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Investing in Local Construction Skills: Scenarios for Upgrading the Built Environment with More Labor and Less Material Resources

Authors:

Abstract

China's cities are desperate for local jobs and resource efficient strategies for upgrading older neighborhoods. In the construction sector, the high degree of standardization dating from before the time of “reform and opening up” invites economies of scale, mobile capital and the fragmentation of labor to a level that together produce a large amount of unsustainable, and irreparable building components and designs. Maintenance and repair of buildings seem more costly than demolition and reconstruction. This is problematic for several reasons: A meaningful engagement of locals in the construction sector is reduced; the high material turnover (demolition and reconstruction) generates environmental problems, resource shortages and price hikes; demolition destroys social ties when residents are relocated during reconstruction; and replacement contributes to the increasing uniformity of cities where place specific urban morphologies are replaced by generic modern designs. The objective of the paper is to explore in which ways and to which degree maintenance and retrofitting of existing buildings would impact local economies. Investing in local construction skills might solve the dilemma partially. The paper reviews international reports concerned about efficiency and quality delivered by the construction sector and summarizes opinions of insiders to the Chinese construction sector regarding the transferability of strategies to the Chinese context.
Procedia Engineering 198 ( 2017 ) 968 974
1877-7058 © 2017 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of the Urban Transitions Conference
doi: 10.1016/j.proeng.2017.07.142
ScienceDirect
Available online at www.sciencedirect.com
Urban Transitions Conference, Shanghai, September 2016
Investing in local construction skills: Scenarios for upgrading the
built environment with more labor and less material resources
Iris Belle
*
College of Architecture and Urban Planning Tongji University, Building B, Tongji University, 1239 Siping Rd., Shanghai 200092, China
Abstract
China’s cities are desperate for local jobs and resource efficient strategies for upgrading older neighborhoods. In the
construction sector, the high degree of standardization dating from before the time of “reform and opening up”
invites economies of scale, mobile capital and the fragmentation of labor to a level that together produce a large
amount of unsustainable, and irreparable building components and designs. Maintenance and repair of buildings
seem more costly than demolition and reconstruction. This is problematic for several reasons: A meaningful
engagement of locals in the construction sector is reduced; the high material turnover (demolition and
reconstruction) generates environmental problems, resource shortages and price hikes; demolition destroys social
ties when residents are relocated during reconstruction; and replacement contributes to the increasing uniformity of
cities where place specific urban morphologies are replaced by generic modern designs. The objective of the paper
is to explore in which ways and to which degree maintenance and retrofitting of existing buildings would impact
local economies. Investing in local construction skills might solve the dilemma partially. The paper reviews
international reports concerned about efficiency and quality delivered by the construction sector and summarizes
opinions of insiders to the Chinese construction sector regarding the transferability of strategies to the Chinese
context.
© 2017 The Authors. Published by Elsevier Ltd.
Peer-review under responsibility ofthe organizing committee of the Urban Transitions Conference.
Keywords: Construction industry; skills; employment; material resources; maintenance and retrofitting
* Corresponding author. Tel.: +86-131-6717-0090.
E-mail address:belleiris@tongji.edu.cn
© 2017 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of the Urban Transitions Conference
969
Iris Belle / Procedia Engineering 198 ( 2017 ) 968 974
1. Introduction
After almost four decades of growth unleashed by the policies of reform and opening up China’s construction
industry is again at a turning point. Since the 1980s Chinese cities have grown at remarkable speed as they filled up
with migrants arriving from the countryside to work in factories newly established with foreign direct investment
and later service jobs of a nature previously unheard of in China. Not only the jobs created but also new products
offering greater choices and now being available in stable supplygave reason for excitement. New products include
housing, office and factory premises for the private economy. The boom of the previous decades was one of
extensive growth based on greater inputs fuelled by increasing foreign direct investment, increasing migration of
underemployed work-age citizens, and more land rezoned for construction. The conditions that sustained this type of
extensive growth are fading.
1.1. New frontiers in the construction industry
The new frontiers for the economy lie in intensive growthusing little but to great effect. While demand still
exists in some sectors, overcapacity in others has become a problem [1]. Subsidies of costs of environmental
pollution and resource depletion have been identified as one of the reasons that have caused some sectors to grow to
the detriment of ecological and social welfare [2]. Restructuring is ahead. In November 2013, the Communist Party
has announced a new policy perspective and vowed to implement measures to slow down economic growth for the
benefit of a more equitable economic structure [3]. For the construction sector, this means to make the best of
existing buildings.
1.2. Dealing with obsolescence
Buildings are about people and material. Both change over time. Unchecked, ageing destroys the values of a
building. With time buildings and their components age. Constant maintenance, regular repair of worn and torn
parts, upgrades and adaptations of floor plans, machinery and equipment will mitigate threats to safety, health
and comfort of inhabitants and users. According to Boussabaine and Kirkham who looked into life-cycle costs of
buildings in the UK the investments in a building’s upkeep and adaptation over its entire life will be a multiple of
the initial building costs [4]. Rypkema has found that in the US the costs for new construction are made up to
equal parts by labor cost and material cost. In rehabilitation projects the share of labor cost rises to 60 to 70
percent [5].
The effects buildings have on their users and their environment have different dimensions of scale. The
building stock of a district or a city affects individuals and communities. Material choices pertain to functionality
and detail of a component just as they can change eco-systems at the location of resource extraction. How to
construct is part of the culture of societies with networks of trade sourcing material, and keeping structures in
place where knowledge about design, technical crafts and skills can be passed on from generation to generation.
Buildings are financially valuable, absorbing large parts of the income of families, enterprises and municipal
budgets.
The continual care a building receives is thus an investment that goes beyond the individual building. Dealing
with obsolescence of buildings is more than a physical upgrade. Keeping buildings in good condition is a social
and ecological responsibility.
2. Goals and governance of intensive growth
The choice of maintenance, retrofitting and adaptation measures it seems lies in the hands of the owners of
real estate. They adjust their buildings according to their preferences. This is only partly true. This section
970 Iris Belle / Procedia Engineering 198 ( 2017 ) 968 – 974
explores the material, legal, economic and political dimensions that determine ageing processes of buildings. It
also elaborates the benefits of long lasting buildings.
2.1. Ageing buildings
Buildings that last longer have lower demands on natural ecosystems. When replacement is slower, less
material needs to be extracted from the environment and less construction debris needs to be deposited. How fast
material transits through a plot of built-up land depends on a combination of factors. First and foremost it
depends on how long a building will live. Taking the mature German building stock as an example, Kohler,
Hassler and Paschen have found that the idea of an end-of-life depending on the ‘genetic disposition’ of a
building is a rather new concept [6]. “Buildings are not demolished because they are old or in a bad state.
Ironically, they are considered to be in a bad state because their owners want to demolish them” [7].
The decision to demolish or not is the result of one or of a combination of the following factors. The physical
condition of a building in terms of safety, material fitness and functionality of components and equipment is of
greatest concern. The ownership situation of the building and the land, including the duration of building or land
lease, can put an end to a building in perfect physical condition. Advances in technology or floor plan layout
might let a building appear less comfortable than newer buildings. In deciding about the retrofit or adaptation of
an individual building, the cost of construction or reconstruction and the availability of skills and expertise play a
role. Other economic factors such as the price of the building or of the land result not only from the qualities of
the building, but depend on the economic and demographic development of a neighborhood, district or city, cost
of land, allowed use according to the zoning plan, cultural standards such as preferences for densities but also
attitude towards the age of buildings. Legal regulations, like safety standards and whether or not the building is
listed as a monument can have a considerable impact on the cost of operation and maintenance. The same is true
for political frameworks that mandate or discourage upgrades, to achieve political goals, such as energy efficient
refurbishments in Germany. Reducing material flows by continually caring for existing buildings is thus not only
a matter of owners, but a governance task. Slower building material flows do not only reduce pressure on
ecosystems. If they are the result of proper maintenance they mean sustained good quality of buildings and if
scaled spatially also sustained good quality of neighborhoods.
2.2. From a construction sector dominated by new construction to a retrofitting dominated
Economic benefits of transitioning from a construction sector relying on contracts for new construction to one
where retrofitting makes up a substantial share are quantifiable. Singapore is a country that made the transition in
the late 1980s, although the share of new construction has remained continuously high to meet the demand of the
rapidly growing population. Since the city state’s independence in 1965, the government accelerated the
development of satellite towns and industrial zones. Urban neighborhoods and villages were demolished and
redeveloped. How the care those building have received is reflected in economic terms is the topic of a series of
annual reports published by the Strategic Projects Unit of the Construction Industry Development Board
Singapore been 1986 and 1990 [8]. The reports find that most buildings are retrofit for the first time when after
passing the 10-year age mark. The investment cost of retrofit measures varies by more than factor 100, ranging
from replacement and renewal of mechanical and electrical equipment to the upgrade of building finishes.
Variations depend on the type of building. Costs per square meter are highest in the group of commercial
buildings where the option not to modernize translates directly to rental revenue. Over the 4-year period of data
collection, the building maintenance and retrofitting sector grew from year to year. A downturn in new
construction due to temporary overcapacity could thus be buffered. Retrofitting and maintenance surprised with
double digit growth in 1988. Growth in income from operation cost and maintenance services corresponded with
the overall economic growth that drove up occupancy rates. The spike in retrofitting activity towards the end of
the survey period is attributed to a national strategy to expand the tourism industry, resulting in the retrofitting of
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hotels and the adaptation of existing buildings for hotel use. Small to medium size local companies dominate the
retrofitting part of the sector, with almost 90 percent of retrofitting contracts. The small contract volumes should
have made it unattractive for foreign companies to bid.
2.3. Quality, efficiency and skill
The quality of maintenance and retrofitting is harder to assess. Concerned about the quality of the services
delivered in the Singapore case, Quah proposed four measures. First, regular on-site building condition surveys
would provide precious data about the state of the building stock and allow adjusting maintenance schemes and
forecasting retrofitting demands. Second, regular meetings would give companies providing services a chance to
share their experience, particularly to unforeseen problems occurring in certain types of buildings and enable the
industry to adjust the cost of their bids accordingly. In the interest of construction companies and building owners
alike exchanging this information would prevent poor execution of construction to meet the low payment. Third,
a management information systems and feedback from maintenance would allow companies to monitor
inefficiencies in building maintenance, and plan for maintenance and retrofitting measures. Forth, owners and
occupiers of buildings need to be educated about the benefits of properly maintaining buildings [9].
A report by the UK construction task force on the state of the construction sector and room for improvement
has looked specifically on social housing [10]. The structure of social housing construction with few but large
contracts was deemed to lend itself to restructuring for the sake of greater efficiency in terms of cost, time and
quality. The automotive sector with its lean production processes served as an example to recommend a greater
cooperation across teams working in different segments of the value add chain from design, to prefabrication,
installation and maintenance. The idea for more standardization of components within a single building was put
forward, not to reduce diversity but for the sake of better quality and better thought-trough design. The report
also emphasizes a lack in training of supervisors as well as craftspeople and the image problem of the sector,
which fails to attract youth who see construction it as a desirable career.
Thuvander who is looking at ‘sustainable building renovation’ in Sweden laments that “None of the more
established methods and tools addresses a complexity that balances material and immaterial values and they are
often too specific. There is a need for simplified tools, especially for evaluating more intangible, experienced
values.” She concludes that “In the building sector, renovation should be considered a service-minded process
rather than a merely technical one as often is the case in new construction.” [11]
3. The Chinese case
China’s construction sector and the effect its structure has on the lifespan of buildings can be divided in three
layers. First, there is land, which is either empty or needs to be cleared of structures. The second is new
construction. The third layer is that of regular maintenance, occasional retrofitting or more substantial adaptation
to new functions. The skills to undertake projects on each layer differ substantially and so does the material
throughput.
3.1. The Chinese construction sector in figures
Aggregated statistics for the Chinese construction industry give a coarse feeling for the dimensions of the
development over the past decades and relationships between the activities concerning land and construction.
From 1998 to 2013 around 5,000 square kilometers of land have been purchased by real estate companies for
development. This is five times the land area occupied by Shanghai’s built urban districts. Over the same period
construction companies have completed more than 30 billion square meters of gross floor area. In 2013 the
construction sector employed 19 million people or 10% of China’s total workforce and had a share of 6.8% of
972 Iris Belle / Procedia Engineering 198 ( 2017 ) 968 – 974
China’s Gross Domestic Product. The real estate sector, spearheading land conversions but also facility
management of existing buildings, employed 3.7 million people or 2% of China’s workforce. The value-added by
construction in 2013 was 3 trillion Yuan compared to the volume of land transaction which was 1.35 trillion
Yuan or more than 40% of construction [12]. The figures do not yet include the industrial production of building
materials, but draw a picture of an industry that is geared towards land transactions and new construction.
3.2. Sustained redevelopment
In order to supply enough contracts for the industry, brownfield land would have to be redeveloped in cyclical
intervals. Redevelopment models similar to Singapore’s Selected En-bloc Redevelopment Scheme [13] and the
urban redevelopment schemes in the US [14, 15] have been undertaken in Chinese cities and the countryside and
have reached mixed effects. Dilapidated, unsanitary and unsafe neighborhoods were replaced with purposefully
planned ones that would empower local communities to lead better and more productive lives. Resident-owners
thus compensated and relocated from crowded neighborhoods to new estates in Beijing have generally welcome
the initiative, also in retrospect, pointing to huge improvements in living conditions, better sanitation and
increased floor space per person. With few prestigious exceptions such redevelopment efforts have resulted in the
construction of generic neighborhoods and building types. In some instances planners, designers and decision
makers have failed to recognize the positive aspects of the existing and done more harm than good, depriving
residents of affordable and functional housing and left them to deal with higher utility bills and longer daily
commutes [16]. In cases where residents, owners and occupants have rejected redevelopment, their motives were
partly financial, partly related to their life style. They feared losing income from renting out illegally constructed
or adapted buildings and doubted if an apartment in a residential mass housing estate would afford the same
quality of life as detached self constructed home. Insiders to urban redevelopment question if the cases of urban
relocation of the early 2000s in which residents were outright satisfied with the results would be affordable for
municipalities or developers 15 years later. They point to quantifiable costs. Land prices have risen. Ambitious
requirements for construction quality to meet energy saving and emission standards have driven up the cost of
construction. Compensation and relocation of owners and occupants from overcrowded dilapidated areas is hence
more costly. Profit margins shrink. Cost of land will relocate residents of central neighborhoods to the periphery
where land is cheaper. Redevelopment remains economically sensible only in prime locations and in the premium
sector, resulting in less and less affordable housing in inner city locations and in a stratification of society in these
areas, a cost less directly quantifiable.
Redevelopment of unsanitary and overcrowded areas and new construction on greenfield sites will continue,
although at a slower pace. Here new skills lie in the planning and design of building types of estates of mixed use
nature and their integration in existing urban or rural contexts. Advances in off-site pre-production of parts
promise material savings. Large real-estate developers have started to explore how to boost efficiency by
integrating teams throughout the design, engineering and construction phases. Insiders predict increasing
automatisation of the construction of custom designed digitized parts. Digital modeling and simulation skills will
become more sought after. Optimizing the quality, reducing material inputs and increasing the skill level of
employees and workers in new construction projects is a process that requires technical knowledge and
governance within the company and within the industry.
3.3. Improvements through monitoring, maintenance and retrofitting
The biggest frontier for construction companies is the expansion of their activities into maintenance and after
construction service. Design and engineering solutions require adjustments after installation to bring the planned
savings and comforts. The ageing of new materials and composite components is hard to simulate in a laboratory.
Documentation and continued involvement in projects after construction will not only increase client confidence
in new systems and products, but also help the industry to learn and improve. Skills related to performance
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Iris Belle / Procedia Engineering 198 ( 2017 ) 968 974
monitoring and error detection will become as important as problem solving skills. Similar to the suggestions of
industry reports in the UK or Germany [10, 17] large Chinese construction companies seek long-term
maintenance contracts with owners and operators of sizable real estate portfolios. This type of co-operation
promises high impact and little friction. Targeted partners already employ real estate professionals in designated
departments, have a tradition to document processes or are keen to establish them, and have the financial
strengths and incentive to set aside necessary budgets. This saves time to educate and persuade, to create
technical skills and build governance and management structures.
Different kinds of challenges lie in monitoring, maintaining and improving building stocks with heterogeneous
ownership structures, a large spread of building ages and a variety of construction styles and materials used. In
cities these are the buildings that have survived the waves of redevelopment due to their complex ownership and
occupancy structures or because they were deemed as culturally significant. In the countryside they are the
houses built by farmers following local traditions. At the intersection of urban and rural, urban villages, buildings
on rural land with initially rural morphologies have been adapted to cater to urban neighborhoods that expanded
and surround them. In their complexity those structures offer a market for small, specialized contractors and must
be included in the discussion about maintenance and retrofitting. Their degree of fragmentation and diversity
balances the uniform character of standardized centrally managed building stocks and contributes to the identity
of locations. Despite being considered less sophisticated from a technological point of view they have advanced
further on their evolutionary path. They already incorporate series of adaptations, upgrades or attempted
upgrades. Here, not centralized decision making processes but individual investments are responsible for the
upkeep of a building. Therefore factors that prolong the lifetime of a building may differ from those that decide
about decommissioning or reusing buildings that are part of large portfolios of centrally managed building stocks.
Also different is the nature of laws and regulations and their enforcement.
4. Conclusion
Consulting literature that highlights risks and potentials of the construction sectors of developed countries
enables to discover chances for the future development of the Chinese construction industry. Conceptually, a
relationship between less use of construction material, longer building-life span, better building quality through
upgrades and stable skilled jobs in the construction sector can be established. A longer life-span of buildings
reduces environmental impacts of mining the components of new construction material or depositing construction
debris. A maintenance regime that includes documentation of building performance and professional exchange
about gaps in expected and measured performance will help to improve the quality of existing and future
buildings and construction services more efficiently than redevelopment after brief analysis. Extending the life-
span of buildings by keeping them in good quality further has social and economic benefits and reflects positively
on the construction industry. Maintenance, retrofitting and adaptation works can buffer economic cycles in the
construction sector. A long-term perspective that characterizes the planning of the state and large corporations,
leads to the redesign of value-add chains the training of construction workers and designers in new skills, crafts
and knowledge. Better education and training means better services to the owners and occupants of existing
buildings, a better image of careers in the construction sector and longer building lives. Commitment to monitor
and improve fragmented buildings stocks as well as centrally managed ones and commitment to developing
governance processes and skills to improve their quality, safety and comfort opens perspectives for the intensive
growth of a construction industry that contributes to a resilient and resource efficient high quality built
environment.
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Overcapacity in China: An Impediment to the Party's Reform Agenda, European Union Chamber of Commerce in China
  • Roland Berger
Roland Berger, Overcapacity in China: An Impediment to the Party's Reform Agenda, European Union Chamber of Commerce in China, Beijing, 2016.
The Economics of Historic Preservation: A Community Leader's Guide, The National Trust for Historic Preservation
  • D Rypkema
D. Rypkema, The Economics of Historic Preservation: A Community Leader's Guide, The National Trust for Historic Preservation, Washington DC, 1994.