no charge, since the claim was made within the guarantee


period. It was most likely a case of poor faulty assembly by the contractor but the

supplier would have difficulty proving that now. And that’s not the customer’s (my

acquaintance’s) problem.

Guarantee: rights and obligations in constructionEuropean consumer law states that you, the buyer are entitled to get what you

order, implicitly and explicitly, no matter what the material or product. European

law says that the manufacturer of building products must deliver the quality that

meets those expectations. If the manufacturer is made liable for a shortcoming,

then he must prove his own innocence and the fault of the user.

In the Netherlands, the responsibility for you as building user to ask clearly for what

you want, is greater than the responsibility of the provider to interpret, confirm

and to meet that request. After delivery of the building – if the building user has

formally stated that the contractor is finished – the user can only confront the

contractor with hidden defects. At least… if you, as user, have maintained sufficient

overview so you can see which defects were not previously visible. Since you are

not allowed on the building site until construction is complete, this is a perfect

recipe for disaster. That is why, as long as Dutch law has not been revised, it is so

important that building users express their demands clearly. Have everything

thoroughly checked by experts (e.g. at least in the form of a delivery inspection)

before you, as user, accept the building. Let’s support each other.


From More Work to More Value as revenue modelFirst the commercial aspects. In the Netherlands, each party in real estate, design

and construction is responsible for the quality they deliver. That depends on what

is agreed with the customer at the start of the whole process. But… sometimes

the customer lacks any knowledge in just about every field. After all, how often do

you, the building user, have a building constructed? So, you end up with a business

model where the construction industry makes more profit the more the customer

discovers and expresses additional demands, wishes and needs during the process.

More work as revenue model, but does it deliver more customer value?

In terms of liability insurance, it is better to cooperate with the customer and avoid

exaggeration of problems that cannot be transparently proven, after all, there’s no

need to look for any liability that you don’t have by law! In Germany, according to

law, the combination architect and contractor are automatically jointly liable and

it is they, not the customer, who must resolve issues together. In Belgium, from

the customer’s perspective, the architect is always liable and that architect must

arrange everything with the contractor. In France each company involved in the

building process is partially liable to the customer, with the architect as collective

policy holder.

In Europe – with the exception of the Netherlands, and also the UK and Ireland –

the responsibility for the end result of the building process does not lie primarily

with the customer, but with the collective businesses in the build. After all, that is

where you find the expertise and the capacity to actively influence the process!

Elsewhere, the ignorance of the customer is the starting point for the legislature. And

therefore the consultants and the builders are obliged

to exhaustively examine the demand of the customer. In

collaboration of course, and to ask the questions-behind-

the-question. To discover the customer’s deepest wishes

and his real needs. Ultimately, for a customer it is not just

about a building, it’s about his expectations and what he

achieves with and in it. Sounds good, doesn’t it?


Financing a building project in the Circular Economy

Smart financing of building projects is done without the bankHas a bank ever said NO! to you when you asked for financing for a building or a

renovation? Then you are not the only one. Building projects are difficult to finance

at the moment. At least, for banks. But don’t worry, arrange your financing smartly

with new parties!

New rules concerning bank reserves and lending are forcing banks to hold on

to their money. Loans and mortgages for both new construction and existing

buildings must fulfil an increasing number of conditions. Conditions concerning

the employment contract of the applicant and around the minimum selling values

on execution of the building to be realized. Fortunately, financial institutions such

as banks have more to offer than just money and there are more ways of getting

investment funds, but how do you bring it all together?

What makes financing building projects so complex?If we look at building projects from the viewpoint of the parties concerned, their

relationships, rules and powers, we now run into a number of problems that make

the financing complex. Why? Because so much is uncertain. And financiers do not

like that. To get a clear picture I will first list the bottlenecks. You can read later about

how we can make matters simpler. Expectations concerning the costs of buildings

are gradually turned into commitment and result contracts with the multiple

supplies of advice, control and execution. These contracts form the basis for the

funding. The actual total costs cannot be completely guaranteed in advance. After

all, it is a sum of costs over a long lead time.


• Permits may only be granted after completion of a lot of preliminary work and

the local administrative organization and politics always play a role in that.

These uncertainties of time and money are a disruptive influence to obtaining

funding in advance.

• The splintered work of contractors, architects, installers etc. delivers separate

parts that only come together on execution and only after that give any certainty

that they collectively offer the required solution. Sometimes only years after

delivery.

• Buildings only offer certainty if the current and future needs of the users

are clear in advance. Those needs are never fully known beforehand and are

changing constantly and increasingly fast nowadays. It is becoming more

and more a matter of trying things out in practice, both for the investor and

the building user himself. The current method of building is not yet set to the

adaptability of building parts. Adapting to the changing needs of users is often

difficult and costly. And the simple ways are usually unknown to the developers,

municipalities, investors and certainly to the public at large.

Did you know? Funding is always based on three pillars That is why we are happy to explain the reasoning behind these three pillars:

1. The cash flow: the money the lender earns with the building by collecting rent

or other ongoing activities with which he can pay off the funding.

2. The risk of rentability or value development that you run in the market. With

buildings, this has to do with the location and the building’s suitability for

various functions.

3. The certainties: the value of the building as collateral. When the applicant is

unable to repay the loan in full, the bank can market the building. Then it is

important to have an up to date building so that it offers more possibilities.


Besides hard certainties, trust is built on the ‘soft’ factors, such as the applicant’s

track record and his behavior. It therefore helps if the applicant and the financier

have known each other for a long time and have worked together before.

The banks see only one ‘counterpart’ at the tableThere is another obstacle to be overcome. Looking at building projects you notice

that the bank only has one ‘counterpart’, i.e. the discussion partner. The bank

only talks to the ultimate developer/owner/investor about funding. The other

stakeholders in the project, such as consultants, architects, contractors, suppliers

and manufacturers are not included. These parties have a personal or business

relationship with the bank for internal credit facilities on their part of the project.

The developer/owner/investor shall pay these parties during or immediately on

completion of the project for their work and in that case, only ongoing guarantees

may prevail. This is therefore an example of payment for transactions and not for

the ultimate achieved value development of the building. The parties in the build

have nothing to do with that.

Real estate and property rulesIn construction, the asking party, the developer/owner/investor traditionally takes

care of (prior) funding. This is in contrast to other markets where the provider

offers that funding in combination with the product. For example, car financing

by the manufacturer or paying for a telephone through the monthly telephone

bill over the year after ‘purchase’. Now in fact, this pre-funding of buildings by the

contractor is not permitted by the AFM (Authority Financial Markets. Ownership

is also arranged differently for other markets. As buyer you become the owner of

the car or telephone, unless you fail to pay, then it can be undone. There is in fact

only one basic law own ownership and that determines the real estate ownership,

everything else is defined as non-real estate. The real estate ownership rules

included in the Dutch Civil Code state that a building is automatically the property


of the land owner and remains ‘undivided’ (with the ground). An unpaid supplier/

manufacturer of that building cannot ‘reclaim’ that ground, since it has always

belonged to the client. The consequences of this definition of ownership for the

Circular Economy will be dealt with in a later chapter.

Four new roles for banks in addition to the current money lending

The new rules concerning bank reserves and loans are making it increasingly

difficult for banks to make funds available for building projects. As a result, the (role

#1) bank as money desk, has therefore almost come to a standstill. Fortunately, the

bank has a lot more to offer than that. The knowledge, experience and networks

that banks have used up to now to determine internally whether it can or will lend

out money, is all extremely valuable to other parties who can invest in building

projects. A bank is in fact also (role #2) the expert at assessing the risks of funding

and (role #3) spreading those same risks. Additionally, banks (role #4) have the

ideal knowledge network and platform for information and shifting the demand

for loans to third parties. Furthermore, banks (role #5) have a role of trust that can

provide added value in the allocation of all kinds of products, such as an offer for a

new living or working space to third parties via the banks, if the bank presents itself

as an ambassador.


Now that banks have to deploy much less manpower to provide loans, they have

the capacity to offer their (internal) qualities to third parties. That is an excellent

opportunity for smart, well-organized third party funding of building projects, not

by the bank via the bank!

Building projects and smart funding can be done without banksThere are enough people and organizations with money who are prepared to

invest in a good building project. For example, parents who want to build a safe,

independent home for their child with a disability, senior citizens with no intention

of ending up in a nursing home. Think too of associations and local organizations

who want to realize a future-proof club house. Let’s not forget the municipalities

who invest in good facilities for their inhabitants. Strength in numbers!

With this set-up the construction industry will also soon have the chance to provide

the funding, as is the norm in other areas of the economy. And because in this way

the construction industry also has an influence on the end value and quality of the

collateral, the sector benefits even more from a proper execution of the building

process. In addition, major parties, such as contractors, suppliers, manufacturers

and suppliers of raw materials, can include their assets – including associated

branch insurances - and sector pension funds, in a market that is familiar to them.

This means their own knowledge and capital gives them the greatest return on

their assets. Furthermore, the building parts can now serve as collateral for the

manufacturing parties. As maker, they know the (residual) value and the best way

to deploy it again.

The solution lies in making new combinationsSolutions come from three parties:

1. a combination of the various internal bank roles;

2. the developer/owner/investor in a project;

3. the stakeholders who wish to participate, both from the vicinity of the building,

the users and the providers.


Methods such as crowdfunding, credit unions and ‘social impact-obligations’ (e.g.

loans for start-ups) use those three markets to bring funding together. Often by

disclosing how a realized product is of interest to others of a realized product,

e.g. the parents mentioned earlier, senior citizens, institutions and the district or

neighborhood. It usually concerns private and local money that is deployed for

financial return, plus the practical profit that the money lenders will have in future.

Smart funding not by the bank but via the bank!

If we also want to make funding possible with the future user as owner, then it is

essential to split the fit-out of a building from the base building. Then the fit-out

can be financed separately, financially, technically and organizationally, i.e. separate

from the financing of the base building where the fit-out follows later. As described

in a previous chapter, this is a common construction for shops and restaurants. In

this set up it is logical to make a distinction in the financing between long term

and short term loans. With a wider market of money lenders immediately becomes

available. See more about this in the next chapter.


Ownership relationships and business models in circular buildings

In this chapter we examine how property relationships in real estate are arranged

and the impact of this on revenue models for the Circular Construction Economy.

Suppose I am renting a house. As tenant, I want a special, much larger kitchen,

but the landlord does not want to install it or pay for it and I don’t have the money

for it. The ideal solution would seem to be renting or leasing an IKEA kitchen for a

reasonable monthly sum. That gives me immediate cooking pleasure, but the costs

only while I use it. If, a couple of years after the kitchen has been installed in the

house, I stop paying, will IKEA take back the kitchen? No, it’s not that simple. Why?

After installation, ‘my’ kitchen was no longer my kitchen! By the way, it wasn’t IKEA’s

either. So whose kitchen is it? Legally, immediately on installation, the kitchen

becomes the property of the owner of the building, the landlord! So neither IKEA

or I can do anything more to the kitchen, that is the decision of the house owner,

the landlord in this case. Of course you can understand that IKEA is not going to

offer this! Which is a shame for this option…

And what happens if my job is transferred to another city or if I find a job far away?

Then I no longer need that special kitchen – that I, as tenant, bought or ordered

from IKEA – in my current home, so I just take that kitchen with me to my next

house. It’s just a question of moving it along with everything else, isn’t it? That is not

possible in the Netherlands. Even if I had installed the kitchen on wheels instead

of fixing it to the house, it still doesn’t change the automatic receipt of ownership

of the kitchen by the owner/landlord. Even if I myself own the house, IKEA cannot

take back the kitchen if I fail to pay; I have become the owner. How does that work?

Two principles in property lawIn the early 90s Dutch property law (in the Civil Code) was changed. In addition

to the original principle of ‘permanent fixtures’ a second principle was added to


real estate property, i.e. the principle of ‘accession’. According to that principle,

ownership of everything in and around a house is determined by what belongs

functionally to a house. A house without a kitchen is, according to the legal Dutch

definition, not a house. That is why the kitchen always belongs to the house owner.

And that is why, in the Netherlands, you cannot rent out or sell a house without

a kitchen. By the way, in Germany, when you sell your house, it is quite normal to

take your kitchen to your new home. That also applies in the Netherlands to an

installation-component such as sun boiler for central heating, even if it is on the

roof and leased from some company or other. Or for example, an infra-red panel

included in the main installation fitted to your ceiling, where there is no radiator in

the space concerned.

This second principle of real estate property results in ‘automatic expropriation’ of

separate elements in, on and to the house and it is a nightmare for suppliers and

insurers in the Circular Economy who wish to lease their products directly to the

inhabitants. We therefore need another, uniform definition of real estate property

to facilitate the rent and lease of parts of the home.

New light on ownership and revenue modelsDo you realize that building are important for two totally different target groups

with entirely different interests? On the one side there’s the investor who wants to

earn money, or from a social point of view, at least wants to retain that money as

value. On the other side you find the user. What he wants is to live, work and spend

his free time live comfortably in accordance with his own wishes. Providers who

focus on those desires are of most interest to him.


Ownership in relation to responsibility and authority

Top left: responsibility is often greater than professionalism

Bottom right: professionalism is often outweighed by jurisdiction

Beneficial effect on natural resource useSplitting the fit-out from the base building ultimately leads to new property

relationships that have an extremely beneficial effect on the use of natural

resources in construction. If we start from this split, we no longer mix different

lifespans of products and building parts with each other and we will no longer

mount installations in cement, for example. Products and materials will only be

processed loosely or dismountable. They can then be removed or replaced easily

with little damage the moment that is functionally, technically, economically and/

or ecologically most favorable.

This means a Circular Natural Resource Economy can emerge, enabling new forms

of contracts. Such as lease contracts for temporary use of, for example, facades, light

installations, kitchen or bathroom. Contracts based on the delivered performance

instead of one-off sale and delivery of products. After all, why would I buy a lamp

if I am only interested in light. Just imagine what new possibilities that opens up

to you, the user of the building. And: what chances does that open up to you the

provider?


A different building process: rebuild instead of new buildWhether you are an owner or user of a building, or both, your needs and wishes

are constantly changing, and are often a surprise! The construction industry does

not take that into enough consideration. In fact, the building sector tries to avoid

too much change because there is often nothing to be earned from it. I would

like to change that through a different building process so that end users can

continuously create the living and working conditions that suit them without loss

of value for others.

How does it work right now?In the Netherlands, rebuilding, restoring or renovating an existing building is often

much more cumbersome and expensive than demolition and new construction.

That is because construction absolutely does not consider that there will changes in

use after delivery. Since the invention of the concrete wall and floor in the building

of homes, about 50 years ago, we have been putting our installations into them,

making every change difficult, if not impossible. If we assume that technically an

office or home can last 100 years and that in that period there will be an average

of ten moves, then you know that renovation occurs ten times more often than

rebuilding. But that is not the basis for the existing rules and regulations or from

the current owners, managers, advisors and builders. The result: empty buildings,

demolition and waste. And sky high costs for you, the owner and user, when you

want to grow and change.

How it should be: a different building processIn short, a different building process is needed, one where your interests as owner

and/or user take precedence in the design and building process. You benefit from

adaptability, flexibility and a property that goes with it. To achieve that, a new

division of ownership is needed, one seen from the point of view of the lifecycle

of a building, with understanding of the different interests of use and investment.

That immediately provides a better distribution of responsibility and risk between

base building and fit-out. In addition, there are a number of components that

could be discussed by the parties during the building project about what is best,

for example, concerning the facade or the power generation. Is that new? No!


You can see the benefits all around you!In the Netherlands, there are several successful examples of this different building

process. For shop owners and other retailers, it is entirely accepted that the tenant

or user gets a ‘bare’ space provided with utilities. The tenant takes care of any

renovations and further layout of the building entirely according to his own insight,

at his own expense and risks. If you want to end your tenancy or sell the premises,

then the space can quickly be given a completely different layout or objective by

the new tenant or owner. As the new tenant or owner, you can get started quickly

and efficiently. In the retail it is normal to give a shop a totally new layout within a

week, or even a weekend. So renovation becomes the logical choice instead of a

new build.

How the current legislation is a real obstacle to customer-oriented buildingSuppose that you, as owner of a premises, are no longer responsible for items that

only last for a decade, i.e. the kitchen units, the bathroom, the central heating boiler

or even the new home battery and that as tenant you would have full say over these

items. I admit, not everyone would be happy about that, particularly for very short

term rental. More importantly, that is absolutely not possible within the current

construction legislation. In the last five years, Japan and Finland have shown the

urgency of this change and how good the result there has been for everyone.

Towards a better business modelThe BRIQS Foundation is dedicated to funded research into how the property

relationships in construction and real estate can be different. The new relationships

will make room for new relations and a sustainable, and therefore better business

model on all fronts for all stakeholders. The solutions mean:

1. That you the investor/owner only have to invest

in the durable building parts, and not in the

kitchen or bathroom. This means you are only

responsible for the so-called ‘base building for

use’. You are relieved of the annoying rules about

fit-out arising from the Building Decree. Things


like the height of the interior doors and the turning room behind the front door

for a wheelchair. You can even choose to lease a demountable façade as part of

your base building from the supplier, so that management and maintenance

falls to the designing and constructing party. In short, you get more return

for less invested capital and smaller risk. Who wouldn’t want a better business

model like that?

2. That you the user finally have complete freedom

to arrange the fit-out yourself, even if you are

not the owner of the whole house or business

premises. So you no longer have to be the owner

of the foundation or other support structure of

a building to make your own decisions about

installations and outfitting. If you want a different

interior, bathroom, kitchen counter or heating or

cooling system – for whatever reason – then you simply arrange it with your

supplier or base building owner yourself, including affordable funding where

necessary. Also ideal for nursing homes and homes for the elderly, for studios

or combining living and working.

3. That you the provider can ultimately deliver the

complete fit-out or parts of it directly to the actual

user. In this type of business model, you arrange

the funding together (buy or lease) and draw up

agreements about management, maintenance

and – in case of a move – relocation. So it’s not a

problem to take the kitchen with you, as do the

Germans, to your next rented or purchased home.

This means direct decision making between

business and consumer.

Prevent the ‘split incentive’The interests of the user are therefore linked to the fit-out, the interests of the owner

to the base building. This clear division of responsibilities immediately solves the


problem of the ‘split incentive’. Or should I say, the new models prevent the ‘split

incentive’; better interpreted as conflicting interests! After all, now the burden

of costs incurred often fall to another party than the one receiving the benefits.

The research and the solution scan show both that the distinction between the

base building and fit-out is leading for a better business model and is a follow-up

to the extensive research from, for example, TU Delft, MIT and Ball State University

and recent practical experience in Japan and Finland. In the new situation for

example, the user pays for his new High Efficienty boiler or water pump himself

and also benefits from the lower energy bill.

When you buy something, you want value for money! That means that you want a

say in what is delivered to you, don’t you? As a consumer you have that influence

everywhere, except in construction. There, as the buyer or renter, you have a whole

battalion of people between you and the manufacturer of the fit-out of your

premises or home. And all of them have their own opinions and interests...

The path to the solutionThe described solutions are, legally speaking, still complicated and seldom

applied. That must and can be a lot simpler. A lot of research still needs to be done

relating to the question of how we can precisely shape that; the current, untapped

possibilities, daily practice in other surrounding countries and new wishes arising

from the Circular Economy are listed. The BRIQS Foundation (www.briqs.org) wrote,

a now conditionally approved, research proposal for the Netherlands Organization

for Scientific Research (www.nwo.nl) to allow our universities to explore how we

can reach new relationships and new rules. We work with organizations such as De

Groene Zaak (www.degroenezaak.com) and Het Groene Brein (www.hetgroenebrein.

nl).

Interviews with professors of notarial practice, construction law and real estate law

of various universities revealed that the current legislation may in fact allow more

than is now being applied.



http://www.nwo.nl

http://www.degroenezaak.nl


http://www.degroenezaak.com

http://www.hetgroenebrein.nl

http://hetgroenebrein.nl

http://hetgroenebrein.nl

In countries around us, new ideas are already being practically incorporated in the

legislation. For example, in France you can automatically regain ownership of any

previously agreed building parts, after a building has been demolished, and as a

tenant in Belgium, for a period of 50 years or up to the moment you leave it, you

remain the owner of everything you add to the building. Legal ownership follows

the civil/commercial agreement between parties in Belgium. In the Netherlands the

legal ownership determines and limits the potential civil/commercial agreements

between parties. The research will contribute to real new proposal that benefit all

parties concerned and in which the European Commission is interested. Would you

like to stay up to date and share your ideas on these developments? Sign up via the

site www.briqs.org. Join in the debate!



Administration and politics discover circular buildings

Government: how are the cow and the green grass doing?Is the grass as green as we claim in the Circular Economy? Seen from the perspective

of government, for the most part our current real estate is a nice cash cow. Suppose

the commodity banks were to take over ownership of buildings and make them

available to us as users? The income from the transfer tax for buildings would

decrease considerably if building sales transactions became less frequent, which

is different from the transfer of a company with real estate components between

commodity banks. This is separate from the reduced levy percentage of the sales

transaction of a couple of years ago, where the transfer tax already generated less

money.

The transaction value is then used to establish the Real Estate Evaluation Act value

of buildings in the neighborhood. That value is then multiplied by a tax percentage,

fixed by the town council, as property tax to be paid to the municipality. But what

is the Real Estate Evaluation Act value of a building, if you lack recent transaction

prices? Will the building now be divided into 40 manufacturers of building products

each with a piece of the ownership, with the municipality collecting tax on each

piece of that building? Inheritance tax on buildings is also based on the Real Estate

Evaluation Act, as are a number of other taxes and deductions, for example, income

tax. That is quite a difference in relation to the current system!

Soon real estate may no longer be the cow to be milked for government financing,

or will it? Why would a parliament or town council accept that if the void is not

filled with new revenues or added value? The grass behind the fence of the Circular

Economy may appear luscious and green, but realistically speaking how do we

reach the necessary decision making when it comes to defining new legislation

and minimizing of the risks of the transition?


As an example of the ultimate Circular Economy we are all familiar with the principle

of translating a physical product into the form of a service to the consumer. The

core business of telecom operators is to sell accessibility (call credit, SMS bundles)

and facilitating communication (data). Washing machine manufacturers sell wash

cycles and the manufacturer of light installations sells light hours. It’s not about

owning the device with which the end result is achieved, but the result as a product

in itself. Devices and goods remain the property of the manufacturer (the user

leases) and are recycled.

In the past, we also operated in a circular way: after people swapped hunting in

the wild for livestock and farming closer to home, tents were discarded for homes

made of stone that could be rented out to others in the cities that emerged. So

if we have been renting out buildings as a housing service since Mesopotamian

times, then we have also been involved in the introduction of the new Circular

Economy. Or is that not the case?

In addition to tax on labor and natural resources, property tax is one of the three

sources of general revenue for government. There are also a number of levies in the

form of rights, tariffs or fees, all limited to the expected (construction) costs. That

has been the case since the emergence of governments, because the individual

who has the income and benefits from a permit, pays. Subsequently, whether

the individual who pays also has a say with that government, depends on the

prevailing vision in society and politics. In the Netherlands, much of the revenues

from buildings are sources of municipal taxes and as such, an important part of

roughly a fifth of the municipal budget that each municipality is entitled to collect.

More importantly, however, that twenty percent is virtually free of all policy so the

municipalities themselves can decide what to do with it! And they are not willing

to have that taken away!

What you often hear in ‘the land of Circular Economy’ are remarks such as “property

is dumb, use is smart” to describe the disadvantages of property. At the same time,

I see new organizations, for example, who view the ownership of natural resources

and materials as the basis for their business model as a commodity bank. So isn’t

ownership therefore the essence of smart? My confusion is really complete when I


notice that for the government, ownership of buildings and associated transactions

form the foundation for a whole series of tax revenues, both for the state and the

municipal treasury. Now, according to the Dutch Civil Code, the legal definition of

property is limited to that of registered goods, particularly buildings, filed with the

Land Registry through a notary. How do all these items operate simultaneously

alongside each other and how do – or rather – can politicians decide on these

issues, I wonder?

The first question confronting every politician with a new political motion –

proposal for new policy – is: ‘where will the necessary budget for your proposal

come from?’ This is the basis for sustainable management of the, by definition,

limited amount of money at the disposal of every segment of our government. If

you are unable to answer this question, it means the end of your proposal and, if it

is a regular occurrence, the end of your political career because you will no longer

be taken seriously. So, we need to change our social game rules, for example for

buildings. How – either in steps or in one fell swoop – do we achieve the circular

construction in the new economy where there is so much to gain from sustainable

natural resource management? It is good to get everyone’s ideas on this!


The financial world and its view of the circular buildings

Is the investor comfortable with the Circular Economy?Imagine this! A beach chair on the Bahamas, a man with a laptop on his knee and a

phone to his ear. While the waiter puts down his cocktail the investor directly closes

the deal to partner with the provider of a building project.

In the Circular Economy, why would a provider – no longer known as the contractor

– be the best and only partner for every investor? For example, if forty manufacturers

supplied facilities for the building separately from each other, you can imagine

that the investor’s holiday fun would be ruined. But not if the provider of work

in the building was also the provider of the building in its entirety! At the same

time, that ‘all inclusive’ provider of a building as a project could also be a co-owner.

Along with the investor, he can certainly assume responsibility for the guarantees

of manufacturers and materials suppliers. Therefore, investor and provider have

a common interest. Together they deliver a solid foundation, support structure,

roof, facade and utilities. It thus becomes a long term investment with returns for

both parties. In this way, the provider supplies not only the construction but the

building itself. The layout and fit-out of the apartments is more a necessary evil for

the investor, one he prefers to leave to the individual tenants, their corporation

or the provider of the building. This means everyone gets value for money. As an

investor, you will definitely choose the Circular Economy! Quite different from the

current situation and all its conflicts of interest. The investor juggles with multiple

parties to achieve a maximum return at a minimum risk. Who are those parties and

what is their stake?


Value of real estateNext to stocks and bonds, real estate is the third category of investments for

pension funds, insurers, banks and rich families. The location, in combination with

the function of the building, be that living, working, recreation etc., determines the

price per square meter. Based on the rental incomes or the quality of a location, each

living function has a specific earnings range per m2. The fit-out is in the hands of

different parties, i.e. advisors, architects and contractors who often work separately

from each other, send separate bills and quickly move on to the next project. Large

developers carry out the plans on behalf of anonymous investors in housing and

corporations. They color the plans in more detail within the lines drawn up. They

all make a living from the transaction-revenue, not from the growing value of the

building, which now falls to the investor alone. In his own interest, the investor will

make every effort to protect the value of his buildings and preferably to let them

grow in the long run. Optimum return from this long term investment is also of

major importance to local government. We discussed this in the previous chapter.

Monitoring valueTo an investor, the value of his building lies in the structure and the exterior. He

usually protects the value of his buildings by appointing a manager. That manager

is given a fixed monthly sum to cover the costs of management and maintenance.

So what does that manager do? He spends as little time as possible on management

by repeatedly deploying the same people who work with the same products and

materials in all the homes. For the user this means a limited choice of kitchens,

bathrooms and installations. Of course these limitations in choice do not contribute

at all to a positive value experience by the user of the building. But where does the

value of this use actually come from?

Transactions are leadingLike the manager, the consultants and contractors are paid for the transaction of

services and work supplied. Their goal is to earn as much money as possible in the

short term. After the final settlement everyone moves on to the next project. In

such cases, quotation costs for transactions are often unavoidable and, due to the

one-off nature, on the high side. That is unfortunate, because in the execution of

each project, a whole series of quotations is requested for every product. That is


because project-based work in construction is still the standard when in fact we

could achieve so much more with a systematic approach in construction and real

estate. In other areas of the economy, project-based work has to a large extent

been replaced by systematic work, which is ultimately much more cost-efficient for

the consumer. Then consultants and contractors are also remunerated for the latter

value development to which they have contributed in their work.

For the real estate agent, only the transactions are of importance. He benefits from

the highest possible price at the moment of transaction as at that moment he is

paid a percentage or a fixed price per sale or rental. So his focus lies on transaction

profit and the fastest possible rental or sale because often, hesitation leads to

cancellation.

Finally, the developers also earn their money with transactions, i.e. the sale

transaction of their project to the investor. But that transaction only takes place if

the developer has fulfilled all the contracts and has covered the risk of additional

project costs. As start-up he earns back his own costs on the sale or rental to users

and by saving on pre-financing consultants and contractors. Without a provisional

purchasing contract from the investor, the developer would be well-advised to do

no more than provide a sketch of the design and a provisional revenue summary.

Adding valueIn the Circular Economy it is all about adding value in the long term, not about a

quick profit from isolated transactions. The question is how, in the long run, all the

supplying parties can add value as a homogenous whole, and how they can be

rewarded for this value addition.

For an investor the value of the location and the value of the building jointly

determine whether the investment will be profitable in the long term. It is therefore

logical that the investor is completely committed to a flexible base-building with

a good foundation, construction, façade and roof. The responsibility for the short

term investments in the fit-out with kitchen, bathroom and installations fall, much

to his relief, on the building user. In the next chapter I describe how this can impact


the use. Everyone maintains his own part correctly, with purchase and fitting

discounts for the fit-out, including maintenance and management, without a lot of

additional costs. In this way, all parties benefit from the value development.


Use of buildings from the principle of the Circular Economy

Value and re-use of raw materials? Why would that be of interest to an building user?If you, the building user, have no influence on a building, it will probably be of

little interest to you what happens to it later. As such, the interest of the user is

the diametrically opposite that of the investor, although it isn’t a problem for him

to throw things away. Currently, as a user you actually only know one thing for

sure: the amount of the flat rental rate you will pay for the square meters and the

number of rooms. You have no insight into and little influence over the costs of

electricity and management. That creates uncertainty in a time when these are

both extremely variable.

In as much as natural resources even interest the building user at all, he probably

doesn’t understand what it means or if he does, he is not allowed to do anything

with that knowledge! The user receives no assurance at all that the building does

in fact contribute to his health, welfare, happiness and productivity. And that is a

really important reason why your customer lives and works there, isn’t it? Do you

recognize the gap between the building user, the investor and the construction

industry? What can we do about that, in everyone’s interests and the interest of the

Circular Economy?

Influence and responsibilityThe interests of the user and those of the investor are widely different, both in terms

of time (short versus long term) and in part of the building (fit-out versus base-

building). As mentioned elsewhere, the investor is primarily interested in long term

returns and in the meantime wants to introduce as few changes as possible to the

building. The user lives and works there for a relatively short period and wants to

adapt the building to suit his changing needs. And if he is unable to change his

living and working environment, chances are he will move to another address.


The interests of the investor lie in the parts that have a stable value, such as the

foundation, support structure, façade, roof, i.e. specifically the exterior. The building

user is primarily interested in the inside: the layout, the finishing materials and

products, the kitchen, bathroom, natural light and light installations, ventilation,

warmth, sound and communication. The building user wants to have some

influence over that! He wants a say in those matters and he is prepared to take

responsibility for them because they have a major impact on his health, welfare,

happiness and productivity. How can we bring the outside and inside together?

An end to the conflict of interestWith real estate for shops, restaurants and also increasingly in healthcare, this conflict

of interest has long since ended. Shop and restaurant premises are delivered empty

for rental. The tenant/user takes care of his own fit-out, one appropriate for the

formula and the desired image for making a success of the business. Technological

developments and changes in the healthcare landscape happen so fast that real

estate must be adaptable from the inside out. That applies namely to hospitals. New

techniques and equipment, coupled with installations and the spatial layout that

requires, means that a lot is being thrown out and that now the average hospital

in the Netherlands can only run for twenty years without extremely expensive

adjustments which often lead to total demolition of the building. We are also

running into similar problems in education. The educational changes are major

and many buildings were designed based on the educational concept of the 1970s

and 1980s. It was then believed: ‘This is it!’ These buildings are like a vacuum sucked

around the then prevailing notion of use. And that automatically means: end of

use = end of building which, because of the unnecessarily premature discarding of

products and materials, is a bad thing for the Circular Economy.

Good, better, bestWe can easily prevent, or at least postpone for a long time, ‘End of Building’ by a new

division of the influence and authority over the outside and inside of the building.

Not only for shops, restaurants, healthcare and education, but more importantly for

housing. In the years to come houses will require significant adjustments in order to

realize drastic savings on energy consumption, also because of the disappearance

of the current gas connection in the house (end lifespan gas pipes and switch to


sustainable energy). At last the building user will get value for money; he can invest

in the best quality and will not have to be satisfied with what the investor supplies

in order to meet the minimum legal requirements. We take the step from good,

through better to what is best for the building user as individual.

In this way, suppliers of fit-out solutions do business directly with building users

and innovate based on the wishes of their customers, also when it comes to (re)use

of products and materials. The investor no longer has to concern himself with that.

And that means an end to the current contradictions between building user, builder

and the investor, that arise from the logical differences in interests in a building.

One is a stakeholder in a building as a user or builder, the other only wants to earn

money with it. The building user sets a high standard when it comes to the quality

of the inside of a building but as of yet does not have the power to enforce these

demands. So it is high time that changed.


From work contractor to solutions provider in the Circular Economy

Would the real circular building provider and material expert please stand up now!I had a wonderful dream last night.

On the sidewalk I almost bumped into a man with a very satisfied smile on his face

standing in front of a recently renovated façade. “What exactly do you see?” I asked

him. “A great piece of craftsmanship,” he answered and he continued to tell me how

he, as a provider, had put up this building for an investor thirty years before on the

condition that he would also maintain the building. They had just replaced the window

frames and the external doors, cleaned the facade and renewed the roof. He was able

to tell me exactly which of the elements and materials used were suitable for re-use

and recycling. The man looked at me and said: Thirty years ago I promised the investor

the best quality + long term returns + a positive contribution to the Circular Economy.

When I was just a contractor, I couldn’t make those kinds of promises because I had

to work to other people’s plans and left immediately after delivery. Fortunately, those

times are over!” He shook my hand firmly and disappeared around the corner.

I stare in astonishment, pinch myself and wake up.

Unsustainable business modelAre you a contractor? Not for much longer, I hope. Because the sooner my dream

becomes reality, the better it is for your revenue model, the future of your business

and as a result, for the Circular Economy. Why am I so convinced of that? Because,

for several reasons, your current revenue model is unsustainable.

• Now you actually have to fleece your customers and lose all your integrity in

order to earn anything from a building project. The more mistakes you find

beforehand in the specifications, the lower your quote, the greater your chances

of winning the project. Then the trick is to signal the mistakes on time and to

solve them at a price. That’s where you make your profit.


• Integrity is essential to bind the youth of today – especially the best of them – to

your company. How are you going to do that with the current perverse revenue

model?

• You contribute to the waste of products and materials and therefore to their

scarcity. That costs more money. Of course, the current working methods are a

disaster for the Circular Economy.

Contractor becomes providerIt’s time to assume a different role and to deliver a building as a total product:

the design, construction, management and maintenance. Or your company will

be taken over by the consultant in the building process, i.e. the architect, project

manager or overseer who maintains contact with the client.

Your company and the Circular Economy can look forward to a sunny future if we

can help you, the current contractor to develop into the provider of those total

solutions, circular solutions. After all, you already have substantial knowledge and

expertise in the area of logistics and organization of the building site. Those areas

of expertise deserve expanding to returns logistics and disassembly. As provider

you are partner to the material suppliers and product suppliers. Before long you

will know the exact value of the materials and products used in the building. You

will also know their life cycle and when and how best to recall them for re-use

or recycling. This helps you to develop into an expert who can handle materials,

products and buildings in the long term. So, not only your way of working changes,

but your revenue model too. This enables you to respond perfectly to the wishes

of investors, and to arrange optimum return on invested capital from the beach

on your laptop, as we described in a previous chapter. Make no mistake, this is a

complex change process.

What needs to change to achieve this?To give you the space to develop into the provider of solutions we in the construction

industry must arrange a number of issues differently. I will mention the three major

changes here:


• ThebuildingclientspecifiesonlythecontextThe building client (building user) no longer specifies the exact building he wants

but gives you the context. What function should the building fulfil and in what

environment? In collaboration with other experts, you present the best answers.

The building client can choose from those. This way of working frees you from many

conflicts that are currently caused by the contractual separation of design work of

the client and his consultants from your execution. That is immediately good news

for the Circular Economy. Fewer conflicts means fewer adjustments and less waste

of products and materials and especially: less trash.

• DistinctionbetweenoutsideandinsideIn a building we distinguish the outside from the inside. The investor only invests

in the outside: the base building and foundation, construction, facade, roof and

utilities as far as the entrance/front door of each home or unit. For that, he does

business directly and exclusively with a provider who is specialized in this type of

base building. The user invests in the inside: the fit-out, starting with the empty

interior space, choice of installations to create a pleasant indoor environment,

kitchen, bathroom, material usage. The user does business directly with the fit-

out supplier. In the next chapter you will see how many benefits that has for both

parties and that it has long been a success formula in the retail world. The financing

of use also changes, but more on that later.

• DevelopingknowledgeIt is essential that we in the construction industry develop new knowledge together.

We can only do that if we continue to build on the knowledge we have already

gained, as is done, for example, in aviation technology and shipbuilding. Therefore,

we no longer approach a building as an entirely unique project, made by several

craftsmen, but as a system of interlocking components. Those components are

manufactured in the factory, assembled on the building site by the base building

and customized to the unique location. This is certainly easy for the fit-out which

can be easily systemized. Several countries have already shown that over the last

few years. If shortages in labor arising in the construction industry after the crisis

forced tens of thousands of building workers to leave the building sector, we should

see it as a way of allowing new, pleasant, safe jobs to emerge. That way we can work


towards higher quality, which leads to a rise in value at reduced costs, while at the

same time, jobs in construction become more valuable.

Systemization facilitates infinite variety, so we needn’t worry about the emergence

of new, boring VINEX neighborhoods. And this systematic way of working

automatically leads to less waste of natural resources and less trash. And the new

future has already begun!

The construction world unraveledAs provider of total solutions, you develop your own specialization: the outside (the

base building) or the inside (the fit-out) of a building. Preferably, you serve just one

of these two customers: the investor or the user i.e. the distinction between Business

to Business (B2B) or Business to Consumer (B2C), everywhere. In other areas of the

economy, for a long time these have been entirely different business models. You

also develop your own knowledge and skills in the area of use and recovery of

natural resources and materials. This helps us to unravel the construction world,

make it transparent, create value in a new way and reduce trash. A win-win-win

situation for you as provider, for the government, the investor, the consultants, the

user and certainly for the Circular Economy and society as a whole.


Health, wellbeing provider and productivity in building use

Are you, as a provider to health, wellbeing and productivity, willing to take up the challenge?It was arranged in a weekend. The inventory of the C1000 around the corner was replaced by a completely new Albert Heijn interior. From a space that was completely full to an empty shop and to a new interior in just 48 hours. This provider was specialized in the supply and assembly of shop fit-outs. No, he never interfered with the premises itself, he said, he was happy to leave that to the co-providers who work for the investors. “Have you ever done this type of work for homes?” I asked him. “Not yet,” he said, “but of course that would be no problem. In fact, that’s a gap in the market! Thanks for the tip.”

In Japan they’d think this was a pretty odd conversation. For years it has been normal there for you, the provider, to be specialized in fit-outs for homes and to do business directly with the user. What do you believe to be the benefit of that type of specialization for all the parties concerned?


In case you haven’t read the previous chapter, I challenge you as provider (formerly contractor) to redefine your field of expertise and revenue model. You can develop into a provider of total solutions in one of these two markets:• Either you work for investors (B2B) and you provide a complete base building,

including maintenance and management. You can read about the benefits of that in the previous chapter.

• Or you work for the user (B2C) and provide exclusively the layout of the inside of the building, the fit-out, that is what this chapter is about.

As I said before, this splitting of base building and fit-out has been the rule for years. In fact, it’s a legal requirement. The Act Concerning Promotion of Long-Life Quality Housing of Japan was implemented on juni 4th 2009. Mr. Yasuo Fukuda, who was then the Prime Minister of Japan, used the word “two hundred years housing” to express his concept for housing policy, but the Japanese government didn’t use that word officially. The result of this new law based on the Open Building principle, are 705.039 detached houses and 17.511 condominiums approved until the end of june 2016.

Haseko is a mid-sized provider of buildings in Japan. In June 2015, I was there on a working visit and wrote a report on the subject. The construction organization of Sekisui and Toyota work in a similar way to Haseko. On the Haseko business site, you find complete homes in apartment buildings, made just the way the customer might have ordered. Note! Might have ordered and not that the customer must order from a standard range, because it is possible to order anything. As a customer you can stroll through the layouts of the houses in the factory to see and experience whether everything is right and works in the way you imagined in the 3D-computer visualization. Only then do you decide whether you really want to buy. If you do, then Haseko or one of the other builders will deliver the fit-out within six weeks and installs it within a week. If you, the customer, want a complete new building, then the delivery takes more than a month longer (after the necessary permits have been granted). For that, another department, as provider, delivers the base building with foundation, construction, facade, roof and utilities up to your own entrance/front door. In fact, that is also how many other builders work there and soon we will be seeing the same trend in Korea and Taiwan.

The benefits to you as specialized provider of fit-out are numerous:• You work directly with the end buyer: the product user. Since you are the

building expert, you help this user to clarify what he wants. What does he need


to live and work in good health and welfare? You answer that question with an appropriate layout and fit-out made from the best materials.

• On the basis of this question you present a plan and also execute it. You are 100% in charge of the quality you deliver. And through management and maintenance you stay involved with the customer.

• You can innovate immediately on the basis of questions and feedback from your customers: you know and you determine the market. The components that are returned by the customer after changes, you can re-use somewhere else. Valuable materials can be re-marketed.

• This enables you to work increasingly systematically = efficiently = cheaply and at the same time you are constantly improving the quality. Your customers stay with you and are your ambassadors for life!

• Your knowledge of materials earns you money because you carefully monitor what you put into buildings and how and when it is the best time to reclaim the materials for re-use or recycling.

Finally, in this new set up you give the customer what really makes him or her happy and for which he or she is prepared pay. You have much more influence on the quality of the product you deliver and that makes a valuable contribution to the Circular Economy. It won’t be long before politicians understand that we here in the Netherlands also need to adjust our rules so that building funding supports the Circular Economy and your entrepreneurship.


Summary

Why this book? To answer this seemingly simple question, first I take you back in

time to bridge the gap with the present.

As a construction engineer, I have spoken to numerous clients over the years in my

position as project leader. But also before that, when I was still a child, individuals

and colleagues of my father (an architect and city planner) came to our home to

discuss the demands their new home had to meet. That’s where I learned to listen

and talk to people from the complex building world, which is made up of many

sub-worlds (I will go into that later). In addition, I gained personal experience

during two renovations to my own house, and by going through the design and

realization process of my parents’ house. I have also managed numerous building

projects for and with others, from infrastructure and homes to shops, offices and

cultural amenities and community schools. I will go into this more in the chapter

‘About the Author’.

“We shape our buildings; thereafter they shape us.”

Sir Winston Churchill

I lined up all these experiences and discovered the logic behind them. Mostly, I

discovered that it doesn’t have to be difficult, but that building projects are often

made unnecessarily difficult! It is the contractors, consultants and the government

that make it difficult, often out of habit, not because it needs to be. So, as of now,

we can start doing things differently. There appear to be many perverse revenue

models in the construction industry, for the principals and their end users, which

often means reality does not turn out for the best. Many parties in the construction

industry don’t even speak each other’s language and have totally different, usually

conflicting, interests. That is often a result of differences in revenue or business

models and in mindset. In other words: they all earn their money in a different

way and for a different reason, often not because they treat the end customer well,

quite the opposite.


You can divide the ‘building world’ roughly into five different and strictly separate

worlds (‘sub-economies’):

1. The world of natural resources and materials

2. Industry and trade

3. Design and realization

4. The world of real estate and financers

5. The user of the building

The (local) authorities form a 6th sub-economy dependent on tax from real estate

and land transactions. That knowledge has allowed me to help a significant number

of people in relation to:

• The expectations you can realistically have of other parties in the construction

and real estate world, from their point of view in relation to yours

• How to formulate questions to (other) building professionals, how to interpret

the answers to ultimately achieve your intended result

• Clarifying for yourself what you really want and can do for your new building

in the area of energy and materials, to benefit use, investment or other future

value.

Since the professionals in the building industry are unaware of these major

differences in the construction industry, you cannot expect any help from them. In

this book, I will give you the information you need to do things differently from now

on, both in terms materials used in a building (building resources) and materials

used as a facility in a building (utilities). The goal is to significantly decrease our

ecological ‘footprint’ and associated costs for ourselves, the construction industry

and society.

Did you know that construction and housing is responsible for almost 40% of mankind’s

material use and CO2 production? That shows just how essential it is to do it differently.

Not only for ecological purposes but also in the interest of everyone involved in the

building. At the moment, buildings are hardly ever simple, fast or cheap to adapt to

change. Not only is the availability of biological and technical materials running out

worldwide, their quality is also deteriorating, while at the same time more people are

utilizing them and living longer. The rising standard of living is pushing demand even

more, causing the exhaustion of our earth to rise exponentially.


High time for the Circular Economy! And for closed cycles of materials and products

which result in the elimination of waste. Waste then becomes the raw material for

re-use or recycling. In addition, the Circular Economy contributes to more work

opportunities and innovation at local and regional level. A circular system where

it is possible to involve all types of economic stakeholders around you, can lead to

a better environment and more prosperity for individuals and society as a whole.

That certainly also applies to construction. Recent developments in the field of

construction, published in Long-Life Quality Housing in Japan (Minami K, 2011)

illustrate the importance of new basic principles in the housing market for the

implementation of new business models that support circularity. This allows the

decision makers under investors and end users to be directly connected with the

knowledge, responsibility and scope of the segments in the building industry (the

five ‘sub-economies). This also includes a role for government to establish conditions

and provide examples. Homes make up more than half the building stocks. In the

coming decade, they will all need to be adapted, due to the nationwide transition to

non-fossil fueled households where the current fossil-based natural gas for heating

is replaced by energy-saving supplemented by natural warming or electricity.

Borrowing money as a professional developer, a private individual in the form of a

mortgage or as a building manufacturer is becoming increasingly difficult. Full or

partial ownership of a building as collateral for a financier, becomes a challenge.

Particularly because the basic building and the fit-out are now regarded by law as

a single entity, when they in fact have totally different life expectancies. This is a

serious obstacle to customer-oriented building and to leading the building sector

into a new circular dimension. But there is a solution! However, it is important to

identify the conditions in existing and any necessary new divisions of ownership

in buildings.

Detailed research is required to respond to the question of precisely how to design

that. This research must identify the opportunities that have not yet been utilized,

common practice in other countries and new demands of the Circular Economy.

The BRIQS Foundation penned a budget research proposal, now conditionally

approved, for the Dutch organization for Scientific Research (www.nwo.nl) to allow


http://www.nwo.nl

our universities to investigate how we can reach new relationships and regulations.

For this, we work with Dutch organizations such as De Groene Zaak and Het Groene

Brein. Various interviews with professors of notary practice, construction and real

estate law from different universities revealed that the current legislation may allow

more than is now applied, and identified the possibilities that our neighboring

countries already recognize.

It is essential to ensure there is support in construction and real estate in the area

of ownership and other forms of control on collateral for loans. This also includes

a role for you! Reading this book is an excellent first step. It will prepare you for

the economic challenges that await us in the construction and real estate world.

I will also help you to gain more understanding, because the Circular Economy

offers opportunities with new business models and valuable collaborations which

benefit the builder, investor and the building user.





Acknowledgments

Fortunately, creating a book seems easier before you embark upon it than it turns

out to be in reality… otherwise I might not have begun at all and you would have

missed everything you have just read. Many experts and friends helped me in this

writing process and in many cases these experts have now become friends.

To start with, I would like to thank Aldi van Lierop (AldiSchrijft) for writing out and

making many earlier blogs that have served as partial topics readable.

Then Bianca Minkman (Sprekende Verhalen) and I completed the task of structuring

the content, discarding and streamlining where necessary to arrive at a clear

description of the Circular Economy for buildings.

Yulia Kryazheva (Yulia-Ink) provided illustrations to accompany the text to bring

head and heart together. Then Geraldine Nesbitt (Write Away, text and design)

translated the text into English so that as many people as possible worldwide can

read how Circular Buildings will be made.

And finally, Daisy Goddijn (Expertboek) poured the end product into the right

design to turn this into an attractive book.

If I did not have this brilliant team, I would have been left with a head full of ideas

and experiences and the urge to tell them. I would probably have overwhelmed you

with much too much information in too short a time for it to be of any really benefit.

In any case, you can now consciously think about what the Circular Economy in the

context of construction leads to and what this means to the building user, investor

or builder.

All that remains is to thank Municipal Secretary of Cirkelstad, Rutger Buch, for

trusting me to write this book, publishing it and presenting it to Prof. Jaqueline

Cramer. And above all the recommendation from John Nederstigt, alderman of the

frontrunner municipality of Haarlemmermeer.


References

Brand S (1994) How Buildings Learn, Viking Press

Braungart M and McDonough W (2002) Cradle to Cradle, North Point Press

Heymans H, Bartels S (2012) Vastgoedtransacties Koop (Real Estate transactions

Buy), Boom Juridische Uitgevers

Geldermans R et.al. (2015) Materialen & Circulair Bouwen (Circular material &

product flows in buildings), TU Delft, including the author Remko Zuidema as co-

writer (available online http://repository.tudelft.nl/islandora/object/uuid:c0c4f4f2-

6380-4091-9a26-217a9c24bb0b [accessed 2016/06/03])

Geldermans R (2016) Design for Change and Circularity: Accommodating

Circular Material & Product Flows in Construction, TU Delft, (available online http://repository.tudelft.nl/islandora/object/uuid:aefbf8e6-06e0-4433-8983-

56c3aef6dac5 [accessed 2016/12/03])

Groothuis F (2014) New Era, New Plan (available online http://www.ex-tax.com/

new-era-new-plan [accessed 2016/06/03]), Deloitte, EY, KPMG/Meijburg & PwC

Habraken N J (1989) The Structure of the Ordinary, Form and Control in the Built

Environment, The MIT Press

Heertje A (1977) Echte economie - Een verhandeling over schaarste en welvaart en

over het geloof in leermeesters en lernen (Real economy - A discourse on scarcity and

prosperity and the belief in teachers and studying), Valkhof Pers

Kendall S and Teicher J (2000) Residential open building, Routledge

Lichtenberg J (2005) Slimbouwen (Smart Construction), Aeneas


http://repository.tudelft.nl/islandora/object/uuid:c0c4f4f2-6380-4091-9a26-217a9c24bb0b

http://repository.tudelft.nl/islandora/object/uuid:c0c4f4f2-6380-4091-9a26-217a9c24bb0b

http://repository.tudelft.nl/islandora/object/uuid:aefbf8e6-06e0-4433-8983-56c3aef6dac5




Raad voor de leefomgeving en infrastructuur (Rli) (2015) Circular Economy from

wish to practice (available online http://en.rli.nl/publications/2015/advice/circular-

economy-from-wish-to-practice [accessed 2016/06/03])

McKinsey & Company (2012, 2013, 2014) Towards the Circular Economy Vol. 1, 2 and

3, Ellen McArthur Foundation

Metabolic (2015) Proposed resource identification framework, p9 (available online http://www.waag.org/sites/waag/files/public/media/publicaties/ritframework_

finalreport_metabolic_29.01.2015.pdf [accessed 2016/06/03])

Minami K (2011) Long-Life Quality Housing and Development of New Infill Systems in

Japan, (available online http://www.minami.arc.shibaura-it.ac.jp/research/article/

pdf/10.pdf [accessed 2016/06/03])

SEV (2007) Leren door demonstreren, De oogst van zeven jaar Industrieel, Flexibel

en Demontabel bouwen (Learning by demonstrating, the harvest of seven years of

Industrial, Flexible and Demountable construction), SEV Realisatie

Tempelmans Plat H (2001) The Economics of Property Management, The Building as

a Means of Production, Butterworth Heinemann

Van der Werf F (1993) Open ontwerpen (Open design), Uitgeverij 010

Zuidema R H (2015) Open Building as the basis for Circular Economy Buildings,

(available online http://e-collection.library.ethz.ch/view/eth:48456 [accessed

2016/06/03]


http://en.rli.nl/publications/2015/advice/circular-economy-from-wish-to-practice

http://en.rli.nl/publications/2015/advice/circular-economy-from-wish-to-practice

http://www.waag.org/sites/waag/files/public/media/publicaties/ritframework_finalreport_metabolic_29.01.2015.pdf

http://www.waag.org/sites/waag/files/public/media/publicaties/ritframework_finalreport_metabolic_29.01.2015.pdf

http://www.minami.arc.shibaura-it.ac.jp/research/article/pdf/10.pdf



Colophon

the Elephant rumbles through the Circular City

© BRIQS Foundation

ISBN: 978-94-92383-54-9

Copyright © Remko Zuidema – www.briqs.org

Version 1.1 - June 2016

Version 2.0 - January 2017

Design: Daisy Goddijn, Expertboek

Final Edit NL: Bianca Minkman, Sprekende Verhalen

Illustrations: Yulia Kryazheva, Yulia-Ink’

English translation: Geraldine Nesbitt, Write Away, text and design

IMPORTANT NOTE TO THE READER If you find this book valuable, please refer others to the website of www.briqs.org,

but please do not give away free copies. This text is protected by copyright. The

latest version can be downloaded from the BRIQS-website.

Subject to the exceptions specified by or under the Copyright Act of 1912, nothing

in this publication may be duplicated, stored in a retrieval system or transmitted

in any form or by any means, electronic, mechanical, photocopying, recording or

otherwise, without the prior written permission of the publisher.

DISCLAIMERIn the compilation of this book, the greatest care has been taken to ensure the

accuracy of the information contained therein. The tips given are based on my

personal experiences. The author is not liable for any inaccuracies or consequences

arising from the application of the suggested changes in the current building

practices.



insight into the five economies, view on renewed ownership

Remko Zuidema

the Elephantrumbles through the Circular City

the Elephant rumbles through the Circular City the Elephant rumbles through the Circular City

Consumption and financing demand control over products and materials in the new circular world of construction, with ownership as a logical resource. Both customers of buildings – the investor and the end user – have fundamentally different ideas about value. On the supplier side, translating buildings into customer oriented services has hardly even started. How can what the construction world offers effectively and specifically provide for that and what bottlenecks make that such a challenge? The writer identifies the major economic changes and then the benefits to investors, end users, society and the construction world. Where the dogmatic Dutch definition of real estate ownership forms an extraordinary stumbling block for both customers.

“If inhabitants have no control, then uniformity and rigidity result. If the community has no control, chaos and conflict result.”

(John B. Horowitz, Ball Sate University)

about the author

Raised in the world of architects, builders and contractors, Remko Zuidema graduated as a Construction Engineer from the TU in Delft and now has 25 years’ work experience in the field. He has worked as a principal, manager and engineer on off-shore, office, educational and residential building projects. It became increasingly clear to him how the interests of the end users differ from those of the owner.

As former local politician, strategic consultant, founder and president of the BRIQS Foundation, the author is directly involved in coordinating natural resources, materials, products with the lifecycles of buildings.

www.briqs.org

ISBN: 978-94-92383-54-9

Remko Zuidem

a

the elephant - briqs...elephant rumbles through the circular city, is difficult. people feel ropes,...

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