A centralised cost management system: exploiting EVM and ABC within IPD

Purpose - Integrated Project Delivery (IPD) is highly recommended to be utilised with Building Information Management (BIM), specifically, with BIM level-3 implementation process. Extant literature highlights the financial management challenges facing the proposed integration. These challenges are mainly related to the IPD compensation and the conventional cost control approaches that are not consistent with IPD principles. As such, this paper presents an integration of several methods to support automating risk/reward sharing amongst project parties, thus, enhancing IPD core team members relationship.

Design/methodology/approach - The literature review was used to highlight the challenges that face the IPD based cost management practices such as the risk/reward sharing amongst IPD core team members, and potential methods to bridge the revealed IPD gap. A framework was developed by integrating the Activity Based Costing (ABC) - as a method to analyse the cost structure - and Earned Value Management (EVM) to develop mathematical models that can determine the three main IPD financial transactions (reimbursed cost, profit and cost saving) fairly. To demonstrate the applicability of the developed system, a real-life case study was used, in which, promising results were collected in regard to visualising the cost control data and understanding of the accumulative status of the project cost and schedule for team members.

Findings - A Centralised Cost Management System (CCMS) for IPD is developed to enable the IPD cost structure, as well as, automating the risk/reward sharing calculations. This system is linked with a web-based management system to display the output of proposed risk/reward sharing models. Moreover, a novel grid is developed to show the project status graphically, and to respect the diversity in core team members backgrounds. In addition, the case study showed that the proposed integration of different methods (ABC, EVM, BIM and web-based management system) is interoperable and applicable.

Originality/value - This research presents a comprehensive solution to the most revealed challenges in cost management practices in IPD implementation. The outcome of this research contributes to the body of knowledge through presenting new extensions of the EVM to be used with the IPD approach to calculate risk/reward. Moreover, the implementation of the proposed tools such as Centralised Cost Management System (CCMS) and CCMS for IPD web system will enhance/foster the implementation of the IPD in conjunction with BIM process.