The Ethiopian construction industry, cost,time and quality are the main constraints for stakeholders including owners, government entities, home builders and the public. The fluctuations of material cost from time to time is a huge challenge, though the industry is still practicing a complex time taking and primitive construction methods. As a result, there is a need for alternative construction materials and methods. The aim of this thesis is to assess the use of an expanded polystyrene (EPS) as a building construction material in Bahir Dar city. The study explores selected physical properties of expanded polystyrene through laboratory tests and determines the factors that hinder the adoption of the EPS technology in Bahir Dar. It also evaluates the construction cost and time perfo rmance against conventional building construction by developing a conceptual 2-story office building model and estimating using take off and unit rate analysis. EPS technology is not a new technology for Asian, European and African countries. However, it is relatively new to our country and limited research studies are done to assess the performance of the technology. Data was collected from EPS panel Production Company, construction material suppliers and construction sites through observation and interviews. The result of this study indicates that EPS building construction is cheaper than conventional construction by 30.9% and saves time by 45.7%. The compressive strength of reinforced expanded polystyrene is 9.3 Mpa and 17.1 Mpa for 15kg/m3 and 18kg/m3 density EPS panels respectivly, this shows that reinforced EPS is relatively better than HCB wall construction, but has less strength than structural concrete more than 20 mega Pascal. The 15kg/m3 and 18kg/m3 density EPS panels have 30.2 and 41.5KN flexural (two point loading sysytem) strength respectively. Expanded polystyrene is observed to be the effective material in water absorption,but has dimensional stability problem and shrinks at 70oC and it is categorized as self-extinguished material. This study is expected to contribute to better understand the technology and helps other researchers who have a willingness to explore more about expanded polystyrene building technology.