Revolutionising cost structure for integrated project delivery: A BIM-based solution

Purpose: The 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/approach: A 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. Findings: After 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 implications: Using 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/value: This 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.