Igniting Urban Change: How Policy Dynamics Affect Business Ecosystems

    What can research tell us about the way regulation impacts the work of design, construction and building occupation?  A recent study sheds light on this question, and suggests an opportunity for BIM to provide insight to improve industry effectiveness.

    Policy which governs the built environment depends on the informed participation of businesses. While public owners and governmental agencies exert significant influence, ultimately corporations must decide to invest in the urban environment through new construction or renovation. Policies which regulate the way we build emerged after the great fire of Chicago in 1871 and the San Francisco earthquake in 1906. Since that time, jurisdictions have continued to add and update building regulations to improve the health, safety and welfare of citizens.  The relatively recent spate of building policies aimed at increasing the sustainability of the environment suggests the need for a thorough understanding of their effectiveness and impact. And to understand effectiveness, we must examine the underlying factors which influence whether businesses adopt, promote or obstruct the sustainable building policy changes of the past decade. The system and associated dynamics – causes and effects – of interconnected businesses which produce buildings are fundamental aspects of this understanding.

    One overarching question is “How do businesses which affect the urban built environment through real estate property development and management respond to regulatory change affecting buildings?” More specifically, “How does the adoption of building rating requirements, performance-oriented building codes, or building energy asset labeling/disclosure programs affect the way companies assess, prioritize and implement investment opportunities and obligations?” A series of one on one interviews with professionals in corporate decision-making roles sheds light on these questions, and provides an opportunity to take a systems view of the way companies interact to product built environment change.

    In fact, green building policy change is a mechanism which ignites a network of forces driving new business practices across a production ecosystem of companies linked by business relationships. In this ecosystem the real estate developer occupies a key role of marketplace initiator. The perception of regulation for developers is a significant factor in policy effectiveness. The question can be studied at three levels:

1. the system of cause and effect as a whole as it is perceived by developers
2. the behaviors of developers and allied professionals who operate within the system, and
3. the interpretations and responses to specific regulations which represent different approaches to the problem of climate change.

    Looking at cause and effect maps derived from the interviews shows that the overall system of policy-driven practice change is strongly influenced by two sets of forces – public interests as expressed through policy, and those of the marketplace as expressed in terms of supply and demand. The interaction of regulation and market specifics influences the way that these forces impact the network of independent businesses which produce built environment change, the production ecosystem for urban buildings, and the way that individual professionals adapt and develop new practices in response to the requirements of regulation.

    The attitudes, beliefs and norms of professionals - real estate investors to developers to designers to contractors - influence the way these companies implement new practices. Such practices include designing for energy efficiency, reducing waste in construction, creating and marketing more efficient building products. For green building policy to succeed, each company in the ecosystem has to change practices, and these changes have to be aligned. Yet it seems that practice change propagates at different rates based on the readiness and expertise of companies and professionals who comprise the ecosystem.

 

    The three key aspects of projects stand out in this analysis,

• “Discovering Opportunity” - when potential projects are identified and prioritized,
• “Experiencing Difficulty” - when projects hit obstacles, and
• “Changing Practices” - the timeline over which regulations are internalized in a company through new processes and methods.

    Developers are aware that they must negotiate risk and compete to succeed within a marketplace governed by public regulations which protect the health, safety and welfare of the community. At the same time, developers articulate a commitment to improving the urban environment through their work. They understand the cause and effect relationships and complex interaction between economic and social worlds. Real estate developers are positive about the prospects for change and for the collaborative working relationship between company and public agency which enables successful project realizations. Developers and agencies share an interest in creating economic opportunity for the community. At the same time, both are aware that at times they sit on opposite sides of the table. These findings suggest the role that BIM can play in gathering information which can be delivered to help participants and policymakers better understand the ecosystem and its progress toward efficiency. The application of insight derived from project- and firm-based data could improve the way that policymakers assess the results of green building policies and develop future regulation to drive the production ecosystem as a whole in positive directions. 

 

- Erin Rae Hoffer AIA LEED BD+C

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