Procurement innovation for a circular economy of construction and demolition waste: Lessons learnt from Suzhou, China

Abstract

Amidst the global trend of advocating a circular economy, various nations and regions in recent years have started to explore innovative procurement models (e.g., Public Private Partnership [PPP]) in dealing with beset issues related to construction and demolition (C&D) waste. However, PPP is suffering from problems such as 'long negotiation time', 'lack of transparency', and 'uneven risk and return allocation', which in turn lead to 'ineffective delivery' and 'poor value for money'. Using a case study, this paper reports some lessons learnt from innovative practices of procuring C&D management services in Suzhou, China. It is discovered that the public and private sectors, without prior knowledge, are operating based on a general concession framework instead of negotiating a clear-cut agreement from the outset. Several key arrangements, such as price, concession period, and strategic operations, are based on relational contract-type of agreements, which are found particularly innovative for shortening the negotiation time, fostering the trust between the relevant parties, dealing with emerging ad hoc problems, and allowing sustainable development of the circular economy. To make such PPP work, it is critical to devise institutions to prevent corruption and opportunistic behaviors. This research provides useful references to developing a circular economy. Although they focus on C&D waste management, the research findings can be applied to other public procurement settings, such as municipal solid waste management service.

Keywords: China; Circular economy; Construction and demolition (C&D) waste; Procurement innovation; Public Private Partnership; Relational contract.