Target Cost Management
Value Engineer (old terminology)...Target Cost Management (new paradigm)
It used to be that Bid Day was the day that the Owner fretted and designers prayed.Would the project bid within budget? Or will it take a “value-engineering” effort to make the project happen? If value-engineering was necessary, it was like “pulling the wings off the butterfly” and quality (characterized as better value) was being pulled from the project. Most importantly, elements of the project that different stakeholders held dear might end up being removed to meet the budget.
Firms that have integrative practices recognized this long ago and believed that there had to be a better way. The answer was simple. By applying the construction professional’s knowledge and focus on each and every project from the beginning, we could employ Target Cost Management, allowing the design to meet the Owner’s budget and priorities. Collaboration between the designer and builder is extremely important when designing to a budget. This approach, while not perfect, produces much better results than the industry average.
Building Information Modeling
The advent of Building Information Modeling (BIM) is allowing integrated firms to employ Target Cost Management at a higher level than ever before. The BIM methodology requires decisions earlier in the design process. This translates to better costing information being developed earlier than was possible in the past. Better costing information facilitates a budgeting effort involving an entire team who understands the costs associated with different elements of the project, market conditions and timing.
BIM, as a tool for the integrated team, also allows real time project cost adjustments as the project design evolves. Instead of conducting takeoffs and estimates at each phase of the project (historically Schematic Design, Design Development and Construction Documents), the savvy integrated team tracks cost adjustments to the conceptual budget continuously throughout the design process. This balancing act is almost impossible if the project team doesn’t understand the cost implications of design decisions.
Experience has proven that the inclusion of a construction professional on the design team is the perfect resource to address the costs associated with the design solution. By immersing this individual as part of the design team, your team should be able to provide real-time Target Cost Management.
For more information please see “The Guild Master” white paper.