C&D ROI: Leveraging Deconstruction Efforts to Increase Profits and Improve PR
When it comes to construction ROI, 73% of CEOs at small-to-mid-sized construction companies believe that their success is reliant on efficiencies that result in a reduction of time and cost, according to the Vistage CEO Confidence Index.
Deconstruction efforts can help construction company CEOs leverage a new strategy for increasing revenue. Deconstruction is a process of selectively dismantling a building’s materials and components for reuse, donation, recycling, and other waste management avenues that lend a service to both your company and the local community.
Turning construction waste into cash
Building deconstruction is a growing construction business trend, especially in the Pacific Northwest. Companies are leveraging this benefit since 30% of all building materials delivered to a typical construction site can end up as waste.
The waste facts below are opportunities for turning materials into cash:
- The rate of construction waste is expected to reach 2.2 billion tons globally by 2025
- C&D waste is said to account for 23% of the national waste stream
- In 2018, the U.S. generated over 600 million tons of construction-related waste
- U.S. C&D waste generation has increased by 342% from 1990 to 2018
A tax-savvy alternative to demolition
Demolitions are fast … pick up the undiscerned materials and toss them in roll-off boxes. Demos have primarily been considered cheaper because they take less time and effort. As we approach a new era, demolitions have some hidden fees and miss some opportunities that deconstruction makes up for.
Deconstruction efforts are tax-deductible for construction companies that carefully remove valuable fixtures and reusable parts and then get those items assessed. The materials can either be reused on other projects, thus saving money on new items, or donated to charities like Habitat for Humanity’s ReStore, as a tax-deductible donation.
For commercial or residential properties that may no longer be repairable or are considered a loss, deconstruction efforts could be a way to retain some final value.
Take the following residential property as an example: in Virginia, a family home owned by Detelina Ivanova was run down and not worth the value to reconstruct. Rather than going the demo route, the family had the house carefully taken apart and had the materials assessed. The items were appraised at $131,500, fair market value. The family was able to donate the items for a $51,000 tax benefit.
The process requires a deconstruction team and an appraiser that determines the value of the items to be salvaged; the appraiser prepares a report and lists all items and fair market value on IRS Form 8283 for individuals, partnerships, and corporations.
Using this deconstruction tax benefit rather than a complete demolition can increase ROI on a job, especially for sizeable buildings with many materials and components to recover.
Increase investor contribution amounts
Is your construction company publicly traded? The Securities and Exchange Commission (SEC) recently announced compliance measures for Scope 1-3 emissions reporting. This means documenting the emissions that it took to create the materials used in construction and where/how those materials are disposed of will contribute to scope 3 emissions reporting.
The reason for this is to ensure that total transparency in carbon usage and waste is documented to investors. Investors are relying heavier on data such as ESG metrics to determine which companies are future-proofing their business models and how much to invest in those companies. According to Deloitte, the more transparent a company’s report is, the more investor money they tend to receive. It’s not that low transparency means no investment funds; these companies see less funds than their competitors who report on important environmental metrics.
For construction and demolition companies to show transparency, it requires accurate reporting on exact materials purchased, supply chain details, and end-of-life treatment of materials and waste – all factors investors are looking more closely at via ESG reporting.
Economic benefits of adopting deconstruction practices
- Hauling fees are reduced as a result of fewer waste materials hauled.
- Reuse of components on other projects reduces new material costs.
- Reselling or donation items can also help offset costs, reduce the tax burden, or become a new form of income in the construction business model,
- Attract sustainably focused clients looking for greener options for demolition.
- Deconstruction is a great opportunity to train new crewmembers on how parts work and how they come apart. Critical thinking skills and work ethic can be taught in these types of jobs where breakage is less critical.
- Adaptive reuse projects result in more positive environmental, social, and governance metrics (like energy usage and social justice) than building demolitions.
The downside of demolition
- Demolitions added 567 million tons of debris to the national waste stream
- Among more than 50,000 analyzed demolitions, 47% were to make way for new construction
- Concrete has one of the longest useful lives among building materials but accounts for the most demolition projects
Deconstruction ordinances are becoming more common
In some regions, deconstruction is an opportunity to carve out a new strategy for improving operations and ROI. In other regions, deconstruction is seen as a vital move into the future and has become mandatory through local law.
Communities in Chapel Hill, North Carolina, and numerous communities in California have adopted ordinances that review construction waste recycling. In California, these ordinances are seen as a positive endeavor as they increase jobs, reduce landfilling, and help companies retain the value left in buildings and deliver that value via material for local use, tax credits to construction/deconstruction companies, and a market for non-profits to sell used buildings materials.
How would you rate your construction company’s waste diversion efforts?
When it comes to public relations, waste efforts rank high on the scale of stakeholder importance. How does your construction company stack up to the competition when it comes to avoiding landfill hauls and reusing materials in valuable ways? Deconstruction efforts that are calculated and documented can be used to share in communication efforts with stakeholders. Whether that be in your own sustainability report or in articles, press releases, and videos that not only highlight but educate on your company’s best practices. General Motors has been a beacon of walking the walk but also documenting the talk so others can repeat their lessons learned.
Efforts leveraged now will help your company stand out and acclimate before potential mandates follow.
Ready to start deconstructing?
With a partner in waste that’s on your side, you can leverage the National Waste Associates network to increase recycling efforts for deconstruction materials. We can help develop a strategic plan for your construction/demolition company that harnesses the top benefits of deconstruction. We can also automate your waste diversion efforts providing metrics that you can use for various environmental reporting requirements.
Would you like our waste experts to help your team leverage deconstruction
efforts to improve your ROI?
We have an extensive network of recycling and waste diversion partners. Let us help you turn demolition waste into deconstruction cash.
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