Computational Economics of Circular Construction: Machine Learning and Digital Twins for Optimizing Demolition Waste Recovery and Business Value

Marta Torres-Polo, Eduardo Guzmán Ortíz

Construction and demolition waste (CDW) represents a critical environmental challenge in the building sector, with global generation exceeding 3.57 billion tonnes annually. The circular economy (CE) framework offers a transformative pathway through selective deconstruction and material recovery, yet implementation faces significant barriers including information asymmetry, supply chain fragmentation, and regulatory uncertainty. This study conducts a systematic literature review using the Context–Mechanism–Outcome (CMO) framework to analyze how computational methods, specifically Digital Twins (DT), Building Information Modeling (BIM), Internet of Things (IoT), blockchain, artificial intelligence, and robotics, act as enablers for resilience in CDW management. Following PRISMA 2020 guidelines and realist synthesis principles, we analyzed 42 high-quality empirical studies from Web of Science and Scopus (2015–2025). Our analysis identifies seven primary mechanisms: traceability (M1), simulation (M2), classification (M3), tracking (M4), collaboration (M5), analytics (M6) and robotics (M7). These mechanisms interact with four critical contexts (information asymmetry, supply chain fragmentation, economic uncertainty, operational risks) to generate outcomes at two levels: resilience capabilities (visibility, monitoring, collaboration, flexibility, anticipation) and performance indicators (recovery rates, cost reduction, CO2 emissions mitigation, occupational safety). Key findings from the CMO analysis reveal that blockchain-enabled traceability increases material recovery rates by 15–25%, DT simulation reduces deconstruction costs by 20–30%, and computer vision automation improves sorting accuracy to 85–95%. The study contributes middle-range theories explaining how digital technologies enable circular transitions under specific contextual conditions, offering actionable strategic implications for researchers, project managers, technology developers, and policymakers committed to advancing computational economics in sustainable construction.