Transaction Cost Economics Framework Development for Malaysian Housing Development

Abstract

Housing development is a high-risk, multifaceted and cross-subsidies business. Therefore, it is essential to thoroughly evaluate its viability through comprehensive feasibility studies. It is imperative to carry out meticulous investment appraisals, specifically in the realm of Malaysian housing developments, known for their substantial regulatory expenses that consequently elevate housing costs. Thus, this study aims to demonstrate the development of the transaction cost economics (TCE) framework recommended to unbundle the hidden cost components within the housing development processes. TCE adoption is useful to coordinate and optimise the economic activities within these processes. To overcome the shortcomings of TCE, the RIBA Plan of Work 2013 stages and key tasks are integrated with the housing development stages, processes and cost components to determine the essential economic activities, highlighting the corresponding parties, processes and costs. The TCE framework is established by experts from various sectors, including government agencies, local authorities, professionals and developers. This is achieved through the use of sequential explanatory mixed methods, which are employed to handle the diverse variables and aspects that hinder the nature of the research. Initially, a literature review identified 26 anticipated TCE components. However, data gathering revealed a total of 38 TCE components. The open-ended questionnaire and semi-structured interview were analysed and triangulated using frequency analysis, content validity ratio analysis and content analysis to ensure all necessary elements were included and unnecessary items removed. Eventually, the findings are applied in the development of the proposed TCE framework for Malaysian housing development. This framework outlines the necessary economic activities along with their associated development costs and TCE categorisation. It can be used to accurately prepare feasibility studies. To conclude, the research outcome improves the efficiency of economic transactions in Malaysian housing development by identifying and organising the various cost components involved, allowing for the optimisation of transaction costs and increased transparency of housing development expenses.