Guidelines for target costing adoption in the development of products for the residential real estate market

Abstract

This study focuses on the problems associated with the traditional practice of reducing costs in construction and the need to increase business competitiveness in the residential real estate sector. In this context, target costing is a promising approach to improve the competitiveness of companies by ensuring that the products launched on the market do not jeopardize the company's results and value delivery to customers. However, far too little attention is paid to target costing implementation by companies that develop residential real state products for sale and face strong market competition. Thus, this paper seeks to investigate whether the standard framework of target costing in the literature applies - with or without adjustments - to real estate developers. Case study was the research strategy adopted. Guidelines are proposed for the introduction of target costing in the development process of residential real estate products. The proposed guidelines are related to the three main sections of the target costing process: market-driven costing, product-level target costing and component-level target costing.

A New Cost Management System for Construction Projects to increase Competitiveness and Traceability in a Project Environment

“…In fact, cost management is a set of steps that management takes to ensure more satisfaction and continuous control and cost reduction. The emphasis of cost management systems is on company activities (Jaya, 2013).…”

“…And identifying opportunities and reducing costs based on value engineering (Melo & Granja, 2017). Martha Jaya in 2013 proposed a model for controlling overhead costs with using first-generation activity based costing in construction projects and calculating overhead costs for each activity based on cost drivers, and increasing accuracy and certainty in estimates and cost budgets and costs control (Jaya, 2013). In Zimina, Glenn & Pasquire (2012), a target costing and lean methods has been used to design the target value on 12 construction projects, which aims at construction cost savings in the project's delivery in terms of cost, time and quality.…”

“…The indirect or overhead costs of the project are between 8% and 15% of total construction costs, which depends on the complexity of the project, where it can grow at a faster rate than direct costs. Large construction firms had a significant increase over 77% in overhead costs of the project and 9.8% unchanged and only 3.2% down (Jaya, 2013). Typically, the cost of construction projects is controlled by the accounting department, and due to the time interval in the accounting operation, there is a late reaction to circumstances.…”

Proposta de aplicação do target costing no processo de projetos de empreendimentos imobiliários em Goiânia

“…A colaboração é garantida por meio de um contrato característico dessa abordagem -Integrated Form of Agreement (IFoA)e utilização de ferramentas BIM. Este primeiro, trata-se de um contrato relacional entre os principais stakeholders, no qual se estabelece incentivos monetários e não monetários entre todos os membros com o objetivo de se reduzir os custos do empreendimento, os realocando, visando obter aumento de valor para os usuários finais (BALLARD, 2015;ZIMINA et al, 2012, MELO;2017).…”

Target Value Design in Real Estate Market: A Conceptual Map Model

“…In such a context, there is a number of variables that influence the design process, such as: cost and schedule constraints, stakeholders from different areas of knowledge and a highly fragmented design process. In Brazil, in addition to the characteristics mentioned above, the construction sector counts with adversarial relationships, where private agendas often overlap the interests of the product as whole and where a collaborative environment is unusual and achieving it effectively can be quite challenging (Oliva, 2014;Melo and Granja, 2017;Neto, Costa and Ravazzano, 2018). On the other hand, the Target Value Design (TVD) consists of a proactive approach to cost management, encouraging collaboration among the stakeholders, and positioning costs and the value perspective for the end user as drivers of the design process.…”