in Construction Projects and Choose the Best Solution to Minimise the Delay and Cost Overrun Using MADMA
FEATURED PAPER
By Justin Johnson
SKEMA Business School
Lille, France
ABSTRACT
The importance of construction projects is increasing day by day, but the efficiency of the projects is not up to the level considering the statistics of delay and cost overrun in projects. “31% of projects came within +/-10% of budgets meaning a whopping 69% exceeded their budgets by more than 10% and as only 25% of the projects finished on time, means that 75% finished late”[1]. This paper aims to identify and analyse the problems causing delay and cost overrun in construction projects and alternative solutions for the problem. In this paper, we analyse the 5 alternative solutions with 14 attributes. For the analysis we use Multi-Attribute Decision Making analysis and with the additive weighting technique to determine the most suitable alternative solution. Based on the analysis, implementing Activity Based Costing with Building Information Modelling in projects improves efficiency and can minimize delay and cost overrun in constructions projects.
Keywords: Building Information Modelling, Cost Estimation, Delay and Cost overrun, Construction, Activity Based Costing
INTRODUCTION
The world economy is growing in very fast rate “The world economy could more than double in size by 2050”[2]. Projects have a major role to play in this booming situation. Projects involve a set of specific complex tasks with a particular scope and limited time in allocated budget. “Accurate cost estimate and effective cost monitoring and control are essential elements to construction project success”[3]. Unfortunately, the current project management is not efficient “The average cost overrun of all projects is 27%”[4] this is a major problem in projects and will increase if not properly managed. The examples cost overrun projects are international space station (68bn$ over budget) and Sochi Olympics (32 bn $ over budget)[5].
“Pre-construction and design services contribute 15% of the budget of that can successfully identify potential issues before construction actually begins. This percentage is very less compared to the money saved on the project construction phase”[6]. Preconstruction planning and estimation have a major role in deciding the project success. “The factors that were studied make it difficult to control cost overruns during the construction stage alone. Instead, there should be sufficient planning of the project at the inception stage. Drawings and other tender documents should be well detailed before going out to tender”[7]. Efficient planning and estimation can prevent delay and cost overrun in construction projects. Current cost estimation system is not accurate as activity-based cost estimation system.
“Activity-Based Costing traces indirect costs or known as overhead to products and services identifying resource and their costs, the consumption of these resources by activities and performance of activities to produce output” [8]. This efficient cost estimation system improves the performance of cost estimation and it results in the performance of project management. The challenge for ABC is huge and complex data input is needed. “BIM (Building Information Modeling) is an intelligent 3D model-based process that gives architecture, engineering, and construction (AEC) professionals the insight and tools to more efficiently plan, design, construct, and manage buildings and infrastructure”[9]. BIM can provide adequate data for ABC the combined utilization of both activity-based costing and building information modeling will significantly minimize the problems in projects. “although delay and cost overrun may seem very inherent in most projects, the good news is that it can be reduced or totally eliminated using a proper project performance monitoring and control system that will integrate all the key activities of each phase of the project”[10].
The primary causes of delay and cost overrun in the project are analyzed through the fishbone diagram. The primary category can be divided into 4 namely project category, human category, environment category, and management category.
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Editor’s note: This paper was prepared for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development. http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director paul.gardiner@skema.edu.
How to cite this paper: Johnson, J. (2019). Comparing the Effects of ABC and BIM in Construction Projects and Choose the Best Solution to Minimise the Delay and Cost Overrun Using MADMA, PM World Journal, Vol. VIII, Issue VII, August. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/08/pmwj84-Aug2019-Johnson-comparing-abc-and-bim-in-construction-projects.pdf
About the Author
Justin Johnson
India and France
Justin Johnson is an Engineer with 4+ years of experience in Oil and Gas Projects, Construction management and Occupational health and safety. Born in UAE, raised in India and recently relocated to France. He holds a bachelor’s degree in Electronics and Communication Engineering from Calicut university, India and MBA Project management from Bharathiar University, India. He certified in Occupational Health and Safety by NEBOSH(UK). He has experience in LNG and LPG Gas plants construction in India and Middle east as Project Engineer and Health and Safety professional. Currently student of Skema Business School, France for MSc Project & Programme Management and Business Development. He speaks fluent English, Hindi, Malayalam, Tamil and basic French.
Justin lives in Lille, France and can be contacted at justin.johnson@skema.edu or
LinkedIn: www.linkedin.com/in/justin-johnson-36360556
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[8] Implementing Activity-Based Costing | IMA – The association of accountants and financial professionals working in the business. (n.d.). Retrieved from https://www.imanet.org/insights-and-trends/strategic-cost-management/implementing-activity-based-costing?ssopc=1
[9] What Is BIM | Building Information Modeling | Autodesk. (n.d.). Retrieved from https://www.autodesk.com/solutions/bim
[10] Buys, F. (2015, September). FIVE CAUSES OF PROJECT DELAY AND COST OVERRUN, AND THEIR MITIGATION MEASURES. Retrieved from https://www.linkedin.com/pulse/five-causes-project-delay-cost-overrun-mitigation-measures-buys/
