Unveiling success determinants for Circular Economy adoption in construction and the built environment: an empirical study using AHP and PLS-SEM

Purpose The construction industry (CI) plays a pivotal role in economic growth but is also a significant contributor to environmental degradation due to high resource consumption, energy use and waste generation. This highlights the urgent need to transition from the traditional linear model to a Circular Economy (CE) framework, which emphasizes resource efficiency, waste minimization and sustainability. However, the adoption of CE in the construction sector remains limited due to a lack of structured understanding of the external determinants influencing its implementation. This study addresses this gap by applying the PESTEL (political, economic, social, technological, environmental and legal) framework to identify and evaluate the macro-environmental determinants that impact CE adoption in the CI. Using a hybrid methodology that combines the Analytic Hierarchy Process (AHP) and Partial Least Squares Structural Equation Modeling (PLS-SEM), the study quantifies the influence of each factor. The results indicate that environmental, political and economic aspects significantly drive CE adoption, while social and technological factors are essential for operationalizing CE practices at scale. Legal factors had a relatively lesser impact. The study presents a comprehensive and data-driven approach to understanding CE implementation, offering actionable insights for policymakers, industry practitioners and researchers. It emphasizes the need for coordinated efforts across multiple dimensions, enabling targeted interventions that support the shift toward sustainable construction practices. Design/methodology/approach The study employs a mixed-methods approach, utilizing the Analytic Hierarchical Process (AHP) and Partial Least Squares Structural Equation Modeling (PLS-SEM) to assess the external factors influencing CE adoption in the built environment. Data were collected through a structured questionnaire survey targeting key stakeholders, including project managers, engineers, contractors, architects and material suppliers. Findings The results indicate that environmental factors, government policies and economic feasibility are the most significant determinants for CE adoption in the CI. Additionally, social awareness, technological advancements and a supportive legal framework emerge as crucial enablers for promoting sustainable practices. Research limitations/implications This study is limited by its reliance on questionnaire data, which may be influenced by respondent bias and varying levels of awareness about Circular Economy (CE) practices. The sample is geographically constrained, which may affect the generalizability of the findings. Additionally, the focus is on external PESTEL factors, without considering internal organizational influences. Future research could address these gaps by expanding the study scope and exploring both internal and external drivers of CE adoption. Practical implications The findings offer actionable insights for industry stakeholders to enhance CE adoption by prioritizing resource efficiency, strengthening regulatory frameworks, increasing technological investments and fostering collaboration within the CI. Originality/value This study provides a comprehensive evaluation of external determinants shaping CE adoption in the CI, contributing to the literature on sustainable construction. The results serve as a roadmap for policymakers and industry professionals to guide the transition toward a more circular and environmentally friendly construction model.