Shift Attention from Expected to Target Costs
July 25th, 2006 by HalProject definition happens in a conversation between ends, means, and constraints. Projects start with clients' wishes: purposes, values, and design criteria. This is bounded by finances, location, regulations, etc.
Rethinking Project Definition in Terms of Target Costing
Glenn Ballard
Glenn has a schematic for a project definition process that incorporates a series of workshops to establish ends, means, and constraints that are in alignment.
"Target costing reveals badly-kept secrets."
Glenn says that the industry has its attention on expected costs rather than target costs. People generally don't know how to make something cost the target that was set. Glenn has established a process for setting the target cost. The process includes "stage gates" to evaluate whether to continue or not based on criteria for each stage. The approach has been piloted on a healthcare project in northern California. Initial results are positive.
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July 26th, 2006 at 12:28 am
This was a hot topic for me a few years ago in a construction company. We were in a competition for a facility where I raised with the estimating team the possibility of setting a cost target, based on our assessment of the competition, then having the designers work to it. All I got was blank looks! We lost the job.
Now its a hot topic for the NSW Govt. for which I work. ‘Budget certainty’ is the goal; that is, once the budget is agreed it must be achieved. My job is to devise tools to assist project teams across Govt. do this, so I’m deeply interested in Glenn’s work.