The construction sector is one of the industries with the highest environmental impact due to resource consumption and waste generation. Material waste exacerbates these impacts by increasing carbon emissions and energy consumption. This study introduces an innovative approach by integrating Life Cycle Assessment (LCA) and the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) to evaluate material waste and environmental impacts simultaneously. By analyzing scenarios of material use in the design and construction phases, this study explores their effects on material efficiency and environmental performance while addressing a notable research gap. Existing studies on the integration of LCA and TOPSIS in evaluating material waste and its environmental impacts remain limited. This research not only demonstrates the applicability of these methods but also contributes to filling this gap. Material waste and efficiency were assessed through Building Information Modeling (BIM), while BIM-LCA integration was used to evaluate environmental impacts. The findings were examined in two stages: LCA and TOPSIS. The TOPSIS analysis considered two scenarios—material waste and environmental impacts. In the first scenario, cast-in-place concrete (5000 psi) and stone and ceramic tiles emerged as priorities. In the second scenario, where carbon emissions and environmental impacts were emphasized, cast-in-place concrete (5000 psi), laminated timber, and stone tiles were identified as critical materials. The results reveal that reducing material waste significantly enhances environmental performance, lowers costs, and promotes sustainability. These findings provide practical insights for developing sustainable strategies in diverse cultural and geographical contexts, particularly for residential projects. The integration of LCA and TOPSIS offers a robust decision-making framework, enabling targeted actions to minimize environmental footprints across all life cycle stages. This study contributes to the literature by providing actionable recommendations for optimizing resource use and improving sustainability in construction practices.