Target and Kaizen Costing in Construction

Ariovaldo Denis Granja1, Flavio Augusto Picchi2 & Gabriel Torrano Robert3

1Professor, Architecture and Construction Department, School of Civil Engineering, Architecture and Urban Design. Av. Albert Einstein, 951, Caixa Postal 6021, Univ. of Campinas, Campinas/SP, Brazil, CEP 13084-971, Phone +55 19/3788-2082, FAX 19/3788-2411, adgranja@fec.unicamp.br ; fpicchi@fec.unicamp.br.
2Director, Lean Institute Brazil, Rua Topázio 911, São Paulo/SP, Brazil, CEP 04105-063, Phone +55 11/5571- 6887, FAX 11/5571-0804, fpicchi@lean.org.br
3Postgraduate research student, Architecture and Construction Department, School of Civil Engineering, Architecture and Urban Design, Univ. of Campinas, Campinas/SP, Brazil, gabriel.robert@bwu.com.br

Abstract

Target costing has been pointed out as a powerful strategy of lean manufacturing companies’ interaction with suppliers. In fact, recent academic and corporate literature show that target costing has a wider role in the lean business system, driving product development and production activities, when combined with kaizen costing. This research aims to develop a framework taking together these two matching approaches, providing a basis of a total cost-management system during the project’s life cycle. The main idea is to first design the project to an allowable cost consisting of the difference among target price meeting customer’s expectations and the desired profit. Cost-reduction interventions should be not restricted to the design phase; they proceed to the construction phase where a continuing series of kaizen activities are needed to achieve great product performance and, at the same time, assuring value for the customer at a lower cost. Combining target and kaizen costing is a powerful approach for construction firms performing in a competitive market, by assuring value for the customer at a low but still profitable price.

Keywords

Target costing, Kaizen costing, Cost reduction.

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Reference

Granja, A.D. , Picchi, F.A. & Robert, G.T. 2005, 'Target and Kaizen Costing in Construction' In:, 13th Annual Conference of the International Group for Lean Construction. Sydney, Australia, 19-21 Jul 2005. pp 227-233

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