Measuring Environmental Costs: The role of Construction Supply Chain Management, Material Flow, Environmental Practices, and Life Cycle Costing

Abstract

Dealing with the environmental cost and its reduction is the key concern among several policymakers for which the role of construction supply chain management is quite evident. Considering this notion, in the first phase, the study investigates environmental cost measurement and reduction strategies in cement production, focusing on the research and development stage, lost quarries and crushers, and the mill stage at the Badoosh Expansion Cement Plant for the years 2021–2023. More specifically, the objective of this research is to identify the use of techniques for measuring environmental costs and to examine Material Flow techniques, Product Life Cycle Costing, and Benchmarking. The Ministry of Industry and Minerals / the Iraqi General Cement Company / Northern Cement Directorate was selected as the study population, and the Badoosh Expansion Cement Plant was chosen as the study sample. The applied study was conducted at the plant through personal interviews and repeated meetings with accountants and officials at the plant and the directorate, in addition to collecting accounting data from the plant’s books and records. Environmental costs were measured using Material Flow techniques, Product Life Cycle Costing, and Benchmarking for three years (2021–2023), in order to calculate the environmental costs arising from abnormal losses across all production stages. The study reached several key conclusions, most notably that the Badoosh Expansion Cement Plant generally bears higher environmental costs, whether in absolute terms or in the ratio of environmental costs to total costs in some years, although the ratios of environmental costs to total costs remain within a relatively close range (7.134%–10.316%). This indicates that resource-use efficiency at the Badoosh Expansion Cement Plant is better, despite its large production scale; however, further improvement is still required to achieve a competitive advantage in the cost per ton produced. Moreover, in the second phrase, the study by using the quantitative survey of investigation (sample of 246 respondents) reveals that among several factors, the role of construction supply chain management is significantly positive and the highest in nature in determining the environmental cost reduction, followed by the life cycle costing and material flow optimization, respectively. However, the study was unable to find any significant influence of the environmental practices towards the environmental cost reduction for which there is a need to reconsider the current practices followed by the relevant industry.