Supply Chain Management Waste Minimisation Toolkit

Transcription

1 Supply Chain Management Waste Minimisation Toolkit VERSION ORIGINAL AUTHORS: DOCUMENT CONTROLLER SIGN OFF AUTHORITY DATE DUE FOR UPDATE: JANUARY 2015 UPDATED BY RMIT University Research Team Professor Kerry London Associate Professor Tayyab Maqsood Dr Malik Khalfan Mr Peng Zhang Mrs Jessica Siva Mr Rob Anderson 1

2 Executive Summary This tool kit has been developed as part of a research project undertaken by RMIT entitled A Supply Chain Management Self-Assessment Framework for Waste Minimisation for the Residential Sector which was funded by the Beyond Waste Fund and managed by Sustainability Victoria. The project had four objectives including; describe and analyse barriers and enablers to waste minimisation practices through a literature review and an audit of the two large house building organisations; develop the Self-Assessment Framework; Validate the Framework and develop guidelines; and finally disseminate the project outcomes. The aim of this Guideline document is to explain the context of waste minimisation, principles of supply chain management practices and the steps involved in using the self-assessment Framework. This document is divided into three sections. Part A provides a summary of the literature review on construction waste minimisation. The review summary presents key enablers and barriers derived from the literature from research conducted internationally. The key enablers identified include; development of strategic procurement to recruit supply chain partners; improving organisational communication across units to facilitate change; knowledge of the problems related to waste minimisation and willing to take actions; and increasing senior management support to drive the change. The key barriers highlighted during the interviews include poor organisational communication across units to facilitate change; perception that direct costs was more important than the whole of life costs; lack of cooperation/maturity from suppliers to minimise waste; and lack of strategic procurement efforts to engage supply chain to reduce waste. Part B describes an Implementation Plan with recommendations on governance, timeframes, personnel; monitoring and review and examples of where the Framework could be embedded in existing organisational initiatives and/or processes. Three exemplar Frameworks are then presented for Organisation A and Organisation B, large volume residential construction organisations. Examples presented in this part including a Profile showing average level of maturity in the Self-Assessment Framework and Action Plans providing details on how to move from Level 1 to 2 through to 3 and then 4. Part C describes the process that an organisation can undertake to develop self-assessment frameworks using an action research methodology. Ten generic steps are highlighted for framework development, validation and implementation. An Action Plan to develop the Frameworks is also presented which is divided into five generic phases. This part ends by providing lessons learnt and recommendations such as ensuring senior management support and having waste minimisation policy. A Communication and Engagement Plan and stage organisational wide events are essential to disseminate progress on the project and to have continuous buy-in from all staff. 2

3 Table of Contents Supply Chain Management Waste Minimisation Toolkit... 1 Executive Summary... 2 Part A Introduction... 5 A.1 Project Background... 5 A.1.1 Development of Toolkit... 5 A.1.2 Intent of Guideline... 5 A.2 Context of waste minimisation... 6 A.2.1 The problem of construction waste... 6 A.2.2 Benefits... 7 A.2.3 Barriers and Enablers... 7 A.2.4 Supply chain management principles... 9 Part B Implementation B.1 Instructions B.1.2 Governance B1.3 Timeframes B1.4 Personnel B1.5 Monitoring and Review B.1.2 Embedding the Self-assessment Framework in organisations B.2 Self-Assessment Framework B.3 Profiles B.4 Action Plans Part C Evolution of Toolkit C.1 Procedure C.2 Action Plan Phase 1: Project Initiation and Governance Structure Phase 2 Framework Development Phase 3 Validation of Framework Phase 4 Implementation of Framework Phase 5 Review of Framework C.3 Lessons learnt and recommendations APPENDIX

4 Table of Contents Introduction Waste in Construction Data and benchmarking Sources and causes Construction waste minimisation Summary Supply Chain Management an overview Definitions Benefits and barriers Lean Manufacturing Supply Chain Management and the construction sector SCM in Australia SCM Internationally Current viewpoints and discussion Summary SCM and waste minimisation in the residential sector Integrated SCM SCM & waste minimisation in the residential sector Conclusion References

5 Part A Introduction A.1 Project Background A.1.1 Development of Toolkit This Toolkit has been developed as part of a research project entitled A Supply Chain Management Self Assessment Framework for Waste Minimisation for the Residential Sector, which was funded by the Environmental Protection Agency Waste Fund and managed by Sustainability Victoria. The Environmental Protection Authority Victoria publicised an Expression of Interest in late Professor London initiated a submission in consultation with the Australian Housing Supply Chain Alliance and colleagues at RMIT, Associate Professor Tayyab Maqsood and Associate Professor Malik Khalfan to conduct an Action Research Project to develop a Self Assessment Supply Chain Management Waste Minimisation Framework for two organisations in the housing sector. RMIT University is the lead organisation for this project on behalf of the Australian Housing Supply Chain Alliance. The project was undertaken from 21 December 2012 to 28 February Two research assistants were employed on this project, including Mr Peng Zhang and Mrs Jessica Siva. Both of the research assistants were PhD candidates in the School of Property, Construction and Project Management, RMIT University. In addition, an Industry Research fellow, Mr Rob Anderson was employed on the project who is also the Chair of the Alliance. A research Ethics Application was submitted for the project to the Design and Social Context College Human Ethics Advisory Network (CHEAN), a sub-committee of the RMIT Human Research Ethics Committee (HREC) on 24 January 2013 in accordance with the Australian National Statement Code on Ethical Conduct in Human Research. The project was approved and was awarded the approval number of CHEAN B /13 on 28 February The project had four objectives and four phases including; describe and analyse barriers and enablers to waste minimisation practices through a literature review on international trends and an audit of the two large house building organisations; develop the Self-Assessment Framework; Validate the Framework and develop guidelines and finally disseminate the project outcomes. The core focus of the project was the development of the Framework using an Action Research Project Methodology involving rigorous data collection and analysis; followed by the development of guidelines in the form of this Toolkit. A.1.2 Intent of Guideline The aim of this Guideline is to explain the context of waste minimisation, principles of supply chain management practices and the steps involved in using the self-assessment Framework. This document tells you how to create benchmarking profiles of supply chain management practices within your organisation aimed at reducing physical construction waste. The Framework and Implementation Plan should and can be customised by other organisations. 5

6 Both specific advice on using the Framework and the philosophy and general design principles behind the Framework are covered. Background information on waste minimisation and supply chain management explain the ideas that have underpinned the development of the Framework. A.2 Context of waste minimisation This section provides you with statistics and information at an aggregate level across Australia and the states and helps to explain the significance of the problem. The practical steps to explain how to use the guideline are in Part B and you may decide not to read Part A, However, we would suggest that you read Part A because it helps to impress upon you the reason why waste minimisation is so important. Part A also explains the supply chain management approach taken and will help you to make more sense of Part B and what the senior executives in your organisation had in mind in relation to waste minimisation as a long term strategy when they designed the study with the RMIT Research team. The complete literature review has been provided in Appendix 1. A.2.1 The problem of construction waste The management of the problem of construction and demolition materials waste is often underpinned by an analysis of data including such measures as; volume of waste generated; volume of waste transported to landfill; volume of waste recycled; carbon dioxide equivalent and embodied energy; cost of transportation to landfill and landfill levy cost. This type of data can then provide baseline targets for action plans that can be monitored. The information can be provided at an industry level on a regional basis which is often aggregated or can be developed at site and organisational level. Aggregated data is more useful to consider when reporting or evaluating industry policy and sectoral level interventions. Site and organisation level data is more useful for companies to use when they are attempting to implement organizational benchmarking and developing and evaluating the impact of their action plans. Unfortunately this type of data is not readily available. It has been suggested that construction and demolition waste can account for approximately 30% of all solid waste streams and hence this has prompted national and/or regional policy development and implementation strategies in various countries in the past decade such as UK, Australia, Singapore, Hong Kong, United States of America and the Netherlands. In Appendix 1 a more comprehensive literature review presents data comparing various countries. Australia is one of the worst if not the worst performer in the world. Therefore it is not surprising that waste in construction has been identified as a significant problem to address. Waste being transported to landfill in Australia is also increasing. In Australia it has been estimated that the cost of disposal of waste generated during the construction of a residential house is between $2000 to $3000 per house. There has also a been suggestions made on the volume of waste generated in the construction of a volume builder house on a flat block to be 18 to 23 m3 of waste per house in Victoria (Hyder, 2011, p. 47). 6

7 A.2.2 Benefits Construction waste minimisation may involve many waste reduction activities which can lead to economic, social and environmental benefits. In terms of economic benefits, it is anticipated that significant savings can be made by construction organisations through reductions in material expense and waste disposal costs. With regards to social benefits, it is proposed that construction waste minimisation may improve design and construction integration skills, improve knowledge-based business processes and increase work safety. Finally, the most important benefits of waste minimisation is through environmental benefits through the effective reduction of excessive materials waste to landfill. A.2.3 Barriers and Enablers Despite the potential benefits of adopting waste minimisation practices substantial evidence (included in the literature review in the Appendix 1) has demonstrated that there is a gap between theory and actual implementation of the suggested practices for waste minimisation by construction organisations. Key barriers to effective implementation of waste minimisation practices include: Lack of economic incentives to reduce and avoid waste; Resistant to change; Unique nature of each project; Fragmented nature of the industry; Lack of awareness, interest or commitment to environmental issues; Perception that waste management is not cost-effective and is actually a costly and time consuming activity; Lack of training and tools to implement waste minimization strategies; Poor coordination and integration between various participants on projects; and Poor review and feedback loop mechanisms to provide information upstream. Various factors have been identified which can influence the successful implementation of a waste management plan by construction organisations including: Involvement of senior site staff; Commitment of top level management; Cooperation of sub-contractors and suppliers Support of on-site staff and workers, and other supply chain partners; Establishment of clear corporate policy, goals and objectives; Increasing workers environmental awareness; Support from government, clients; design consultants; and sponsors; Presence of clear and effective internal communication on waste management; Presence of waste management experience and experts; and Availability of recycling facilities. 7

8 Various studies in the UK, US, Singapore and Australia have examined the benefits of waste minimisation, barriers to waste minimisation efforts and enabling factors; and a more complete description is included in the Appendix 1. During the stage 2 of the action research project, the RMIT researchers identified the following barriers and enablers within the residential sector during the data collection with two house building organisations (Organisation A and Organisation B). Table 1 summaries the five most common barriers whereas Table 2 summarises the five most common and significant ideas/actions/strategies that would reduce physical materials waste onsite as perceived by the research participants within each of the organisations. Table 1: The key barriers Organisation A Poor organisational communication across units to facilitate change Perception that Direct costs vs. Whole of life costs was more important Poor organisational communication of strategic objectives Lack of cooperation/maturity from suppliers to minimise waste Lack of strategic procurement & Partnership Organisation B Poor organisational communication across units to facilitate change Knowledge of problem vs. Lack of action Perception that Direct costs vs. Whole of life costs was more important Ordering error, over ordering, under ordering Resistance to change (lack of incentives) Table 2: Enablers Organisation A Develop strategic procurement & partnerships Knowledge of problem and take action Initiate supplier development Improve organisational communication across units to facilitate change Increase senior management support to drive change Organisation B Develop strategic procurement & partnerships Knowledge of problem and take action Initiate supplier development Change the perception of Direct costs vs. Whole of life costs by changing behaviours of senior management Develop more off site manufacturing & prefabrication systems 8

9 Past work into construction waste minimisation, including the work done by EPA has suggested a number of key approaches for construction organisations that are seeking to reduce and avoid waste. This includes integrating waste management strategies into the design process; using offsite construction including prefabricated materials and products; conducting a waste minimisation assessment that examines opportunities for waste avoidance reduction, reuse and recycling; and incorporating waste minimisation targets and measures into organisations environmental management plans. One of the most common themes underpinning policy, research studies and public debate on waste minimisation is the need to focus on integration of the supply chain. The RMIT research project focussed on the introduction of supply chain management practice within construction organisations that may have the ability to influence waste minimisation across the housing sector. Since, upstream decisions and actions are just as important as site management actions therefore, the following brief discussion provides some background on supply chain management (SCM) principles. A.2.4 Supply chain management principles Supply Chain Management (SCM) has been proposed as a solution to the construction industry inefficiencies by many researchers (see more details in Appendices 1). It has been an approach on the national agenda for many countries for some time however; there is still a general lack of adoption in the industry. While originating from the manufacturing industries, improved efficiencies in the construction sector have been flagged for almost as long as construction has been around. It has been argued that the construction sector is one of the least integrated industries and in order to achieve economic and labour efficiencies in the construction sector there needs to be a restructure of the building supply chain. Many benefits can be achieved through SCM including; reduced costs; improved responsiveness and ability to changes; reduced uncertainty for project owners; increased service level; and facilitated decision making. The construction industry in general has been described as being resistant to change and failing to take a more holistic view of the industry and associated problems. Due to the temporary nature of projects and short-term nature of work, it is at times difficult within the construction industry to build up a reliable supply chain. Various details of studies in this area, both within Australian context and within other countries, have been included in Appendix 1. There are challenges to implementing SCM in the construction industry including short-term working arrangements, lack of trust/information sharing, limited customer focus, price-based selection and inefficient use of emerging and existing technologies. Issues such as lack of co-ordination and communication amongst supply chain actors has been said to be a limiting factor in the successful uptake of SCM in the construction industry. 9

10 The development of integrated supply delivery solutions have not been extensively recognised in the Australian residential sector. Ad hoc examples and applications by some major building companies have seen some limited success. However, this has not been diffused throughout the sector and thus has had little real impact on overall sector performance and individual company competitiveness. Whole-scale industry improvement requires a concerted effort to undertake a stepwise change. A key to the solution is to investigate successful examples of integrated supply chains which have resulted in productivity and/or innovation performance improvements (London and Siva, 2012). The concept of SCM has been implemented in the manufacturing sector since the 1940s. However, its transferability, adoption and diffusion in the construction industry especially in Australia has been slow. In summary there are three key reasons for this in relation to the house building sector: Low levels of managerial skills and knowledge Lack of implementation tools to support employees to develop SCM policies, processes and practices Lack of competitiveness in larger volume house build organisations and a subsequent lack of incentive for change and continuous improvement SCM has closely been linked to the lean approach. The objective of lean management is to achieve zero waste. A number of sources of waste have been identified including: overproduction, waiting, transportation, inappropriate processing, unnecessary inventory, unnecessary motion and defects. However, in brief, lean manufacturing principles have often been seen as difficult to implement in construction because of the same reasons it is difficult to implement supply chain management. One of the key challenges is that implementation tools are often borrowed from manufacturing but with little real understanding of the context of construction and thus little adaptation of the tools is undertaken. A Blueprint specifically targeting SCM for project and portfolio management in construction was developed by Professor London (2008). It attempts to identify portfolio and project based activities since there are many activities involved in SCM and these activities are implemented on projects as well as across the organization. The following Blueprint organises these activities according to four areas including: 1. Developing supplier group strategy maps; 2. Implementing strategic sourcing processes and practices; 3. Streamlining supplier coordination systems; and 4. Managing supplier performance for improved alignment 10

11 Figure 1: Blueprint Supply Chain Management project based industry (London, 2008) The approach taken in the action research project that underpins this guideline was that actions of the whole supply chain will ultimately reduce waste to landfill in the Australian housing sector. The action research project attempted to go further than simply documenting case studies of outcomes. This guidelines represents an attempt to move beyond the rhetoric of claiming that supply chain management is the answer to waste minimisation towards developing, piloting and validating a tool that could be embedded in organisations and that makes the concept of SCM more practical. The tool that was developed wereself Assessment Supply Chain Management Waste Minimisation Framework for two organisations. They were customised for the two organisations. These exemplars are presented in this guideline and used to explain the next step in implementation. 11

12 Part B Implementation B.1 Instructions After the Framework has been developed an Implementation Plan needs to be developed and put into action. This section provides guidance on an Implementation Plan in terms of governance, timeframes, personnel and monitoring and review after the Framework has been developed. This section also provides guidance by explaining an example of a Framework and the Profile that has been developed for an organisation. The steps to create the example Framework principles and the Profile are also described briefly in this Section and in a generic manner in Section C. A Framework can be developed for each of the subactivities described in the Blueprint in Section A. The scope of the Implementation Plan needs to be defined and then prioritising of the Supply Chain Management set of activities is required. B.1.2 Governance A Project Steering Committee should be created to develop an Implementation Plan. A member of the Senior Management Team should be appointed as Project Director. A Project Manager should be appointed and resourced with a team appropriate to the scope of the project. The Project Director is responsible for the success of the SCM Waste Minimisation Self- Assessment Framework Implementation Plan. Specifically the Project Director is responsible for monitoring and evaluating the Plan; reporting to Senior Management and for decision making regarding scope and scope changes during Implementation. The Project Director is responsible for approving the scope of the Implementation Plan. The Project Manager is responsible for defining the scope of the Plan. The Project Manager is responsible for carrying out the Implementation Plan. B1.3 Timeframes The Implementation Plan should be aligned to the timing of the organisation s strategic planning processes. A review schedule should be developed that includes goal setting at the beginning of the year, mid-year review and annual year reporting. The goal setting should include identification of the Principle(s) that the Project Manager and the team shall execute during the year. It should also include an Action Plan specific to the Principle that is being addressed and steps to move the Profile from one level to the next and address the gaps in performance. The Project Steering Committee should meet at least 3 times per year. The Project Manager and team may meet with the Project Director in subsequent meetings to achieve outcomes. The main tasks of the Implementation Team will involve communication and engagement of the Framework to staff; meeting and working with key departments and staff related to the specific goals for the year; setting strategies and specific actions that will result in improvements of the profile and then collecting and analysing data to establish the new profile at the end of the year. 12

13 Implementation Timeframe Review Principles Design Action Plans Communicate Action Plans Engage staff Implement actions Mid year Review Revise actions and/or continue Collect data Develop new Profiles Report End year Review J F M A M J J A S O N D B1.4 Personnel The personnel required to develop a Framework, develop an Implementation Plan and then carry out the Plan are recommended below. This assumes that only one Framework is developed for an organisation. The development of one Framework would take approximately 6 months with the following personnel. Phase: Framework Development and Validation Role Brief Project Description Time Commitments Project Director Senior manager 2 days Knowledge of supply chain management Project Champions Champions are typically department 2 days managers Time commitment approx.. Project Manager Knowledge of supply chain management 12 days Knowledge of waste minimisation Leadership skills in action research projects and action research methodologies (ARM) High level analytical skills Good stakeholder management capabilities Senior Investigator Knowledge and skills in ARMHigh level 8 days analytical skills Waste management knowledge Good report writing skills Research Officer Qualitative data collection and analysis skills Quantitative data collection and analysis skills Good organisational skills 48 days 13

14 Implementation is for 12 months. Phase: Framework Implementation Role Brief Project Description Time Commitment Project Director Senior executive 3 days Knowledge of either waste management or SCM Project Steering 2-5 staff (depending upon size and scope) 3 days Committee Provide feedback and input Project Manager Knowledge of supply chain management 8days Knowledge of waste minimisation Leadership skills in action research project methodology High level analytical skills Good stakeholder management capabilities Senior Investigator Knowledge and skills in ARM 4 days High level analytical skills Waste management knowledge Good report writing skills Research Officer Qualitative data collection and analysis skills Quantitative data collection and analysis skills 16 days B1.5 Monitoring and Review The Assessment Framework is the tool to be used by the organisation to monitor progress on how well SCM Waste Minimisation Principles are being understood and implemented. The Framework(s) can be completed individually or within a group or unit. If completed within a group then the tool can be a useful to trigger discussion. Such discussions will enhance sharing of knowledge and improve awareness and understanding of how an organisation approaches supply chain management in relation to waste minimisation. Individual self-assessment can highlight areas to improve skills and knowledge. An individual assessment might be a pre-cursor to a workgroup discussion that could also include staff from other units so that agreement on key activities or problems can be reached. Shared understanding is important to the implementation of waste minimisation through supply chain management. Each row in the matrix on the right of the page represents an important activity in adopting SCM practices towards supplier / contractor management or internal workflow management within the categories of 1. Know the Rules, 2. Apply the Rules and 3. Change the Rules. Know the Rules: What are the policies and procedures within the organisation? Apply the Rules: How are policies and procedures understood and implemented? 14

15 Change the Rules: When the policies and procedures are not working are there mechanisms in place to evaluate their effectiveness and then change as required? Within each of these categories there are a number of Principles in the Self-Assessment Framework. The Framework has instructions and is a self-contained A3 sheet. A rigorous Action Research Methodology is used in developing a Framework. In brief, the Principles are drafted by the Project Team and validated with the Project Director and the Project Champions. They are based upon analysis of numerous individual and/or focus group interviews with staff and an audit of current enablers and drivers to more effective supply chain management for waste minimisation policy, procedures and practices. They are then tested again and validated with selected staff within each Project Champions department. Validation takes place through numerous individual interviews and/or focus group interviews which take approximately one hour each. The most important underlying strategy with the Action Research Methodology is that many staff are committed to the Implementation Plan because of their involvement in the development of the Framework. New Frameworks may be developed each year after the end of year Review. The staff is required to work through each row and tick the box which best describes the status of his/her organisation or his/her individual knowledge. There are four levels that can be chosen: 1. Level 1 No awareness 2. Level 2 Some Implementation 3. Level 3 Several examples 4. Level 4 The ways things are done When each cell is complete the staff will then be able to see what has been achieved and what needs attention. Staff are then ready to engage with action plan(s) to make improvements. Some activities are not within staffs immediate control, but they may be able to influence others. B.1.2 Embedding the Self-assessment Framework in organisations The Framework and Guideline should be part of several initiatives/processes internally and externally, including: 1. Internally: National Building Council National Housing Executive Lean Implementation/Supply Chain Management Forum Business Process Manuals 2. Externally: Supplier & Trade Council Product Development Alliance Industry Associations and Alliances 15

16 B.2 Self-Assessment Framework The following are exemplars of Self-Assessment Frameworks that have been generated, including: 1. Table 3 External Supplier Management Self-Assessment Framework for a large national house builder (Organisation B) 2. Table 4 Internal Workflow Management Self-Assessment Framework for a large national house builder (Organisation B) 3. Table 5 Management Self-Assessment Framework for a large national developer (Organisation A) 16

17 Table 3 External Supplier Management Self-Assessment Framework for Organisation B 17

18 Table 4 Internal Workflow Management Self-Assessment Framework for Organisation B 18

19 Table 5 Supplier Management Self-Assessment Framework for Organisation A 19

20 B.3 Profiles After the Frameworks were developed, data was collected from staff in both organisations to enable the creation of initial Benchmarking Profiles. The statements were coded as shown in Table 6 and Table 7. Each of the four Levels are colour-coded; for example Level 1 No awareness is coded Red and indicates that immediate action should be taken to move from Level 1 to Level 2. The benchmarking data of the Supply Chain Management Waste Minimization Principles for Organisation A is provided in Figure 2. This data was developed based upon 18 staff completing the Framework. The presentation of the data in this figure is only for the demonstration purpose. For example, for statement coded as A, 4 staff indicated to be at level 1 (red), 9 staff indicated to be at level 2 (orange), 5 at level 3 (yellow) and no response for level 4 (green). The benchmarking data of the External Supplier Management Framework for Organisation B is provided in Figure 4. This data was developed based upon 21 staff completing the Framework. The presentation of the data in this figure is only for the demonstration purpose. For example, for statement coded as A, 3 staff indicated to be at level 1 (red), 16 staff indicated to be at level 2 (orange), 2 at level 3 (yellow) and no response for level 4 (green). From these data, an average level could be determined for each statement in the selfassessment frameworks and a resulting profile for each organisation was developed as shown in Figure 3 and Figure 5. These profiles give a snap shot of the average maturity levels across the organisations for each statement in the self-assessment frameworks. 20

21 Table 6 Coding of the Supply Chain Management Waste Minimization Principles for Organisation A Know the rules Apply the rules Change the rues Waste Minimisation Plan Strategic Procurement Plan Waste Minimisation Strategic procurement Project Coordination Coordination and Ongoing Development Code A B C D E F G H I J K L Principle An environmental policy, including waste management and minimisation objectives and strategy that align to divisional business financial objectives and KPIs aligned to ISO An information management systems to capture and communicate waste minimization related data to maintain compliance and facilitate change A design development process that incorporates waste minimisation as a key design criteria. A supplier and contractor procurement approach that drives innovation and value creation to reduce waste through the tendering process. An environmental policy accepted into the hearts and minds of all staff. on all projects and waste minimisation objectives and strategy are an inherent part of how things are done. All staff members are appropriately trained in the BPM process, which incorporates waste minimisation objectives and strategy. All staff feel empowered and have a voice regarding waste minimisation objectives. Staff feel that waste minimization suggestions will be validated and implemented where appropriate. A proactive approach to strategic waste minimisation initiatives with contractors during and after the tender process. Innovative waste minimisation strategies regularly developed through knowledge sharing with contractors, project teams and other business units.. An information management system that measure physical waste generated onsite and assists in the development of a strategy to enhance waste reduction outcomes. An information management system to make visible the volume and cost of waste material generated onsite to enable quality assurance reporting and internal benchmarking Construction site feedback in relation to waste minimization initiatives is captured and included in the Strategic Procurement Plan. 21

22 Know the rules Apply the rules Change the rules Level 4 The way things are done Progressing well Green Level 3 Several examples Progressing Yellow Level 2 Some implementation Needs attention Orange Level 1 No awareness Needs immediate attention Red Figure 2: Response distribution across various statements in the Self-Assessment Framework for Organisation A 22

23 Figure 3: Profile showing average level of maturity for Principles in the Self-Assessment Framework for Organisation A 23

24 Table 7 Coding of Principles of the External Supplier Management Framework for Organisation B Know the rules Apply the rules Change the rues Waste Minimisation Plan Strategic Procurement Plan Waste Minimisation Strategic procurement Project Coordination Coordination and Development Code A B C D E F G H I J K L M N O P Q Principle Sustainability policy including a waste management and minimisation objectives and strategy aligned to corporate business profitability objectives and KPIs Strategic partnerships with suppliers and trades critical to waste management efforts (eg. risk vs spend: timber, plasterboard, bricks and site spoil) to develop innovations that result in efficiencies, price reduction and/or value creation Supplier and Trade Council strategy aligned with corporate objectives Procurement process to select suppliers and trade subcontractors account for location and job differences.contract Award criteria aligns to waste minimization amongst other key business objectives such as commercial, innovation, service, quality, and safety Sustainability policy accepted into the hearts and minds of all staff on all jobs and waste minimisation objectives are part of how things are done Trades and suppliers are intrinsically linked into the waste minimization objectives of the organization and undertake action s to support these objectives Staff members appropriately trained based upon individual roles and responsibilities (for example in product knowledge, elite ordering skills) Consistent proactive approach to initiating strategic partnerships with waste minimisation business critical suppliers Seamless application of procurement process aligned with staff competencies and job contract award criteria consistently applied to achieve waste minimisation objectives Employees feel empowered to do something to minimize waste Staff members comprehensively trained to work with suppliers to undertake project supplier performance monitoring during project delivery Post project supplier assessment monitoring & feedback on waste minimisation performance across projects Innovative waste minimisation strategies regularly developed through integration with suppliers to share knowledge of construction products and processes Business systems that measure and analyse and make visible physical waste generated onsite and a strategy to enhance waste reduction outcomes Strategy to make waste minimisation efforts part of renewal agreements Employees feel empowered to make a suggestion re waste minimisation opportunities Formally integrate construction site supplier feedback into upstream processes and regular annual value creation forum to support creation, development and implementation of waste minimisation strategies. 24

25 Level 4 The way things are done Progressing well Green Level 3 Several examples Progressing Yellow Level 2 Some implementation Needs attention Orange Level 1 No awareness Needs immediate attention Red Figure 4: Response distribution across various statements in the Self-Assessment Framework for organisation B 25

26 Level 4 Know the rules Apply the rules Change the rules Strategic Waste Minimisation Strategic Project Coordination Coordination and WMP Procurement Plan procurement Development A B C D E F G H I J K L M N O P Q Level 3 Level 2 Level 1 Figure 5: Profile showing average level of maturity for Principles in the Self-Assessment Framework for Organisation B 26

27 B.4 Action Plans The self-assessment framework maps the adoption of supply chain practices on four levels. Level 1 No awareness Red Level 2 Some implementation Orange Level 3 Several examples Yellow Level 4 The way things are done Green The organisation shall devise action plans in order to progress from one maturity level to the next for each principle in the self-assessment frame work. The organisation shall endeavour to gradually transition from one level to the other. The following are provided as examples: Know the Rules: Principle: Sustainability policy including a waste management and minimisation objectives and strategy aligned to corporate business profitability objectives and KPIs Action Plan Level 1 to Level 2 Level 2 to Level 3 Level 3 to Level 4 1. Gain senior level management support for drafting of the sustainability policy. 2. Develop a consultation process which includes transparent sessions where information is collected, synthesised and then translated into a Policy. 3. Communicate sustainability policy to all and the response to the ideas in the consultation process and policy is finalised and approved by senior management. 1. Locate sustainability policy on organisation intranet. 2. Encourage staff to frequently read the policy and implement where possible. 3. Ensure alignment of sustainability policy with Business objectives and KPIs 1. Ensure that staff work plans have an acknowledgement that staff member is aware of the policy and thoroughly understands it. 2. Link every outgoing communication to the sustainability policy 3. Organisation achieves national and international accreditation in relation to waste management and minimisation 4. Organisation reviews the policy annually to make sure it is aligned to business objectives and KPIs 27

28 Apply the Rules: Principle: Cross functional teams meet regularly to evaluate waste minimisation objectives for new product lines and feedback by supplier/trade product/process Action Plan Level 1 to Level 2 Level 2 to Level 3 Level 3 to Level 4 1. Gain senior level management support for creating cross functional teams 2. Identify a senior manager who takes responsibility for waste minimisation and the formation of the cross functional teams 3. Identify champions for cross functional management team membership 1. Develop a process for regular meetings and obtaining feedback within the organisation 2. Communicate purpose and actions of cross functional teams within the organisation 3. Ensure staff work plans acknowledge role and performance in cross functional teams 1. Introduce a rewards and incentives scheme is introduced to support cross functional teams 2. Communicate widely across the organisation the cross functional teams strategies and actions plans for waste minimisation 28

29 Change the Rules: Principle: Business systems that measure and analyse and make visible physical waste generated onsite and a strategy to enhance waste reduction outcomes Action Plan Level 1 to Level 2 Level 2 to Level 3 Level 3 to Level 4 1. Gain senior level management support for introducing business systems to measure and analyse waste 2. Educate staff and enhance their understanding of requirements for measuring physical waste generated onsite 3. Introduce the construction site supplier feedback into upstream processes 4. Gain consensus on the method for waste material measurement and analysis 5. Develop strategies to make waste minimisation efforts part of renewal agreements 1. Introduce business systems to measure and analyse waste generated onsite 2. Introduce the processes to measure and analyse physical waste generated onsite 3. Integrate the construction site supplier feedback into upstream processes 4. Empower employees to make a suggestion regarding waste minimisation opportunities 5. Monitor the implementation of the strategy and monitoring practices to reduce waste based on agreed targets 1. Introduce a rewards and incentives scheme to staff to identify and introduce changes to the methods and processes for waste minimisation 2. Review the business systems capability to measure and analyse waste generated onsite 3. Review the KPIs annually for waste minimisation with cross functional teams and set new targets 4. Empower employees to implement suggestions regarding waste minimisation opportunities 29

30 Part C Evolution of Toolkit C.1 Procedure The Toolkit and the Framework Principles are designed to address the current needs of the organisations involved in the action research project. The outcome from the development of the Framework provides the current health of the organisations involved in the project. Section B indicated the roadmap to achieve performance improvements for waste minimisation including the following key generic ten phases; 1. Engage senior management with the process and develop a governance structure and resourcing plan to support the project 2. Communicate to all staff the purpose of the project 3. Conduct a rigorous audit of organisational barriers and enablers to a supply chain management waste minimisation approach 4. Develop a customised Framework(s) with Principles that responds to organisational barriers and enablers through extensive research using an action research methodology 5. Validate the Framework(s) and the Principles with a comprehensive communication and engagement plan 6. Develop organisational Framework(s) Profiles by collecting data 7. Identify the gaps in performance Levels and prioritise strategic actions 8. Develop Action Plans to change behaviours and adoption of Principles 9. Monitor adoption and collect data annually to compare Profiles 10. Evaluate strategies, actions and Principles for effectiveness and learn from evaluation to enhance program 10 Generic Steps for Framework Development, Validation and Implementation Other organisations aspiring to develop a self-assessment tool should follow the process that is explained in this toolkit. The self-assessment Frameworks presented in Section B are specific to the organisations involved in the study. However, the process to develop the Frameworks is quite generic and the followed specific Actions are recommended. To implement the development of Self-Assessment Supply Chain Management Waste Minimisation Framework additional guidance and support may be required if in-house expertise is not available. Some actions require specialist knowledge, skills and capabilities that will not typically be available in-house and need to out-sourced. 30

31 C.2 Action Plan Phase 1: Project Initiation and Governance Structure 1. Ensure senior management support and engagement. Develop clear understanding of the value that this initiative will bring to the organisation in the senior management team. 2. Develop a project management governance structure. A senior manager in the organisation shall be appointed as the Project Director of the Waste Minimisation Project Steering Committee (PSC). Key staff from various departments should be represented on the PSC. 3. A Project Manager to be appointed and a team identified to support the Project Manager. This team may be in-house or external to the organisation as the skills and capabilities to develop the Framework are more than likely not readily available. 4. Project Manager shall take responsibility for development of the self-assessment framework(s). The Project Manager with support from the team shall be responsible for developing an Implementation Plan for the Framework for the rollout, monitoring and evaluation. 5. The team members shall have experience and understanding of Action Research Projects (ARP). The approach requires undertaking an action which can also be referred to as intervention and then measurement of the impact of that action or intervention to suggest another course of action based on the results. The Project Manager would have experience in Action Research Projects (ARP). The Project Manager shall have a high level of understanding of supply chain management principles and practice. 6. The Project Director with the Project Manager shall organise a schedule of timelines and an outline of the scope of the project and with the Project Steering Committee monitor the progress at regular intervals. 7. The development of the Organisational Framework should take approximately 3-6 months however this may vary according to the scope of the project and size of the organisation. If one of the Frameworks included in this Toolkit is used and adapted then it will take less than that. Phase 2 Framework Development 1. The team shall refer to the self-assessment Framework(s) presented in Section B and develop their initial understanding of these Frameworks. 2. Develop a set of interview questions on policy, process and practice to understand and document the issues/barriers that the organisation is facing regarding the waste minimisation and the role of supply chain management. 3. The team shall interview minimum of 25 staff across various functional units in the organisation. Each interview may last from 45 minutes to 1 hour. 4. The interview transcripts shall be analysed carefully to document issues/barriers and enablers related to supply chain management and waste minimisation. 5. Combine all interview transcripts together and summarise various barriers and enablers in various categories and themes. The themes form the basis for the development of self-assessment Framework(s) including the Principles that are crafted specifically suite to the organisation. These statements can have their 31

32 maturity measured across four levels. Level 1 being the least mature and level 4 being the most mature. 6. Divide the self-assessment Framework into the following three sections: Know the Rules (policy and procedure) Apply the Rules (practice) Change the Rules (evaluation) 7. Know the Rules shall focus on Principles that raise awareness levels and understanding of the waste minimisation policy and procedures in the organisation and the role of supply chain management in improving waste minimisation targets. 8. Apply the Rules shall contain Principles about various activities/initiatives that are desired in operations 9. Change the Rules shall focus on how Principles can be monitored and evaluated and mechanisms within the organisation whereby new initiatives and efforts can be created and implemented within the organisation to improve the waste minimisation agenda of the organisation. 10. Develop various self-assessment Framework(s) for internal (cross functional units) and external supply chains. Internal and external supply chains may be well integrated and therefore only one self-assessment framework shall suffice. Phase 3 Validation of Framework 1. The Framework requires validation before its organisational wide implementation. The team shall test the Framework with at least 25 to 30 staff at several levels in different functional units. The staff shall complete the assessment Framework and shall provide comments about the simplicity, usability and suitability of the framework. 2. The interview data can then be used to refine and validate the Framework. Make appropriate changes to the self-assessment framework based on the feedback gathered during the validation process. 3. Propose to senior management an Implementation Plan through the most appropriate strategy including; annual work planning, business processes or project planning. Phase 4 Implementation of Framework 1. Create a governance structure as recommended in Section B and modify to suit. 2. Implement the assessment Framework in the organisation based on an agreed strategy with the senior management. 3. Analyse the data and develop an average maturity level for each Principle 4. Present the analysis to senior management and report on the average maturity level of each statement (Project Director responsibility). 5. Adopt feedback from the senior management on the areas where improvements are required as matter of priority for next three years. (Project Director responsibility) 6. Brief Project Steering Committee (PSC) about the agreed priority areas. (Project Director responsibility) 7. Write Action Plans for each priority areas. The exemplars of such Action Plans are provided in Section B. 32

33 Phase 5 Review of Framework 1. Review the Framework(s) annually. Collect data to ensure a transparent and rigorous process and then compare against previous Profile(s). 2. Report on the benchmarking Profiles at an organisational wide level and analyse where improvements have been made and where improvements have not been made. 3. Respond to the changing organisational internal environment as well as the external conditions. For example; externally there may be changes to the regulation related to management of waste that the organisation is required to respond to. Internally there may be situations where experienced staff have moved on and new staff members have taken up new positions. 4. Obtain full support and commitment to the review. The review should be a serious exercise as it is anticipated that the results of Implementation would have an influence on the strategy developed for managing both the internal and external supply chain. The review process shall be transparent and rigorous. 5. Create a version control and this should be managed as for all other guidelines in the organisation. Appropriate levels of authority should sign off on the changes and they should be communicated to all in the organisation. C.3 Lessons learnt and recommendations 1. Ensure senior management support through open and transparent promotion of the project. 2. Identify committed champions and ensure a high profile is established for the Project Steering Committee. 3. Develop a waste minimization policy. 4. Develop reliable data on waste and promulgate this information ensuring that the cost to the organization is well articulated. Ensure the reasons for adoption of Framework(s) is well communicated including benefits to the organization. 5. Ensure staff from policy units as well as operational units are represented on the Steering Committee. 6. Develop a Communication and Engagement Plan and stage organisational wide events to disseminate progress on the project. 7. Develop organisational wide understanding, knowledge and skills as required for supply chain management principles and practices. Train staff as appropriate. 8. Incrementally implement the initiative in the organization in order to change culture and behaviours and reduce resistance to chance. Treat the Implementation phase like a change management process. 9. Source appropriate skilled people to conduct the exercise. The skill of the team developing a self-assessment is critically important. The team must have experience with Action Research approach and should also have proven experience of supply chain management in the context of waste minimization. 33

34 The final phase involves distributing the findings from the study. We developed and presented a synthesis of key learnings and outcomes, and disseminated to a broader industry audience via public forums to be organised with RMIT University, MBAV, HIA and others as appropriate. We presented outcomes in wider media such as conference and journal papers. 34

35 APPENDIX 1 A SUPPLY CHAIN MANAGEMENT SELF ASSESSMENT FRAMEWORK FOR WASTE MINIMISATION FOR THE RESIDENTIAL SECTOR LITERATURE REVIEW March 2013 The research described in this report was carried out by Chief Investigator: Investigators: Researchers: Professor Kerry London Dr Malik Khalfan and Associate Professor Tayyab Maqsood Jessica Siva and Peng Zhang Industry Research fellow: Rob Anderson Research Program: Cash funding by EPA Victoria through the Beyond Waste Fund Date: March 2013 In kind contributions by Metricon, Australand, RMIT, FMG Engineering, MBA V, Boral 35

36 Table of Contents Table of Contents Introduction Waste in Construction Data and benchmarking Sources and causes Construction waste minimisation Summary Supply Chain Management an overview Definitions Benefits and barriers Lean Manufacturing Supply Chain Management and the construction sector SCM in Australia SCM Internationally Current viewpoints and discussion Summary SCM and waste minimisation in the residential sector Integrated SCM SCM & waste minimisation in the residential sector Conclusion References

37 1.0 Introduction This literature review is a milestone report for the research project entitled A Supply Chain Management Self Assessment Framework for Waste Minimisation for the Residential Sector. The project is funded by the Environmental Protection Agency Waste Fund and is managed by Sustainability Victoria. RMIT University is the lead organisation for this project on behalf of the Australian Housing Supply Chain Alliance. Members of this Alliance who are partners for the project include Metricon, Australand, FMG Engineering, Boral, Master Builders Association Victoria and RMIT University. The project is being undertaken from December 2012 to February This review is an important task which will underpin the development of the project. The overall aim of the project is to develop and test a new framework that can be used by volume residential construction organisations to develop benchmarking profiles in relation to: (a) Practitioner/staff awareness/knowledge and capabilities of best practice in integrated SCM across design, procurement, tendering and construction functions to achieve organisational objectives for waste avoidance and reduction; (b) Practitioner/staff capabilities to respond to changes in supply chain environments at a project level; and (c) Organisational capacity at a portfolio level to support policy, systems and procedural changes to adapt to future waste avoidance and reduction strategies. The outcome of which is to assist the building industry in Australia to reduce and avoid construction material waste. In Australia, as with many other developed countries, waste from materials and the building process is a significant environmental and economic issue (BRE, 2006; Ling and Lim, 2002; DSEWPC, 2011). Over the past two decades, supply chain management (SCM) has had increasing attention within the construction management literature. However, there is has been little real evidence of its adoption at a systemic level in the industry in any of the construction sectors including; residential, commercial and civil. The purpose of this document is to provide a targeted literature review of recent developments in international best practice for construction waste minimisation in supply chain management for the housing construction sector. The review is organized in the following sections: 1. Waste in construction 2. Supply chain management 3. Supply chain management and waste minimisation in the residential construction sector 37

38 2.0 Waste in Construction Waste in construction has been identified as a significant problem in Australia. Construction waste or construction and demolition (C&D) waste includes a mixture of inert and non-inert materials arising from construction, renovation, demolition activities including excavation, civil and building construction, roadwork, site clearance, demolition and building renovation (Shen et al, 2004; Tam and Tam, 2008; Poon, 2007; Yuan et al, 2011). 2.1 Data and benchmarking The strategic approach to management of the problem of construction and demolition materials waste is often underpinned by an analysis of data including such measures as; volume of waste generated; volume of waste transported to landfill; volume of waste recycled; carbon dioxide equivalent and embodied energy; cost of transportation to landfill and landfill levy cost. This type of data can then provide baseline data, targets and action plans. The information can be provided at an industry level on a regional basis which is often aggregated or can be developed at site and project level. Aggregated data is more useful to consider when reporting or evaluating industry policy and sectoral level interventions and the project level analysis is more useful for companies to use when they are attempting to implement organizational benchmarking and developing and evaluating the impact of their action plans. It has been noted by many that this type of data is not readily available (BRE, 2006). It has been suggested that construction and demolition waste can account for approximately 30% of all solid waste streams (Brooks et al, 1994; Mincks, 1994; Bossink and Brouers, 1996) and hence this has prompted national and/or regional policy development and implementation strategies in various countries in the past decade such as UK, Australia, Singapore, Hong Kong, United States of America and the Netherlands. Waste being transported to landfill in Australia increased from 2004 till In Australia, construction waste has been estimated to account for 16-40% of total waste (Bell, 1998)with nearly one ton of solid waste sent to landfill per person annually (Reddrop and Ryan, 1997). In C&D waste generation in Australia totalled 15.1 million tonnes of which 7.5 million tonnes was residual waste to landfill (WCS Market Intelligence, 2008). In the C&D waste stream accounted for 38% of total waste, amounting to approximately 16.6 million tonnes (DSEWPC, 2011). In C&D waste generation in Australia increased to a total of 19.0 million tones of which 8.5 million tones was disposed to landfill while 10.5 million tones or 55% was recovered and recycled (Hyder, 2011). In Victoria in a total of 3.15 million tones of C&D material was recovered for reprocessing, however, 47% of waste to landfill was generated from the C&D sector (Sustainability Victoria, 2010). The problem of construction waste is an international problem. Construction waste is not limited to Australia (Mills et al, 1999; Yuan et al, 2011). In 2006, in the UK, the volume of construction, demolition and refurbishment waste accounted for approximately 100 million tonnes annually. In the UK almost a third of all total waste each year is attributed to the construction industry, approximately 50% of which is recycled (BRE, 2006) and the wastage rate in the UK construction industry was as high as 10-15% (McGrath and Anderson, 2000). Furthermore, it is suspected that this is an issue which is identified to worsen as the push to improve energy efficiency through refurbishment and demolition of properties intensifies over the coming decades. The reduction of construction waste has become a priority in the UK 38

39 with a 20 year strategy to reduce construction waste developed in 2006 (BRE, 2006). In addition to the environmental impacts of waste materials, there are also significant economic impacts as well. The cost of waste disposal is predicted to increase in future years (BRE, 2006), further adding to the economic impacts. Consequently the effective management of construction waste is high on the agenda both in Australia and internationally. Table 1 provides some data on the amount of C&D waste generated in a number of countries including The Netherlands, Australia, United States of America, Germany and Finland. Table 1. C&D Waste as percentage of all solid waste entering landfills in various countries (Bossink and Brouwers, 1996) Country C&D Waste (by weight) (%) The Netherlands 26 Australia United States 20, 23, 24, 29 Germany 19 Finland In Singapore, the Housing and Development Board confirmed that wastage is indeed a problem for the construction industry and estimated that material wastage accounts for approximately 2% of the contract sum (Ling and Lim, 1995). In Singapore construction materials waste is disposed of either through incineration (90%) or landfill (10%). It is a significant problem for a country where land is at a premium and so a national waste management strategy is critical for Singapore. The US Environmental Protection Agency (USEPA, 2002) estimated that approximately 136 million tons of building related C&D waste were generated in 1996 with demolition waste accounting for 48% and renovation 44% of the total waste. In Hong Kong, from 1993 to 2004, the annual generation of C&D waste has more than doubled, reaching an amount of about 20 million tons in 2004 a single year (Poon, 2007). Of particular interest to policymakers and industry practitioners alike is research in Ireland by Duran et al (2006) where they explored the economic viability of construction and demolition waste recycling. Through conducting surveys and interviews with 29 local authorities responsible for waste management, 15 aggregate producers and general recycling centers, suppliers of crushers, waste management companies and policy makers the study uncovered that economic viability is likely to occur when the cost of land filling exceeds the cost of recycling. The study also identified that recycling centres benefit from economies of scale whereby an increase in the scale of a centre implies a decrease in recycling costs. Furthermore the study also analysed the use of taxes and subsidies as tools to encourage recycling. One important conclusion of the study is a suggestion that market based instruments are likely to be the best option for policy makers. In order to encourage recycling, the prices charged to users of landfills and primary aggregates should be high (Duran et al, 2006, p. 319). The findings of Duran et al (2006) were confirmed by work carried out by the Department of Sustainability, Environment, Water, Population and Communities Queensland Department of Environment and Resource Management which identified that high landfill disposal costs provide an incentive to process mixed C&D waste in order to recover certain high value and high volume components and avoid landfill disposal costs (Hyder, 2011, p. 11). 39

40 Civil Engineerin g Leisure Health Care/ Hospitals Residentia l Office Education/ Schools Supply chain management waste minimisation toolkit 2013 A pilot project Developing a Strategic Approach to Construction Waste was established by the UK s Building Research Establishment (BRE) to identify activities and drivers to dictate the future direction of the construction industry in relation to resource efficiency. The work carried out by the BRE has produced some important data and environmental benchmarks in relation to construction waste in the housing sector and some of these are reproduced below. Some initial data on the amounts of waste produced from different types of construction have been identified and a number of environmental performance indicators are outlined in Table 2 below. The indicators are given as m3 waste per 100m2 floor area to enable like for like comparison; and m3/ 100,000 Table 2 Environmental performance indicators (BRE, 2006) D: Demolition E: Excavation G: Groundworks M: Mainframe S: Services P: Partitions F: Fit-out Benchmarks E, G, M G, M, S, P, F Key performance indicator (KPI) = m3/ 100,000 project value G, M, S, P, F G, M, S, P, F G, M, S, P, F G, M, S, P, F Environmental performance indicator (EPI) = m3/100m2 Benchmarking data on the amount of waste per house has been developed through BRE s analysis of 23 housing projects. Table 3 presents this data in relation to the average amount of waste produced across the sites which is 19.2m3 waste per 100m2 floor area. Using this figure and applying it to a typical semi of 80m2, BRE (2006) estimated an average material waste generation of 15.36m3 of waste per house. Furthermore when adding in an average of 50% void space in the skips that would collect this waste this equates to around 30m3 of skipped waste. A typical skip has a volume of 6.125m3, so around 5 skips will be needed to contain the waste from 1 house. Based upon the Envirronmental Agency conversion factors, the weight of waste from our generic house is 9.6 tonnes (BRE, 2006, p. 9). 40

41 Table 3 Benchmarking data in relation to amount of waste per house (BRE, 2006) Project type Housing EPI (m3 waste/100m2) Average Waste Group Residential x 23 no Conversion factor Tonnes Timber Concrete Inert Ceramic Insulation Plastic Packaging Metal Plaster & cement Miscellaneous Total EPI Past work in the UK has shown that a typical construction skips costs 1343 when the cost of the skip is added to the cost of labour and materials that fill it. The BRE (2006, p. 10) outline the breakdown of this as: 1. skip hire 85 (quite low compared to current prices) 6.4% of cost 2. labour to fill it % of cost 3. cost of materials in skip % of cost Therefore the financial cost of waste for our generic house is for 5 skips, around 6715, and rising. In Australia it has been estimated that the cost of disposal of waste generated during the construction of a residential house is between $2000 to $3000 per house. There has also a been suggestion made on the volume of waste generated in the construction of a volume builder house on a flat block to be 18 to 23 m3 of waste per house in Victoria (Hyder, 2011, p. 47). In Australia the management of environmental issues including the management of C&D waste is the responsibility of Australian states and territory governments. The Australian Government does not directly legislate management of C&D waste (DSEWPC, 2012). Research undertaken by the Department of Sustainability Environment, Water, Population and Communities (DSEWPC)(2012) identified the cost of landfill as a significant driver for reuse and recycling of C&D Waste. According to the DSEWPC, in 2009, landfill costs in Australia ranged from $42 per tonne to $102 per tonne. In addition to the cost of land-filling by operators, there can be an additional charge levied by the state and territory jurisdictions. 41

42 In New South Wales for example, the government s Section 88 Landfill Levy applies to regulated areas and ranged between $20.40 per tonne and $70 per tonne. The lower limit is set to rise by $10 (plus adjustment for the consumer price index) per year until It is expected that this will drive additional re-use and recycling from the construction industry (2012, p. 10). Victoria has had a long history of landfill levy application (Hyder, 2011). Table 4 provides information in relation to the waste levies charged for municipal solid waste (MSW) and industrial waste. The levy for industrial waste is applied to C&D waste disposed to landfill that does not contain prescribed industrial waste. Table 4 Waste levies for Victoria (Sustainability Victoria, 2011) Geographic area Waste levy (per tonne) Forecast waste levy increase Metro/ provincial MSW: $30 Industrial: $30 Rural MSW: $15 Industrial: $25 MSW: $40 Industrial: $40 MSW: $20 Industrial: $35 Increasing to $53.20 for both MSW and Industrial by Increasing to $26.60 for both MSW and $46.60 for Industrial by Work undertaken by Hyder Consulting for Sustainability Victoria has uncovered the relationships between amount of waste sent to landfill and an increase in landfill price. Figure 1 presents an estimation of responses to the price of landfill for the three key waste streams of MSW, C&I and C&D. According to Figure 1, there is a suggestion that C&D waste generation is likely to most rapidly respond to a pricing signal thereby resulting in increased waste being diverted from landfill (Hyder, 2011). Figure 1 Assumed diversion responses of waste streams to increases in the price of landfill (Hyder, 2011) Furthermore it was identified that not only was pricing important but the geographic location of reprocessors was also important in terms of facilitating C&D material recovery particularly in metropolitan Melbourne (Hyder, 2011). A Sustainability Victoria commissioned study 42

43 found that resource recovery from C&I and C&D waste streams in the North Eastern and Mildura regions of Victoria was significantly hampered by the movement of wastes to landfills in NSW where landfill cost were typically lower (in part due to landfill levies in the nonregulated area of NSW). The study indicated this made landfill disposal a cheaper alternative for many materials, compared to separation and recovery. The study indicated that in some instances the cost differential between townships in Victoria could be double those in NSW (Hyder, 2011, p. 96). Apart from the attempt to develop baseline data for benchmarking purposes, the other most significant contribution underpinning the UK BRE report was that an holistic approach to the life cycle of products and materials was needed. Waste is being produced through manufacture, distribution, design, construction, refurbishment and demolition. Long term targets for waste reduction, reuse and recycling are the best way to define what can be achieved and focus our combined efforts within the framework of a combined target. This is not easy to do for a wastestream that is fragmented in the following ways: 1. Waste is being produced and sent to landfill by the actions of the whole supply chain manufacture, distribution, design, construction, maintenance, refurbishment, demolition, (resource management). 2. Waste from manufacture, construction, refurbishment and demolition are lumped together for reporting purposes but are different in terms of amounts, composition, causes, levels of integration and separation. However, different targets for each part of the supply chain or activity would be less meaningful unless set against overarching, global targets i.e. each will have a role to play in reaching the target but the actions and relative contribution may differ in accordance with their ability to deliver. An example of this could be waste reduction and demolition waste, whereby the only realistic way to prevent demolition waste would be to have a longer lasting building this is not something the demolition sector can achieve. It is more the design, durability of products/materials and maintenance of the building that can achieve waste reduction in this instance. (BRE, 2006; p8). Significant reductions in waste will only be possible if they are accrued throughout the supply chain. The BRE (2006) suggests an allocation of the target of 50% waste reduction across the relevant supply chain, ie distributed in accordance with the ability to deliver those savings. An idea of what this might look like is given by BRE in Figure 2 below. 43

44 Figure 2 Allocation of target baseline vs target waste per house (BRE, 2006) The DSEWPC developed a Construction and Demolition Waste Guide recycling and reuse across the supply chain which is underpinned by the idea that the myriad of supply chain stakeholders play out their roles in delivering a sustainable built environment. The guide documented a series of case studies to outline various C&D waste recycling and reuse initiatives across Australia and demonstrate a range of opportunities at various stages of the supply chain. Whilst the case studies clearly demonstrate the benefits and profits associated with the initiatives there is little discussion on the actual strategies used to integrate the supply chain as well as the specific actions of supply chain actors. The approach taken in our research project is underpinned by the strategy that it is the actions of the whole supply chain that will ultimately reduce waste to landfill in the Australian housing sector but is an attempt to go further than simply documenting case studies of outcomes. It is our contention that there has been little research in housing waste minimization that moves beyond the rhetoric of claiming that supply chain management is the answer to waste minimisation to towards developing and piloting strategies that could be embedded in organisations. 2.2 Sources and causes To be able to reduce the amount of waste generated it is important to know what the source and causes are. The source and cause of construction and demolition waste has often been considered to be the responsibility of the contractor however this is a simplistic view of a complex problem. Clearly there are problems handed to the site operatives in relation to waste that are beyond their control. It has been identified that project design, product manufacture, estimating, procurement and materials handling as well as site construction practices all have a role to play in reducing on-site waste. The construction process involves many players and all have a contribution to play in waste minimization. This section explores the site operatives as well as upstream contributors to the challenge of waste minimization. Often the focus is on waste recycling and much effort is expended on fixing the problem at the end of the waste chain. Although these efforts are to be acknowledged it is also worthwhile to examine the source and then identify the cause and develop strategies to address the root cause of the problem to minimize waste and reduce effort in a band-aid approach at the end of the construction process. 44