Regulations by the EU push the idea of a CE. In developing countries, there is little focus on implementing appropriate legal and regulatory interventions to promote the idea of circularity (C01). If policymakers wish to generate support for CE, they should intensify their efforts to remove obstacles such as inconsistencies in policies, rules and regulations (C02). There is ample opportunity for government involvement concerning market barriers (C03). A few examples are, allowing entrepreneurs to operate on the market and creating the potential for price signals, property rights, and easing subsidies that support linear products (Grafström and Aasma, 2021) (S01). Institutional and regulatory forces are frequently mentioned as enabling elements for a CE (M01). Emphasis is placed on public policy solutions (such as taxation, legal frameworks, and incentives) that alleviate market imperfections (S02). Typically, these are changes to a national policy intended to provide financial incentives for a CE (Superti et al., 2021). Regulations with an emphasis on CE can provide guidelines for the planning, construction, and operation of buildings. This covers lifecycle costing (LCC) analysis, specifications for using recycled or repurposed materials, whole life carbon reporting, energy efficiency through life cycle assessment (LCA) for comprehensive environmental impact assessment (EIA) (Hossain and Ng, 2018), waste minimization techniques, and applying circular ideas to construction methods (AlJaber et al., 2023b) (S03) (S04) (S05). Based on their objectives and descriptions, the EU and Portuguese policies and legislation aimed at promoting this paradigm change (from linear to circular economy) were broadly categorized as resource and waste management, SDGs and green public procurement dedicated to CE (S02). The development of policies and regulations, new and innovative digital tools as well as platforms, education and capacity building, and a governance model that meets demands were the main opportunities and challenges of these laws and regulations that were recognized (Pedroso and Tavares, 2024) (C01) (C02). Regarding digital transformation, policymakers have been proactive in updating construction contracts to include BIM protocol (Charef and Lu, 2021). For example, the UK government has standardized BIM level 2 implementation by providing the PAS series which lays out a framework for collaborative working and information exchange (Charef, 2022). In addition to people and technology, obtaining CE in construction calls on policy and regulatory expertise. Policymakers should create incentive programs promoting circular material flow in the design, operation, and end-of-life phases. It is also important to quickly establish new certification programs, such as green building rating systems, to acknowledge and promote CE in construction (M02) (S04). Determining the circularity of structures requires the definition of circularity criteria. To boost the market and convince consumers about the efficacy and value of recovered materials, certification programs within them are also deficient and need to be controlled (Charef and Lu, 2021) (C04) (S06). There are diverse policies and regulations with respect to construction, planning and infrastructure in developed and developing countries. While developed countries generally have an already set infrastructure and focus mainly on maintaining and upgrading, developing countries are fertile for newer constructions and are in an expansion phase for growth spurt. Thus, the challenges encountered and solutions for these are varied (Patwa et al., 2021; Alotaibi et al., 2024). Developed countries prioritize sustainability, safety and preservation whereas developing countries focus on basic infrastructure development. Moreover, developed countries would already have a robust legal system and a well-defined regulatory framework, including building codes and laws which are strictly enforced. With limited regulatory frameworks which may still be evolving and lack of enforcement, developing countries find it harder to ensure that buildings are compliant with CE. For example, there are lack of standards and regulations for using secondary/used materials and components (Mhatre et al., 2023), lack of relevant policies, regulations, and construction codes for MMC (Tleuken et al., 2022), and inadequate enforcement of environmental regulations to manage CDW (Bao, 2023; Mhatre et al., 2023). Some ways of curtailing these problems would be to develop building codes that would incorporate safety, structural integrity and technological advancements within them. It is important to establish regulatory bodies that would provide policymakers opportunities to implement CE through taxes, laws, and regulatory framework within the construction industry (Pomponi and Moncaster, 2017) and be responsible for monitoring compliance to these newer codes and practices (Hjaltadóttir and Hild, 2021). Depending on the climate, cultural and geographical demands of the nation, international standards often serve as a guide for developing ideas and integrating newer construction methods. This can be done by reforming and aligning existing policies and regulations in line with CE principles to facilitate adoption of CE practices (Bao, 2023) like revising policies to facilitate waste management practices for material reuse and upcycling (Gallego-Schmid et al., 2020) and making whole-life carbon estimates mandatory (Gillott et al., 2022). There is also a need to develop standard practices for the reuse of building materials (Benachio et al., 2020) and quality certifications for secondary materials (Mhatre et al., 2023). Other than these, education and training in MMC and BIM are also critical in achieving a sustainable system in developing countries.

Technical training and knowledge of CE are crucial aspects of the effective adoption of CE principles in construction practices. The need for experts in the sector to implement CE effectively is rising as there is a growing interest to achieve a sustainable and financially viable future (Guerreschi et al., 2023) (M05) (M06) (M07). Good education, technical training, knowledge sharing, and competencies by academia and industry are essential in this regard to facilitate use of CE construction practices and concepts (Kanters, 2018; Guerreschi et al., 2023) (M03) (M04). Every generation benefits equally from this bidirectional exchange of knowledge, which considers different perspectives and experiences. Research and instruction on CE strategies help put into practice sustainable development that considers the social, economic, and environmental domains (M09). It is significant in developing economies as the number of experts is usually low in such countries (Guerreschi et al., 2023) (C05) (C06). The current deficiency in industry-wide comprehension is anticipated to impede the acceptance of circularity in the short run (C09) (C10). It is suggested that certain stakeholders within the supply chain, such as consumers and designers, possess a limited understanding of how to effectively implement CE concepts (Adams et al., 2017) (C07) (C08). A cohesive set of CE design abilities is becoming increasingly necessary in both business and academia since it may direct the creation of specialized training courses and curricula (M10). Building competencies is essential to design practice such as designing with BIM (S08). An emphasis on these competencies in the curriculum might facilitate a drive to shift to a CE in higher design education (Sumter et al., 2020) (M08). Utilizing BIM technology and optimization techniques in the early design process enables environmentally friendly and ecologically conscious construction and infrastructure design while tacking the effects on the environment (Afzal et al., 2023). Individual courses aimed at improving one’s knowledge and skills are mostly run by educational institutions and businesses, providing chances for professional advancement, experience acquisition, and on-the-job training (M10). To effectively design educational and training initiatives, it is crucial to comprehend the spatial distribution of economic activity concerning local and global economies, considering the various CE techniques. CE education must cover both fundamental and supporting circular occupations, spanning vocational training and skill development to postsecondary education (S07). For example, knowledge and skills on MMC (S09). The demand for education and training will change when the CE takes effect, as will the jobs that meet those requirements (Burger et al., 2019).

Technology and innovation are the backbone of the entire concept of CE, as without them, the concept would not seem feasible on a large scale. Lack of technical support for the professionals hampers CE adoption (Mhatre et al., 2023) (C12). Information and communication technologies (ICT) are possible remedies for CE problems because they can aid in CE-oriented decision-making (Yu et al., 2022) (M11). How digital technology can help reduce building waste during the design stage has not received much attention (C13) (C14). Digital technologies like BIM can help the industry adopt circular design principles, increasing material recycling rates and decreasing wasteful building waste (Talla and McIlwaine, 2022) (M12). There is a call for the creation of cost-efficient technology and adequate infrastructure for CE materials and processes to address the lack of suitable technology and inventory management for salvaged material/component and their segregation (Charef and Lu, 2021; Gedam et al., 2021; Mhatre et al., 2023) (C11) (S13). Performance, expansion, and innovations in CE go together. Organizations that implemented CE innovations saw a marked increase in revenue and employment growth when compared to other organizations in their industry and exhibited a markedly improved financial situation with no discernible effect on labor productivity. Instruments that mandate the adoption of CE practices by construction organizations can increase the benefits of CE developments at the corporate level. Policymakers can establish a Porter-hypothesis-type win-win scenario by promoting technologies that advance the concepts of CE, provided that the market responds to these advances by increasing the willingness or inclination to purchase CE-based products. Therefore, it is crucial to combine policies that educate consumers about the long-term advantages of a shift toward CE with legislation focused on the CE (Horbach and Rammer, 2020). Establishing an information support and dissemination center may aid in achieving this (S10). Once materials are tagged in material passports, BIM can be used to track components and import them into design software at the design stage (Gallego-Schmid et al., 2020) (S11). Common data repository facilities and exchange platforms through BIM and Blockchain technology can provide project information from inception to end of life and enable material and energy traceability, allowing users to predict the recycling and reuse of materials/components (Charef and Lu, 2021; Shojaei et al., 2021) (S12). BIM tools can assist in selective disassembly and disassembly planning by providing a disassembly model with complete information in an automated and efficient way (Sanchez et al., 2021).

All relevant stakeholders must be aware of the CE principles and practices, which might stimulate economic growth, create employment, and lessen environmental effects like carbon emissions while addressing the growing resource-related issues that companies and economies face (Ellen MacArthur Foundation, 2015b) (M13) (M14). To encourage stakeholders to embrace CE practices, raising awareness of CE, and demonstrating its advantages for the environment and economy through extended workshops, seminars, and conferences is imperative (Leising et al., 2018) (M15) (M17). Without such information, stakeholders risk ignoring the potential economic and environmental benefits and the chance to produce more profitable and circular results. The most important awareness hurdles identified in the literature are the following: “a lack of case studies; inadequate information in building design; a fragmented supply chain; a lack of skills and engagement in the supply and value chains; and a limited understanding of CE” (AlJaber et al., 2023b) (C15) (C17). Implementing pilot projects based on the best practice case studies of circular buildings, awareness through electronic media, events and advertisements and land, temporary planning permissions, and support for the circular activities by governments are necessary to promote CE (Bilal et al., 2020; Dokter et al., 2021; Williams, 2023) (M16) (M18) (M20). Moreover, there existed a noticeable lack of awareness within the sector. This could be attributed to the absence of widespread consensus on the manifestation of CE principles in the construction industry (Adams et al., 2017). Budget and upfront expenditures, awareness and CE education gaps, a lack of legislation, and the need for modifications to the present building company structures are the biggest obstacles that have been found (Guerra and Leite, 2021) (C18) (C19). The obstacles that must be addressed to proceed with construction waste management are improving rules, changing people’s awareness and perspectives, and providing resources to gather pertinent data on construction waste (Esa et al., 2017) (M19) (M20) (M21). There is a knowledge gap about the insufficient data on the qualities of recovered and recycled building materials, which is the cause of the lack of confidence and acceptability for recovered and recycled materials (C20). To encourage the use of recovered materials, it is necessary to raise knowledge awareness and educate all stakeholders on the 3R (Reduce, Reuse, and Recycle) strategy (Osei-Tutu et al., 2023). Pilot projects demonstrating use of deconstruction practices and incorporation of recovered and recycled materials will raise awareness (López Ruiz et al., 2020) (S14). Organizations can benefit from increasing the level of awareness of utilizing BIM technology as a resource saving technique for delivering waste efficient projects by recruiting new BIM specialists and conducting training and certification programs (Ganiyu et al., 2020).

Collaboration and information sharing are very significant due to the complexities of CE. Lack of platforms for organizational collaboration and stakeholder participation in project delivery (Munaro and Tavares, 2023) (C21) (C22), and lack of accountability of individual supply chain members, for example, producer/suppliers’ responsibility for product liability (Gerding et al., 2021) due to segmentation and lack of disclosure are barriers to the sector’s adoption of circular practices (Hjaltadóttir and Hild, 2021) (C23). Stakeholders’ understanding and awareness of CE need to be increased. If the shift to CE is to take place, then all stakeholders must work to modify their strategies and collaborate to share experiences for the next cross-sectional working processes (Moscati et al., 2023) (M22). To attain circularity in a project, cooperation between project stakeholders in both vertical and horizontal supply chains is essential. This kind of cooperation is necessary to create a shared platform for finding potential business partners, exchanging information, and creating business plans for material flow or sharing (M22) (M23). Used materials are considered inferior, and knowledge and comprehension of CE procedures are absent. These hurdles result from the lack of confidence in and embrace of reused materials and the lack of care for recovered materials (Osei-Tutu et al., 2023) (C24). Regarding material flows, the requirement to monitor material reuse, maintain track of material origins, and facilitate the transfer of material ownership are also pressing for the cooperation of large-scale value chain actors on a common platform (Senaratne et al., 2021) (M24). In supply chain cooperation, developing a vision is the first step for CE. To integrate new collaborative techniques among the supply chain collaborators, higher level actor knowledge is necessary. Stakeholders must be able to expand their horizons to encompass a building’s end-of-life alternatives. They must also adopt a new, interdisciplinary approach to problem-solving in which others can hold participants accountable for their assignments and outputs (M24). Facilitating supply-chain cooperation by bringing together all partners, from suppliers to designers, demolishers, and waste management companies is crucial in network mechanics (Leising et al., 2018). A CE is largely made possible by information exchange between contract parties (S15). Firms can maintain product and material awareness by having information about the treated items as well as the activities of other stakeholders. The primary means by which product makers get lifecycle data and expertise from repair, refurbishment, and recycling is through enhanced feedback. Using this data, they may improve their designs and production processes, resulting in more environmentally friendly products, such as recyclable or more long-lasting items with more efficient, dependable maintenance. As a result, the product’s lifespan is extended. To further the CE, inter-organizational information exchange should adhere to transdisciplinary standards (Jäger-Roschko and Petersen, 2022). A central repository facility consisting of BIM models, the BIM dimensions, projects’ databases, and information about the asset from its inception to its end of life can assist in data management at the asset and material level (Charef and Lu, 2021).

Based on the growth of CE in construction, professionals argue, citing a lack of uniform procedures and practices to assist them in implementing their building endeavors (Benachio et al., 2020) (C25). There is a lack of standardization of recycled and reusable materials and components preventing their demand and use freely for new and repurposed constructions (Hart et al., 2019). By creating frameworks, design guidelines, supporting materials, and standards for the sustainable utilization of resources and energy while preserving the value and quality of materials throughout the cycle, standardization measures help to implement CE policies (M25) (S18) (S19). Examples include improving recycling quality and quantity and ensuring waste prevention and management by introducing audits before demolition (Mhatre et al., 2021) (M25) (S17). A manufacturing-style approach to the durability and reuse of standardized components and materials, as well as simplicity, standardization, modularity in design, sustainably sourced materials, and transparent and accessible mechanical connections, all facilitate circular building (Dams et al., 2021). Most standards are imposed from an economic perspective instead of an environmental one. Environmental assessment systems must incorporate CE practices like having regionalized tools and databases for LCA (Hossain and Ng, 2018) and tracking and monitoring protocols for assessment methods (Pomponi and Moncaster, 2017; Gallego-Schmid et al., 2020) (S16). Combining digital technologies like BIM, MP, and environmental sustainability tools like LCA and LCC are not yet promoted by policy framework. Hence, standardizing them will help with decision-making related to design process and end of life management (Giorgi et al., 2022). Once standardized, policies can encourage their application. Furthermore, ISO 20887 appears to be the first real standard that addresses the concept of building component reuse. There has to be more morphological uniformity. It is not appropriate to limit this morphological standardization to profile sections alone. Broader emphasis should be placed on standardizing the heights and lengths of architectural components (Anastasiades et al., 2021) (M26) (S19). There needs to be a framework for standardizing CE, proposing it as a sustainable paradigm that can facilitate uniform organization of diverse regulatory components, allowing various standardizing organizations to assess them (S20). This CE standardization system can involve employing specific tools, guidelines, Key Enabling Technologies (KETs), and Key Performance Indicators (KPIs) that can present a company as a representation of a circular business, serving as the most consolidated analytical unit for the circular value chain (Ávila-Gutiérrez et al., 2019) (S18) (S20). As the industry grows closer to a closed-loop supply chain, studies on standardizing material types and dimensions may be useful for MMC and can offer a list of the materials that make up a structure (Minunno et al., 2018) (M26).

A clear business case is necessary to implement any new model. Although less obvious, applying CE in the construction sector is feasible from a business case standpoint. However, as often thought in today’s markets and with today’s rules, CE business models for the construction sector are significantly less obvious. As far as research indicates, the primary obstacles and hurdles to providing CE services in the construction industry are not recognized by partners in the sector and are rarely, if ever, discussed in CE literature (Van Den Brink et al., 2017) (C27). The creation, distribution, and collection of value within and with closed material loops by an organization serve as the foundation for a circular business model (Linder and Williander, 2017). For circular business models to be effective, other facets of sustainability such as social and environmental concerns must be considered (Haggège et al., 2017). Hence, implementing circular business models that redefine profitability and use product-service systems as ownership models is vital to transition to CE (Pomponi and Moncaster, 2017) (M27) (S21). The requirement for a systems-thinking-based new economic model is becoming increasingly apparent, and today’s unparalleled convergence of social and technical advancements may make the shift to a CE possible (Ellen MacArthur Foundation, 2015b). An organization through a circular business model generates, collects, and distributes value by utilizing the value creation logic centered on prolonging the useful life of products and parts and closing material loops through long-life design, repair, and remanufacture. The preceding value chain, which replaces primary material input with secondary materials and components, and the following value chain, which makes them available for further use to maximize the original set value, are two examples of extending the lifespan and closing material loops. It is ideal to extend their useable life and close the production loop when a product attains its irreversible end of life (Nußholz, 2017). Businesses run higher risks if they use reused supplies instead of virgin materials because there is less market interest in products made from recycled materials (Grafström and Aasma, 2021) (C29). Lack of adequate quality and quantity of salvaged/recycled materials is due lack of standards and quality certifications and market demand (Mhatre et al., 2023) (C28). Also, cost of virgin/new materials is cheaper than processing and recycling cost to produce secondary/recycled materials (Favot and Massarutto, 2019) (C30). Updating procurement methods such as government procurement, and circular tendering (Williams, 2023), leasing or buy-back schemes (Leising et al., 2018) and establishing digital marketplaces for salvaged/recycled materials can increase supply and generate market demand (Çetin et al., 2022) (S22) (S23) (S24). These salvaged/recycled materials can be tagged in the material bank using MP and BIM can be used to track and import them when it comes to the design stage of a project (Gallego-Schmid et al., 2020). Discussing business model circularity is crucial in light of the financial practices that society is currently embracing. Increasing the number of circular firms would aid in mitigating many of the drawbacks of linear enterprises in the past, present, and perhaps future. In an attempt to develop environmentally friendly solutions, circular business models often consider the environmental and economic dimensions in that order, paying potential neglect to the social component (Salvador et al., 2020). Utilization of innovative alternate materials using recycled content will reduce dependency on certain materials that are used in every construction project and improve the availability of materials (Norouzi et al., 2021) (S25). Furthermore, organizations can include contracting methods adapted to CE approach in their business models like assigning higher weightage to contractors using such alternate materials and BIM in their projects than the overall cost in the tender selection process (Minunno et al., 2018).

A well-designed and focused financial initiative program is lacking for CE practices. By offsetting the upfront expenses of switching to more circular processes, these initiatives might increase the financial appeal of these approaches. If these initiatives are not provided, firms may view CE practices as an expense, lowering their incentive to adopt them (AlJaber et al., 2023b) (C31) (C32) (C33). Financial instruments should be developed to lower business risk, monitor external taxes, raise environmental accounting, and set the appropriate price (Govindan and Hasanagic, 2018) such as imposing taxes on disposing of CDW and increasing taxes on the mining of virgin raw materials (Mhatre et al., 2023) (M29) (M30). The government can support financial initiatives to assist CE by making the initial financial commitment to implement it (Smol et al., 2015) (S28) by devoting specific budget for CE approach in construction, launch platforms for CE investments, and tax rebates and subsidies for circular applications and materials (Bilal et al., 2020; López Ruiz et al., 2020; Charef and Lu, 2021) (M28). Promoting CE will be MMC based where BIM is needed, which causes considerable upfront costs although savings are superior in the long run. Contractors and consultants work on profit-based setups and are driven by it. Hence, without incentives they may not adopt newer and costlier construction processes. With clear guidelines, policies, and regulations drawn by the government for construction industry, compliance to CE based practices will be achievable. Economic incentives in the form of either tax reductions or low-interest loans encourage private sectors to take up sustainable work practices in construction. One might think of it as a direct internal loss for the government by giving these incentives, however, in the longer period, these investments can be recovered as the efficiency in the industry will improve with a sustainable sector in place. While economic incentives are crucial in promoting CE, government should lay down strict policies and regulations to provide these incentives. For example, incentives may be offered initially for 5–10 years, after which CE practices will become the new norm. Once the time-bound incentive period is crossed, it should be mandated to continue to adhere to CE principles for all upcoming constructions. This way sustainable construction practices will be achieved in an efficient manner. The growing fascination with the financial elements of CE enterprises results from the technological shift toward sustainability and CE shaping investments and company operations. The financing sources, both public and private, evaluate various financing subjects, including supply chains, cooperative projects, and the circular business of individual companies, using various criteria like “valuation and profitability of circular business models, their type, investment costs, and their business potential”. Many variables that may operate as drivers have also been thought to behave as inhibitors (Saarinen and Aarikka-Stenroos, 2023). This is because the CE is still relatively new and not recognizable as a linear standard system. The absence of institutional, financial, and non-financial metrics to evaluate the growth of various circular enterprises is another significant issue impeding the adoption of the CE (C32) (C33) (C34) (C35). Financial insights can be given into design alternatives while using BIM during design stage (Çetin et al., 2022), and project cost optimization can be achieved during construction and maintenance as BIM can yield useful data for future deconstruction and remodeling tasks (AlJaber et al., 2023a). It is crucial to emphasize that assets from many sources (reuse, recycling, product design, etc.) must be considered in evaluating the product’s expenses throughout all manufacturing stages before it can be considered financially successful which can be enabled by funding for CE research and development (S26). Thus, monetary incentives, program subsidies, and public awareness among governments, industries, and clients are critical variables for the development of the CE (Gonçalves et al., 2022) (S28). Non-financial incentives from industry and clients include awards for recognition and preference in bidding or ranking to design professionals and constructors that employ CE practices (Minunno et al., 2018; Bilal et al., 2020) (M31) (M32) (S30) (S31). The extent to which businesses attain CE is correlated with the investment amount. The degree to which investments are made in CE is also influenced by the availability of money and, more specifically, the level of financial backing that could come from loans with reduced interest from private institutions (Górecki et al., 2019) (S29). The expansion of diverse circular activities carried out by corporations appears notably influenced by the availability of resources, particularly at an affordable cost. Emphasizing the quality of these resources is crucial, given that corporations often require greater guarantees to finance operations within the CE framework compared to other initiatives (Aranda-Usón et al., 2019). Providing alternate investment/financing like PPP or PPF to these corporations could be of assistance in such a scenario (Bilal et al., 2020; Munaro and Tavares, 2023) (S27).