Enhancing accuracy in construction overhead cost estimation: a novel integration of activity-based costing and building information modelling

Abstract

Purpose

This study addresses the prevailing complexities and limitations in estimating and managing construction overhead costs (COCs) in the existing literature, with the purpose of enhancing the accuracy of cost performance indicators in construction project management.

Design/methodology/approach

An innovative approach is proposed, employing the activity-based costing (ABC) accounting method combined with building information modelling (BIM) to assign real overhead costs to project activities. This study, distinguished by its incorporation of a real case study, focuses on an administrative building with a four-story concrete structure. It establishes an automated method for evaluating project cost performance through the detailed analysis of earned value management (EVM) cost indicators derived from ABC results and BIM data.

Findings

The results show that the ABC integration improves the accuracy of cost performance indicators by over 9%, revealing the project's true cost index for the first time and demonstrating the substantial value of the approach in construction engineering and management.

Research limitations/implications

The current study highlights a notable gap in the existing literature, addressing the challenges in onsite overhead cost estimation and offering a solution that incorporates the state-of-the-art techniques.

Practical implications

The proposed method has significant implications for project managers and practitioners, enabling better-informed decisions based on precise cost data, ultimately leading to enhanced project outcomes.

Originality/value

This research uniquely combines ABC and BIM, presenting a pioneering solution for the accurate estimation and management of COCs in construction projects, adding significant value to the current body of knowledge in this field.

Citation

Naderi, M., Nazari, A., Shafaat, A. and Abrishami, S. (2024), "Enhancing accuracy in construction overhead cost estimation: a novel integration of activity-based costing and building information modelling", Smart and Sustainable Built Environment, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/SASBE-07-2023-0180