Compliance concerns of environmental laws at building design stage : Transaction cost considerations

Purpose – This study aims to identify the most critical concerns of property developers in terms of the transaction costs involved in compliance with environmental laws at the building scheme design stage when key design decisions are made. Design/methodology/approach – Sixteen structured interviews were carried out with experienced industry practitioners in Hong Kong. Transaction cost theory is used to explain the regulatory compliance costs. Findings – The results show that the most significant impacts of transaction costs were due to uncertainties in negotiations with government, which takes time to obtain approvals and overcome ambiguous legislative requirements. Practical implications – The government could make use of the research findings to formulate a clear environmental policy to coordinate various departments and laws to address uncertainty with time for project delivery, and conduct quantitative regulatory impact assessments in the development of new legislation. Originality/value – This study identifies and explaines “uncertainties” as the most critical concern for property developers in terms of the transaction costs involved in compliance with environmental laws. The results of this study would help policymakers to improve policy design, which would in turn increase efficiency and productivity in the property development process.