COST MODEL DEVELOPMENT FOR GREEN BUILDING COMPLIANCE WITH INDONESIA'S REGULATION NO.21 OF 2021

Abstract

The Indonesian Ministry of Public Works and Public Housing (PUPR), through Regulation No. 21 of 2021, stipulates that a Green Building Performance Assessment must be conducted as a mandatory criterion for securing both the Building Approval (PBG) and the Certificate of Feasibility for Function (SLF). Nevertheless, many actors within the construction industry continue to perceive green building initiatives as financially burdensome due to their perceived high initial costs. To better understand and address these concerns, this study utilized the Soft Systems Methodology (SSM), incorporating expert panel evaluations supported by the Content Validity Index (CVI) method and structured survey instruments. Through this process, five key variables were established: traditional construction methods, sustainable building design, value engineering strategies, lifecycle cost evaluation, and overall cost efficiency. These variables were further detailed into 26 distinct dimensions and 92 measurable indicators. A comprehensive cost modeling approach was then constructed and tested using Structural Equation Modeling (SEM) via the Smart-PLS platform. The analysis revealed significant interdependencies among the identified variables, with the resulting model expressed as Y = 0.016X₁ + 0.182X₂ + 0.093X₃ + 0.683X₄ + β. This equation highlighted that lifecycle cost analysis had the most substantial impact on overall cost-effectiveness. Although green buildings may initially entail higher capital expenditures, the findings suggest that they offer superior economic efficiency over time compared to conventional structures. Furthermore, the proportion of green-related construction expenses relative to total project costs was shown to be relatively small. Overall, the research validates the intent behind Regulation No. 21 of 2021 and promotes the widespread implementation of green building concepts among developers and property industry stakeholders. In addition to demonstrating long-term financial benefits, the study also highlights the educational, environmental, and operational advantages—such as improved resource efficiency and enhanced occupant productivity—that green construction practices can offer to both the professional and academic communities.