PurposeThe amalgamation of integrated project delivery (IPD) and building information modelling (BIM) is highly recommended for successful project delivery. However, IPD lacks an accurate cost estimation methodology at the “front-end” of projects, when little project information is available. This study aims to tackle this issue, through presenting analytical aspects, theoretical grounds and practical steps/procedures for integrating target value design (TVD), activity-based costing (ABC) and Monte Carlo simulation into the IPD cost structure, within a BIM-enabled platform.Design/methodology/approachA critical review was conducted to study the status of cost estimation within IPD, as well as exploring methods and tools that can enhance the cost estimation process for IPD. Thereafter, a framework is developed to present the proposed methodology of cost estimation for IPD throughout its entire stages. A case project is used to validate the practicality of the developed solution through comparing the profit-at-risk percentage for each party, using both traditional cost estimation and the proposed solution.FindingsAfter applying the proposed IPD's cost estimation framework, on a real-life case project, the findings demonstrated significant deviations in the profit-at-risk value for various work packages of the project (approximately 100% of the finishing package and 22% of openings package). By providing a precise allocation of overhead costs, the solution can be used in real-life projects to change the entire IPD cost structure and ensure a fair sharing of risk–rewards among the involved parties in IPD projects.Practical implicationsUsing the proposed methodology of cost estimation for IPD can enhance the relationship among IPD's core team members; all revealed financial deficiencies will be considered (i.e. compensation structure, profit pooling), hence enhancing the IPD performance.Originality/valueThis paper presents a comprehensive solution for integrating BIM and IPD in terms of cost estimation, offering three main contributions: (1) an innovate approach to utilise five-dimensional (5D) BIM capabilities with Monte Carlo simulation, hence providing reliable cost estimating during the conceptual TVD stage; (2) mathematical models that are developed through integrating ABC into the detailed 5D BIM to determine the three IPD's cost structure limbs; and (3) a novel mechanism of managing cost saving (rewards) through distinguishing between saved resources from organisation level, to daily task level, to increase trust among parties.
Revolutionising cost structure for integrated project delivery: a BIM-based solution
