A Value-Based Cost Benchmarking Framework for Construction Projects

Thesis Abstract

In the context of escalating project complexity and fragmented cost governance in construction, traditional cost benchmarking approaches often fail to capture value creation and lifecycle cost drivers, leading to misaligned supplier incentives and suboptimal project outcomes. This study aims to develop a Value-Based Cost Benchmarking Framework (VBCBF) for construction projects that integrates cost performance with value realization across the project lifecycle. The objectives are to (1) identify drivers of value in cost performance from early design through handover, (2) develop a composite value-cost metric that combines cost, time, quality, risk, and stakeholder satisfaction, (3) design and validate a benchmarking framework that enables comparable value-based cost metrics across projects, and (4) evaluate the framework’s predictive capability for project outcomes under varying market conditions. The research adopts a mixed-methods approach underpinned by stakeholder theory and the resource-based view to connect value realization with organizational capabilities and project governance. A sequential explanatory design is employed, beginning with quantitative data collection and analysis, followed by qualitative inquiry to contextualize and refine the framework. The population comprises 210 publicly funded and privately financed construction projects executed in Europe between 2018 and 2024, with a stratified sample yielding 120 projects for robust statistical inference. For quantitative analysis, data are drawn from project performance databases and annual reports, including cost, schedule, quality metrics, risk events, client satisfaction scores, and lifecycle cost estimates. Instrumentation includes a standardized Value-Cocused Cost Dataset (VCCD) and a Project Value Realization Interview Protocol (PVRIP) for subsequent qualitative validation. Reliability and validity are established through pilot testing, Cronbach’s alpha values above 0.80 for composite scales, exploratory and confirmatory factor analyses, and triangulation with archival records. Data analysis employs multiple regression to identify key predictors of value realization, structural equation modelling (SEM) to test the integrated value-cost model, and cluster analysis to classify projects into value-performance typologies. The framework’s core specification is a value-cost function that combines normalized cost performance, time variance, quality/warranty implications, risk-adjusted returns, and stakeholder-derived utility, operationalized through weighted indicators derived via analytic hierarchy process (AHP) to reflect project governance and market context. A sensitivity analysis assesses framework robustness under different discount rates and market volatility. The qualitative strand utilizes thematic analysis of 40 in-depth interviews with project directors, cost managers, and client representatives to elucidate enablers and barriers to value-based cost optimization. Expected findings indicate that incorporating value-based indicators alongside traditional cost benchmarks significantly improves explanatory power for project success outcomes, with SEM revealing strong associations between governance quality, timely risk response, and value realization. Cluster analysis is anticipated to reveal three archetypal projects—high-value optimizers, cost-focused controllers, and balanced performers—each requiring distinct benchmarking weights and governance practices. The study anticipates that the VBCBF will outperform conventional benchmarking models in predicting post-completion value realization and lifecycle cost efficiency by at least 12–15%. The contribution to knowledge includes (i) a robust, transferable framework that links cost benchmarking to value realization across project stages, (ii) an empirically validated composite metric and benchmarking weights rooted in stakeholder priorities, and (iii) practical guidelines for procurement strategies, contract design, and governance structures that align cost management with value creation. The main conclusion posits that value-aware cost benchmarking enhances decision-support for project managers and clients, enabling proactive trade-offs that optimize lifecycle outcomes. Recommendations address adoption in public procurement policy, integration with digital cost-management platforms, and further refinement through cross-sector validation and longitudinal studies to capture evolving market dynamics and innovation effects.