Pillar One
    Strategic Definition

    Pillar Two
    BIM Definition

    Pillar Four
    Technology Skills Design

    Pillar Five
    Technology Skills Technical Design

    Pillar Nine

    Pillar Ten
    Asset Management

Cost Management with BIM


Cost estimating, forecasting, and planning are a part of Project Cost planning. Cost planning is the projection of future costs. Cost tracking is backward-looking: it is accounting for what has already occurred. Cost tracking refers to following the cost of various activities through the estimating and accounting cost management system and is accomplished through the use of cost coding of activities and their associated costs. It includes methods such as time collection (the use of resource time sheets) and expense accumulation. This type of data collection associates costs and activities for the various activities being performed, enabling accurate analysis and optimal decision-making. While every stage of the cost management system is important, cost tracking is one of the most critical stages, because weaknesses in data collection will have the most detrimental effect on the other stages. Inaccurate data will lead to poor risk assessment and poor planning.

The Project analysis stage of estimating and planning considers individual costs and related activities, while the decision stage evaluates and forecasts the entire cost management system and provides an opportunity to make appropriate changes and initiate best practices. The estimating software system offers an opportunity to improve the risk management as a whole.

Cost management is central to the idea of BIM management. While estimating and planning software includes the ability to show how resources are committed, the accounting system should show when, and why resources were committed to a task or project. Through a comprehensive review of the entire portfolio of resources available, cost management monitoring leads to an improved understanding of how resources can effectively be used in optimal cost benefit on a project through task and cost code management.

The related concept of resource utilisation on a project is especially applicable to planning and forecasting, because many changes can be implemented  to have a direct effect on the cashflow analysis . Keeping a controlled cost management system on a BIM project is an ongoing process that requires continuous review not only on site but at management level to. Similarly, a cost management policy can also be seen as a risk mitigation policy and is therefore a part of everyone’s job.

While different cost accounting systems include different components that may seem essential to financial management level, the indispensable element is an overall understanding of the interrelationship between project activities and actual costs as well as the ability to manage and track these cost relationships is to an organization’s advantage.

Identifying Activity based costs

Identification of actual costs against the budget is a critical element throughout the cost management process. Identifying actual costs begins with understanding the difference between direct and indirect costs.

A direct cost can be seen in various ways:

  1. Fixed costs are costs that typically do not change in response to changes in volume of activity. Examples include depreciation, supervisory salaries, and maintenance expenses.
  2. Variable costs are costs that change in response to the changes in the volume of activity. It is generally assumed that the relationship between variable costs and resource utilisation is proportional. Examples include the utilisation of direct labour, direct materials, and direct expenses.
  3. Mixed costs are costs that contain both a variable cost element and a fixed cost element. These costs are sometimes referred to as semi-variable costs. One example is a Digger loader rental that is billed at a base rate plus standing time.
  4. Direct costs are costs that easily can be linked to a specific service, activity, or department.
  5. Indirect costs are costs that cannot easily be linked to a single specific service, activity, or department.

With certain estimating software, the application has a unique ability to combine complex worksheets with multiple resource allocation in the  Bill of quantities rates. Direct and indirect costs are broken down among labour, material, plant, overhead and subcontractors, each of which has a unique resource code. These costs are all easily traceable to specific activities through each activity having a Cost code that can be found within the BIM object and provide accurate cost information one imported into the cost management system.

The allocation of indirect overhead costs is often more complex on a BIM model, since overhead costs can be used by many project activities and across many projects. Maintenance costs for example are incurred regardless of whether or not the barriers are used in any specific events, and need to be managed within the accounting ledger and allocated to particular resources codes.

Cost Recovery

Cost recovery of project activities is essential: However, regardless of the extent to which an organization engages in cost recovery, it is beneficial for each organization to have a well-defined cost accounting system. Having such a policy will facilitate financial control, including procurement, pay roll, plant and human resource management, ensuring an equitable financial structure, and distinguish an organization’s ongoing success.


Good cost management and risk mitigation is an integral part of BIM management and an organizational and individual responsibility. Cost management monitoring is an ongoing and interrelated process that requires frequent review to continue functioning successfully and being able to monitor risk mitigation.


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