Target Costing Research Analysis: Reflections For Construction Industry Implementation

Target costing or Genka Kikaku, as originally named in Japan, is not only a tool for managing costs, but a strategic approach for development of new products, that aims to reduce costs, ensuring quality, reliability and other attributes that will add value to the customers. This paper presents a framework that summarizes a product development process with the literal application of target costing, and seeks to compare this framework to three implementations of it in the construction industry. It started with elaboration of a flowchart that allowed the definition of the parameters to be used in the analysis. Results show that none of the cases studied covers a completed target costing implementation as envisioned in manufacture. Finally, this work points out some issues that need further development such as studies about alternative ways of obtaining the target cost - based on the current market price instead of historical data.601612Ansari, S., Bell, J., Swenson, D., A template for implementing target costing (2006) Cost Management, ABI/INFORM Global, 20 (5), pp. 20-27. , New YorkBallard, G., Reiser, P., The St. Olaf College fieldhouse project: A case study in designing to target cost (2004) Proceedings... of the 12th Annual Conference on Lean Construction, , DenmarkBallard, G., Rethinking project definition in terms of target costing (2006) Proceedings... of the 14th Annual Conference on Lean Construction, , Santiago, ChileBroome, J., Perry, J., How practitioners set share fractions in target cost contracts (2002) International Journal of Project Management, 20 (1), pp. 59-66. , DOI 10.1016/S0263-7863(00)00035-1, PII S0263786300000351Cooper, R., Slagmulder, R., (1997) Target Costing and Value Engineering, p. 379. , Productivity Press, PortlandCooper, R., Slagmulder, R., (1999) Supply Chain Development for the Lean Enterprise: Interorganizational Cost Management., p. 510. , Productivity Press, PortlandDekker, H., Smidt, P., A survey of the adoption and use of target costing in Dutch firms (2003) International Journal of Production Economics, 84 (3), pp. 293-305. , Elsevier, New YorkFormiga, A., Dos, S., Target costing implementation for cost estimating in construction firms of Porto Alegre/RS, Brazil (2005) Implantação Do Uso Do Target Costing Na Elaboraç ão de Orçamentos de Obras em Empresa de Construção Civil de Porto Alegre-RS, p. 105. , Master. Diss., Civil Eng., Federal University of Rio Grande do Sul, Porto Alegre-RS, Brazil, . (in Portuguese)Granja, A.D., Picchi, F.A., Robert, G.T., Target and Kaizen costing in construction (2005) Proceedings... of the 13th Annual Conference on Lean Construction, , Sidney, AustraliaIbusuki, U., Kaminski, P.C., Product development process with focus on value engineering and target-costing: A case study in an automotive company (2007) International Journal of Production Economics, 105 (2), pp. 459-474. , DOI 10.1016/j.ijpe.2005.08.009, PII S0925527306000958, Scheduling in Batch-Processing Industries and Supply ShainsKern, A.P., Soares, A.C., Formoso, C.T., Target costing in cost planning and control of construction projects (2006) Proceedings... of the 11th Encontro Nacional de Tecnologia Do Ambiente Construído (ENTAC), , Florianópolis, Santa Catarina, Brasil (in portugueseLin, T.W., Merchant, K.A., Yang, Y., Yu, Z., Target costing and incentive compensation (2005) Cost Management, ABI/INFORM Global, 19 (2), pp. 29-42. , New YorkMcNair, C.J., Polutnik, L., Silvi, R., Customer-driven lean cost management (2006) Cost Management, ABI/INFORM Global, 20 (6), pp. 9-21. , New YorkMonden, Y., (1995) Target Costing and Kaizen Costing, p. 373. , Productivity press, Portland, OregonNicolini, D., Tomkins, C., Holti, R., Oldman, A., Smalley, M., Can Target Costing and Whole Life Costing be Applied in the Construction Industry?: Evidence from Two Case Studies (2000) British Journal of Management, 11 (4), pp. 303-324Robert, G.T., Granja, A.D., Target and Kaizen costing implementation in construction (2006) Proceedings... of the 14th Annual Conference on Lean Construction, Santiago, ChileWilliamson, A., Target and kaizen costing (1997) Manufacturing Engineer, 76 (1), pp. 22-24Yook, K., Kim, I., Yoshikawa, T., Target costing in the construction industry: Evidence from Japan (2005) Construction Accounting & Taxation, ABI/INFORM Global, 15 (3), pp. 5-18. , New Yor