Conceptual model for minimization of transaction costs in building energy efficiency (BEE) for affordable housing delivery

Abstract

Energy efficiency is fundamental to enhancing homes affordability. There are several unique challenges to affordable housing that owner-developers need to address in order for energy efficiency to make significant economic sense. Issues such as Transaction Costs (TCs) plays a significant role in achieving building energy efficiency (BEE) for affordable housing delivery. It is evident that split incentives, information asymmetry, institutional transition, opportunistic behavior, and ill-informed users incur different levels of TCs and affect stakeholder’s willingness to take part in BEE for affordable housing. A better understanding of the nature and structure of TCs is indispensable to enhance the market-drive and investment for BEE affordable housing. Uncertainty, specific investment, frequency and bounded rationality are seen as the key dimensions of TCs. The research focuses on how to minimize TCs involve in BEE affordable housing delivery. It was found in the literature that, the level of TCs for building energy efficiency was estimated at 20.5% of total project costs. A conceptual competency-driven benefits realization model is proposed for minimizing TCs taking into consideration the peculiarities of the current housing projects delivery. This research aims to establish the significance of leveraging on BEE project team-competency and commitment organized within a strategic Benefits Realization Management framework to optimize client ‘s benefits in terms of minimizing TCs. The focus is on the aspect of developer’s competencies and their project team commitment with respect to minimizing TCs that is structured within a Benefits Realization Management (BRM) practice. This model is proposed as a pro-active enabler tool for the purpose of achieving Value for Money in BEE affordable housing projects. This paper is part of a series of publications.