Reusing precast concrete elements in construction: assessing the economic conditions

2.1 ENGINEERING PERSPECTIVES

One important driver and enabler of circularity practices is engineering, which develops technologies, processes and procedures for PCE reuse. Research has focused on environmental and life-cycle assessment (LCA), material and structural engineering, process and quality assurance, and digitalisation and information management.

LCA-based studies provide knowledge on life-cycle environmental impacts and costs. Al-Najjar and Malmqvist (2025) demonstrate the significant embodied carbon savings of reuse. Material and structural engineering research provides knowledge on PCEs themselves and their potential for reuse. For example, Suchorzewski et al. (2023) focus on assessing the technical condition and remaining service life of components. Similarly, process-oriented studies contribute by designing more efficient and higher-quality processes for reuse. Räsänen and Lahdensivu (2023), for instance, provide a quality assurance procedure focused on assessing building components for reuse. Furthermore, works on digital technologies aims to improve the inventory of components, enable traceability and design and optimise information flows (Dervishaj et al. 2023a; Dervishaj et al. 2023b; Dervishaj & Gudmundsson 2024).

These works reduce technical uncertainty and enable reuse in practice. They also improve reuse as a viable alternative in comparison to the use of virgin materials. Nevertheless, these studies do not themselves analyse economic factors, which as units of analysis would provide knowledge on the economic viability of reuse.

2.2 BUSINESS PERSPECTIVES

Another important strand of research is business studies, which examine actor constellations, their relationships and processes, and emerging business models in PCE reuse.

Industrial ecosystem research provides knowledge on system-level transformation, clarifying actor roles and interdependencies. For example, Harala et al. (2023) analyse how actor roles, interactions and perceptions develop in the transition towards reuse. Value creation and capture studies contribute by specifying how and what types of value are created in reuse practices, and who benefits from them. For example, Riuttala et al. (2024), identify value capture determinants, which are relevant for the economic viability of actors involved. Similarly, Sairanen et al. (2024) examine how circular offerings are perceived by clients. Aarikka-Stenroos et al. (2021) focus on value creation in an industrial ecosystem. In addition, research and industry reports provide evidence from research projects (ReCreate Project n.d.; Återhus Project 2023).

These studies make an important contribution to microeconomic analysis by identifying economic mechanisms. However, they tend to focus on value creation and coordination and are mostly based on qualitative methods, rather than being driven by microeconomic theory or quantitative data. As such, they lack a systematic analysis of underlying economic factors, such as cost structures, risks and investment analysis, that determine the economic viability in practice.

2.3 POLICY PERSPECTIVES

A third relevant category of knowledge concerns policy perspectives, which are driven by legal frameworks. For reuse, relevant EU-level frameworks include the European Climate Law and the Fit for 55 package (European Union n.d.), the EU Emissions Trading System (European Commission n.d.), and related European Commission initiatives. These include the Construction Products Regulation, the Energy Performance of Buildings Directive and the Transition Pathway for the Construction, along with broader waste prevention legislation. Notably, a second emissions trading system (ETS2) has been introduced to cover emissions from buildings, road transport and additional sectors, complementing ETS1 under the European Green Deal (European Commission n.d.). In addition, national legislation, regulation and standards play an important role. Examples include the climate declaration requirements for buildings in Sweden (Regeringskansliet 2021) and recent updates to Danish building regulations (Social- og Boligministeriet 2024).

It is expected that these regulations, when enforced, will incentivise innovation to reduce CO₂ emissions in the construction sector. Research should aim to estimate the impact of these regulations on the industry, although the combined effect of this legislative cocktail can be challenging to predict, particularly as emerging regulations are often subject to compromise. This creates uncertainty when estimating economic feasibility. From the industry’s perspective, such uncertainty hampers long-term investment, such as those in new PCE reuse capabilities and capacity. Nevertheless, these policies aim to incentivise such investments, making the status quo of manufacturing conventional carbon-intensive concrete elements less competitive in the market. Therefore, it is reasonable to assume that economic feasibility will increasingly favour low-carbon technologies, such as the reuse of PCEs.

Academic research that focuses on the implementation of legislative frameworks in the construction and related sectors is still scarce but important (e.g. Eriksson & Bostedt 2026; Shahid et al. 2024), and more research is emerging. However, there remains a gap in understanding the specific implications of policy for PCE reuse, as well as in the microeconomic analysis of policy changes in the construction sector more broadly.

2.4 A SUPPLY-CHAIN FRAMEWORK FOR ANALYSING ECONOMIC BOUNDARY CONDITIONS

To complement the engineering, business, and policy perspectives, in this section a supply-chain framework is proposed for analysing economic boundary conditions (Figure 1). The framework is grounded in microeconomic theory, particularly evolutionary perspectives on firm behaviour (e.g. Nelson & Winter 1982) and opportunity cost logic (e.g. Mankiw 2007). Evolutionary perspectives emphasise that firms operate through established routines based on prior investments and learning, which can create path dependencies and lock-ins around prevailing practices (Nelson & Winter 1982) such as standard demolition and virgin material production. As a result, transitioning to reuse requires changes in routines and capabilities, learning and innovation, and coordination across actors (Jacobides et al. 2018; Lundvall 2016). Opportunity cost implies that any decision involves trade-offs between alternative uses of resources, and that actors will prefer the option with the highest expected net benefit (Mankiw 2007).

Figure 1

The framework conceptualises PCE reuse as a sequence of interdependent decisions made by multiple actors operating under constraints and uncertainty. These decisions determine whether elements progress through a reuse pathway or are directed towards demolition and recycling, or if virgin materials are used in new buildings. Reuse is thus a process consisting of multiple decision points, each influenced by economic mechanisms such as costs, risks and coordination requirements.

The framework represents a stylised model of a supply-chain process. It represents activities observed in practice (ReCreate Project n.d.) but recognises that individual projects may deviate from this representation. For example, the number of transport stages, the use of intermediate storage and the inspection and reconditioning activities may vary depending on project conditions, contractual arrangements and actor strategies. Moreover, different types of PCEs may require different assessment and handling procedures. Since reuse supply chains remain in an early stage of development, no standardised process design has emerged.

A central role in this supply chain is played by real estate owners. At the end-of-life stage, they act as material suppliers (donor buildings), deciding whether to initiate demolition or pursue reuse-related activities. At the procurement stage, they act as building buyers, influencing whether reused or virgin materials are selected in new projects. These decisions are made in interaction with other actors, including deconstruction contractors, engineering consultants, logistics providers and reuse intermediaries. Therefore, the economic feasibility depends on coordination across actors, each facing their own economic constraints.

In essence, the framework compares three alternative supply-chain pathways, which represent competing and complementing uses of resources at each decision point. The standard demolition pathway follows a rather linear process from donor building to recycling or disposal of materials. This pathway is characterised by established routines, relatively low coordination complexity, and predictable cost structures.

The reuse pathway involves a more complex sequence from donor building and inventory and suitability tests to deconstruction and material reconditioning for new buildings. This pathway introduces multiple decision points where components may either continue within the reuse supply chain or exit to demolition or recycling. It involves a broader set of actors, including engineers, logistics providers, storage operators and reuse intermediaries. While it may generate value through avoided disposal costs and reduced demand for new materials, it also introduces higher transaction, coordination and uncertainty-related costs.

The virgin material production pathway follows a conventional industrial process from production of concrete ingredients to PCE factory and assembly of a new building. This pathway benefits from economies of scale, standardised production, and established market structures, offering predictable quality, availability and pricing.

These pathways are presented as analytically distinct, but they may coexist in practice. A single deconstruction project may reuse some elements and dispose others, and a construction project may use some elements that are reused and others made of virgin materials. According to opportunity cost logic, actors compare alternatives across these pathways, and the relative costs and benefits determine whether reuse is economically feasible.

Finally, following the evolutionary economics perspectives, the framework acknowledges path dependencies in the construction practices. Existing production capacities and institutional arrangements are largely aligned with standard demolition and virgin material supply chains (ReCreate Project n.d.). This creates structural barriers for reuse supply chains, which require new forms of coordination, investment and learning. As a result, reuse becomes viable only when economic conditions are sufficiently favourable across multiple decision points to overcome these existing path dependencies.

This paper considers this framework through three questions:

1. Which economic factors influence decisions at the donor building stage to direct components into the reuse pathway rather than the demolition pathway?

2. Which economic factors influence material choices in new buildings between reuse and virgin material production?

3. Which economic factors determine the profitability of actors operating within the reuse supply chain?

4.1 DONOR-SIDE DECISIONS: DIRECTING ELEMENTS INTO THE REUSE PATHWAY

4.2 BUYER-SIDE DECISIONS: REUSE VERSUS VIRGIN MATERIALS

4.3 SUPPLY CHAIN-LEVEL CONDITIONS

4.4 SUMMARY OF ECONOMIC BOUNDARY CONDITIONS ACROSS DECISION POINTS AND SYSTEM-LEVEL CONDITIONS

Across the analysis, three key patterns are evident.

First, economic data are limited and are derived primarily from pilot projects and nascent supply chains, which do not yet reflect economies of scale or learning-curve effects (Besanko et al. 2010; Mankiw 2007). Therefore, it is not possible to draw strong conclusions about the magnitude of economic mechanisms, such as cost structures or profitability. As Svedmyr et al. (2024) and Küpfer et al. (2023) argue, greater availability of structured economic data from both public and private sources would enable more comprehensive analyses.

Second, reuse remains largely a local activity owing to high transportation costs, limited overall capacity and specialised knowledge requirements (Ghisellini et al. 2018; Svedmyr et al. 2024). This suggests that reuse supply chains depend on agglomeration effects (Besanko et al. 2010), whereby a sufficient concentration of projects, actors and capabilities within a region is required for economically viable supply chains to emerge.

Third, reuse depends on cumulative economic mechanisms across actors and supply-chain stages. The implication is that the economics of reuse should be considered at the system level, accounting for total costs across the supply chain rather than focusing on individual decision points. Table 3 synthesises the findings by linking decision points and conditions to the underlying economic mechanisms and their observed effects on reuse viability, which contribute to total costs at the supply chain level.

A notable feature is that several decision points are primarily constraining, where costs, uncertainty and transaction complexity relative to standard demolition and virgin material use limit reuse adoption. In contrast, at other decision points, the effects are conditional, as they depend on market demand, the availability of actors and elements, and project-specific requirements. At the system level, reuse depends on how value is created and distributed across actors, broader incentive structures established through policy and regulation, and interaction between actor-level decisions and system-level conditions (Hyde 2026; Jacobides et al. 2018).

5.1 THEORETICAL CONTRIBUTION

The main theoretical contribution of this study lies in conceptualising reuse as a sequence of interdependent economic decisions rather than a single technological or environmental choice. By drawing on microeconomic theory (Besanko et al. 2010; Mankiw 2007) and cost management perspectives (Ebrahimian & Mohammadi 2024; Kulmala et al. 2002; Paranko 2012), the study introduces a supply-chain framework for the analysis of economic mechanisms.

This perspective extends existing research in three ways. First, it complements engineering studies (e.g. Al-Najjar & Malmqvist 2025; Dervishaj et al. 2023a; Suchorzewski et al. 2023) by providing a basis for analysing technical feasibility with economic feasibility. Second, it contributes to business-oriented research (e.g. Aarikka-Stenroos et al. 2021; Harala et al. 2023; Riuttala et al. 2024) by explicitly framing value creation and coordination in terms of economic mechanisms, such as costs, risks and incentives. Third, it responds to calls for stronger microeconomic foundations in circular economy research (Corvellec et al. 2022; Hyde 2026; Kirchherr et al. 2023).

5.2 RESEARCH AGENDA: ECONOMIC MECHANISMS AND EMPIRICAL GAPS

The framework developed in this study provides a basis for structuring research agenda by linking economic boundary conditions to specific stages and actors in the supply chain. Table 4 operationalises this perspective by identifying research areas.

A central priority concerns the systematic measurement of cost structures across supply chain stages. While existing studies highlight the importance of labour, logistics, material and coordination costs (Ghisellini et al. 2018; Küpfer et al. 2023), there is limited consistency in how these costs are defined, measured and compared across contexts. Research could develop standardised approaches for benchmarking. Such approaches could build on cost management frameworks (Kulmala et al. 2002; Paranko 2012) and incorporate process-based analysis of supply-chain activities.

A second priority relates to the economics of information and uncertainty in decision-making (Besanko et al. 2010). Activities such as assessment, inspection and reconditioning are important for enabling reuse, yet their economic role is not well understood. Research could analyse how different levels of information affect decision outcomes, and how digital technologies may reduce uncertainty and transaction costs (Dervishaj et al. 2023a; Dervishaj et al. 2023b; Dervishaj & Gudmundsson 2024). Furthermore, increased availability of PCEs could lead to the emergence of what may be considered an entirely new market, which is currently in its infancy. The development of such a market could have significant economic implications, as markets function as coordination mechanisms that promote efficiency, facilitate information exchange, and generate signals for investors, with growing markets being particularly attractive for investment.

A third research direction concerns the formation and functioning of markets for reused elements. Future research could examine how supply and demand are matched over time and space, how prices are formed, and how supply-chain activities and intermediaries influence market development. This aligns with broader research on industrial ecosystems and market coordination (Aarikka-Stenroos et al. 2021; Harala et al. 2023). Future research could also analyse the market prices of PCEs and specific actor roles, such as specialised reuse contractors.

On the demand side, further research is needed on the integration of reuse into project-level decision-making. In particular, there is a need to better understand how cost, risk and design constraints are taken into account when building buyers make decisions about reuse or virgin material use. Future studies could combine cost analysis with behavioural and organisational perspectives, such as willingness to pay (Gurtner & Starovicova 2026; Herranz-Pascual et al. 2024), to capture actual decision processes.

Another important area concerns the role of coordination and governance in reducing transaction costs. Reuse supply chains involve multiple actors, making coordination an important determinant of feasibility. Some firms may consider vertical integration to overcome coordination challenges and transaction costs (Besanko et al. 2010). While previous research highlights coordination (Aarikka-Stenroos et al. 2021; Harala et al. 2023; Riuttala et al. 2024; Sairanen et al. 2024), there is limited understanding of how different organisational arrangements affect reuse. Addressing this gap requires further analysis of governance, incentives and cost structures.

At the system level, two interconnected areas require further attention. First, the distribution of costs and benefits across the supply chain remains poorly understood. Existing studies indicate that value is created at the system level but may not be evenly captured by individual actors (Riuttala et al. 2024; Sairanen et al. 2024). Future research could analyse value allocation and profitability using value-chain or ecosystem approaches, building on both economic theory and business research.

Second, the microeconomic effects of policy and regulatory frameworks represent an important but underexplored research area. While policies are expected to influence incentives and reduce risks (Eriksson & Bostedt 2026; Shahid et al. 2024), their impact on concrete decision-making remains unclear. Future studies could examine how instruments such as subsidies, standards and carbon pricing affect actor behaviour and investment decisions. This includes analysing interactions between policy instruments and market mechanisms, as well as their implications for investments. Future research could also address broader economic and institutional dynamics. Küpfer et al. (2023) highlight the potential for reuse to generate new business models, employment and local value creation, but these effects remain underexplored in quantitative terms.

Finally, advancing research in this field requires structured economic data. Future work could already proceed with modelling and simulation-based methods (Ebrahimian & Mohammadi 2024). At the same time, improved data availability, highlighted as a key need in previous studies (Küpfer et al. 2023; Svedmyr et al. 2024), is essential for validating such models. Quantitative methods are especially helpful for analysing scaling of reuse in practice and comparative analyses between standard demolition, reuse and virgin material pathways. Also, further qualitative case studies can give in-depth understanding on the microeconomic mechanisms and boundary conditions.

5.3 LIMITATIONS

This study is subject to several limitations. First, most evidence originates from Nordic and European contexts, which may limit transferability to other regions.

Second, the analysis relies primarily on documents derived from pilot projects and emerging reuse supply chains, where processes are not yet standardised and cost structures reflect early-stage supply chains.

Third, reliable and comparable economic data remain scarce. Key variables such as cost structures, prices and profitability are often not reported, which limits the analysis (Kulmala et al. 2002; Küpfer et al. 2023; Svedmyr et al. 2024). This constraint applies both to the reviewed material and to the broader research field.

Fourth, the analysis does not address more granular task-level decomposition of supply-chain activities, where parts demolition, reuse and virgin material use coexist within the same project, and variation in reuse feasibility across different PCE types. Existing evidence suggests that reuse potential differs between PCEs: hollow-core slabs have higher reuse feasibility (ReCreate Project n.d.). Furthermore, broader societal or economic impacts are not analysed.