A Value-Based Measurement Framework for Construction Cost Management

Thesis Abstract

This study addresses the persistent misalignment between construction cost management practices and value delivery in capital projects, where traditional cost-centric approaches often fail to capture broader value dimensions such as lifecycle costs, quality, and stakeholder satisfaction. The aim is to develop a Value-Based Measurement Framework (VBMF) that integrates cost performance with multi-criteria value outcomes to enhance decision-making in construction cost management. Specific objectives are (i) to identify and categorize value dimensions relevant to construction projects beyond conventional cost, (ii) to establish a theoretically grounded measurement model linking cost performance to value outcomes, (iii) to quantify the relationships between cost management practices and value indicators using empirical data, (iv) to validate the framework through case study applications across diverse project types, and (v) to propose actionable guidelines for practitioners to implement value-based cost management in procurement, budgeting, and control processes. The study adopts a grounded, mixed-methods design anchored in value-based management theory and stakeholder value literature. A sequential exploratory strategy is employed initial qualitative interviews with 28 industry practitioners, including project managers, quantity surveyors, and owners’ representatives, to identify salient value dimensions and measurement constructs. This is followed by a quantitative survey of 312 project participants sourced from 40 ongoing public and private sector projects to test hypothesized relationships. Data collection instruments consist of a structured questionnaire operationalizing value dimensions (cost, lifecycle cost, quality, time, safety, stakeholder satisfaction, and environmental impact) and cost management practices (estimation accuracy, budget control, change management, risk-adjusted budgeting). In addition, project archival data (budget variance, change orders, earned value metrics) from 20 completed projects are analyzed to triangulate survey findings. Validity and reliability are established through content validity with expert panels, pilot testing (n=40), Cronbach’s alpha assessments (? ? 0.70), and confirmatory factor analysis (CFA) to verify the measurement model. Analytical methods comprise descriptive statistics to profile responses, structural equation modelling (SEM) to test the hypothesized Value-Based Measurement Model, and multiple regression analyses to examine the impact of specific cost management practices on value outcomes. Regression results are interpreted in the context of effect sizes and predictive validity, while SEM assesses model fit using CFI, TLI, RMSEA, and SRMR criteria. The study also employs thematic analysis of interview transcripts to extract nuanced insights on enablers and barriers to implementing value-based cost management. A composite VBMF score is computed to facilitate cross-project benchmarking and sensitivity analyses explore how project type, size, and procurement route moderate relationships within the model. Expected findings indicate that integrating lifecycle cost considerations, quality outcomes, and stakeholder satisfaction with traditional cost metrics significantly improves predictive accuracy of overall project value, with cost management practices—particularly accurate estimation, disciplined change control, and risk-adjusted budgeting—exerting robust positive effects on value measures. The study anticipates that value metrics will mediate the relationship between cost performance and overall project success, revealing that projects with higher value alignment exhibit lower total lifecycle costs and higher stakeholder satisfaction despite modest initial overruns. The contribution to knowledge encompasses (i) a theoretically informed VBMF that operationalizes value in construction cost management, (ii) empirical evidence linking cost practices to multi-criteria value outcomes, and (iii) a practical framework and benchmarking instrument for practitioners to measure and enhance value delivery in capital projects. The study concludes that a value-centric approach to cost management yields superior decision support and performance outcomes by translating financial metrics into broader value indicators aligned with stakeholder expectations and sustainability considerations. Recommendations include integrating the VBMF into standard costing and procurement processes, developing organization-wide dashboards for real-time value tracking, and pursuing policy incentives that promote lifecycle-oriented budgeting. Implications for future research emphasize refining the framework for different cultural and regulatory contexts, exploring automation-enabled data capture for value metrics, and extending the framework to digital twin-enabled project environments.