Challenges in Estimating Transaction Costs in Green Building Projects - A Review

Review Article

Abstract

As the global construction sector shifts toward more sustainable practices, green building projects are rapidly increasing in number and scope. These developments are essential in reducing environmental impact, improving building efficiency, and promoting healthier living environments. However, one major financial barrier remains insufficiently studied: transaction costs. These are indirect and often hidden costs related to planning, regulatory approval, certification, coordination, stakeholder communication, and legal procedures. Inaccurate estimation of these costs can result in serious budgeting errors, delayed project delivery, and investor hesitancy. This paper examines the key sources and implications of transaction costs in green construction, particularly in emerging markets such as Oman. A mixed-methods research design was employed, utilizing literature review, professional surveys, and case study analysis. The results reveal that complex certification processes, lack of technical expertise, and regulatory uncertainty are significant contributors to transaction costs. This study offers strategic recommendations, including early-stage cost modelling of transaction expenses, workforce upskilling, and regulatory streamlining. These measures can significantly enhance cost predictability and project viability in the green building sector.