Does outsourcing add up for construction waste?

Illustration created using ChatGPT shows pile of construction waste, with big dollar-sign adorned bag of money in middle and bank building behind. — *Image created using ChatGPT generative artificial intelligence (AI)*

In this SustMeme Guest Post, Jane Marsh, Editor-in-Chief at Environment.co, follows the money in construction waste in a bid to discover whether outsourcing can make economic sense for sustainability.

JM: The waste dilemma facing many construction firms is that, whilst they recognise the need to manage their environmental impacts more sustainably, they often lack the necessary resources in-house.

The need to commit to greener initiatives is urgent, as reputations and revenue increasingly rely on reducing carbon footprints. So, paying a third party to handle waste processing might seem like the best solution.

However, decision-makers must assess whether it will truly yield greater profit, or just bleed budgets dry.

Persistent and growing problem

Worldwide, construction and demolition waste (C&DW) is a persistent and growing issue, with low repurposing rates stubbornly in evidence despite the high recyclability of many materials.

The United States, for example, generated 600 million tons of C&DW in 2018 — amounting to almost a quarter of the country’s total waste stream — and numbers are set to double from 2016 levels by 2050.

With US construction producing some $2.1 trillion in structures every year, the sheer volumes involved add up fast. However, the global scenario could be even worse, with minimal data for developing countries.

The scale of the problem results in excessive landfill tipping fees to be accounted for by construction, with the average cost Stateside jumping 10% from 2023 to 2024, going up from $56.80 per ton to $62.28.

Prices do vary by region, with notably higher fees in densely populated areas. Almost everywhere, however, any prospect of reducing or removing the likelihood of incurring these expenses offers a potential business incentive for construction firms in particular, even when investing in third-party waste management.

Perceived solution and savings

With waste now more widely viewed as resource, many companies specialise in extracting and recycling what they can from C&DW. They supplement the supply chain with additional materials that may have become scarce in recent years, while supporting circular economic principles by reusing construction components.

For the business case to work, the cost of outsourcing must be less than the tipping fees and other expenses associated with internal C&DW management. Lower tipping fees are guaranteed, as less waste gets diverted to landfill. Teams could also reduce off-site overweight load fees if more waste is sent to another facility.

Businesses can save time and money spent investing in dedicated C&DW handling and processing equipment which third-party specialists already have in place — reducing the burden on capital expenditure.

Firms may also benefit from increased efficiency in workflows. Delegating waste management to an external company allows employees to focus on core tasks, instead of devoting time to handling, transporting and sorting trash. This might mean jobs complete more quickly, boosting throughput and capacity.

Finally, firms may be able to realise increased profits, in addition to direct cost savings, by bolstering their reputation as a sustainable company. This could lead to more investors and clients, plus a higher profile.

In effect, a glowing environmental track record will manifest as a competitive business advantage.

Profit for waste management

In terms of what is in it for waste management, outsourced businesses earn profit from several verticals.

Firstly, they can charge service fees for various stages of the management process, including collection, sorting and processing. Each stage can have different rates applied, too — which affords construction firms the agency to choose exactly how much they want to participate in management and in what way.

Specialist facilities also gain profit from reselling the materials they extract from waste streams.

Scrap metals vary in price, but are evergreen and easy to distribute. Concrete has more versatility when crushed into aggregate, which can still be used in construction for foundations and more. Other income streams come from repurposed wood and drywall for biomass, mulch or paper.

Taken together, these strategies will eventually grow into an industry with a market value of $49.4 billion in North America and Europe by 2031. The compound annual growth rate of 4.5% proves the sector’s profitability and future promise, making it attractive to investors, innovators and new-entrants alike.

Truth of who wins in the end

Who earns more at the end of the day depends on the many metrics that influence profitability, including:

Region: Local market conditions can change how much construction companies potentially save.
Complexity of the waste stream: More valuable materials can make it significantly more profitable for waste management teams, generating better revenue from resales.
Contractual terms: Increased transparency and communication on the part of waste management helps clarify the financial benefits of recycling, enabling teams to negotiate and foster long-term partnerships.

Despite potential savings opportunities for construction, however, there is still inadequate research commonly available at present to determine whether one approach consistently outperforms the other.

That said, one study did discover that partial outsourcing can prove financially favourable and provide better environmental outcomes compared to higher degrees of third-party reliance.

This implies each company has the ability to profit, with the construction company garnering savings to offset the costs of supporting the third party. Importantly, successful and financially smart partnerships rely on strong contracts, transparent pricing and quality communication to provide optimal benefits.

Partnership for profit and planet

While the bottom line will always be the primary determinant of whether or not a construction company commits to a circularity initiative, there is still a responsibility to manage C&DW more sustainably.

Resource depletion, pollution risk and policy push are all motivating factors. Neglecting these realities is likely to cost organisations more in the long term. There is an incentive to act, if not perhaps an imperative.

Given the twin drivers of compliance and competitiveness, it is in the collective interest of all construction stakeholders to come up with a practical plan to scale sustainable solutions to the industry’s waste problem.

Portrait of Jane Marsh, smiling leant against white pillar, stood on harlequin tiled red and white floor, wearing white sleeveless silk top and black jeans.

Jane Marsh is Editor-in-Chief of Environment.co, where she leads the publication’s mission to make sustainability accessible and actionable for readers worldwide. With a background in environmental journalism and communications, Jane has spent her career exploring the intersection of technology, policy, and sustainable living. Jane is passionate about advancing awareness around clean energy transitions, circular economy practices, and the future of green infrastructure. Under her editorial direction, Environment.co continues to highlight the people and tech driving a more sustainable planet.

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