The architecture, engineering, construction, and operations industry faces an urgent need to enhance construction and demolition waste management in urban areas, driven by increasing demolition and construction activities and a desire to align with sustainable practices and the circular economy principles. To address this need, a systematic literature review on the building information modelling methodology was conducted, employing a structured protocol and specific tools for the analysis of academic studies, based on PRISMA guidelines and StArt software (version 3.4 BETA). Ninety relevant studies published between 1998 and 2024, were analysed and selected from the Web of Science, Scopus, and Engineering Village databases. Findings indicate that China leads in publications with 34%, followed by Brazil (8%) and the United Kingdom (7%). The analysis emphasises the use of drones and LiDAR scanners for precise spatial data, processed by 3D reconstruction tools like Pix4D and FARO As-Built. Revit excels in 3D modelling, providing a robust platform for visualisation and analysis. Visual programming tools such as Dynamo automate processes and optimise material reuse. The study presents a conceptual framework that integrates these technologies with the principles of the circular economy, clarifying the interactions and practical applications that promote the sustainable management of demolition waste from urban buildings and process efficiency. Although the approach promotes material reuse and sustainability, it still faces barriers such as the need for waste segregation at the source, the adaptation of innovative technologies, like the iPhone 15 Pro LiDAR and thermal cameras, as well as associated costs. These factors may limit its adoption in larger-scale projects, particularly due to the increased complexity of buildings.