Target Attainment Review

At project milestones, measure distance to target cost and decide: redesign, renegotiate, or accept with eyes open.

Time45 min
FormatSmall group
StageTrack

Target Attainment Review: what it is and why it works

Target Attainment Review measures, at each project milestone, how far the current cost is from the target cost for every module, and forces a decision on each gap. The team computes the gap and its trend since the previous milestone, then chooses per module: redesign to close the gap, renegotiate with suppliers, or accept the gap explicitly with a documented business rationale. Accepted gaps are totaled and compared with what the business case can absorb; if the total threatens the case, the issue is escalated rather than left to accumulate quietly.

The method works because target costing only disciplines a project if the target is checked often enough to act on. Without regular attainment reviews, a target set at the start becomes a number nobody looks at until launch, when the gap is fixed in tooling and contracts. Treating acceptance as a decision rather than a default keeps accountability visible and prevents many small, reasonable-sounding overruns from adding up to a failed business case. Target attainment tracking is part of the target costing literature, including Kato and Boer. The review links back to Target Cost Definition, uses the Cost Risk Assessment to judge whether trends are likely to continue, and feeds the go/no-go logic of the Cost Gate Review.

What you need

Target cost per module from the target cost definition
Current cost estimates per module with confidence grades
Trend data from previous milestones
Business case margin and the maximum total gap it can absorb
Open risks and ongoing cost reduction actions

What you get

Gap and trend per module: closing, stable or opening
A decision per module: redesign, renegotiate or accept
Documented rationale for each accepted gap
Total accepted gap compared with business case tolerance
Escalation note when the business case is at risk

When to use it

When the target date arrives and nobody has checked the target cost.

How to do it, step by step

At each milestone, measure current cost against target cost per module.
Compute the gap and the trend: closing or opening?
Decide per module: redesign, renegotiate, or accept explicitly.
Document the accepted gaps with their business rationale.
Escalate if the total gap threatens the business case.

Worked example: Milestone review on a rotary screw compressor platform

Illustrative scenario — figures are realistic but not from a real company.

A compressor maker was developing a new 100 hp rotary screw platform with a target cost of $14,200 per unit, split into seven modules. At the design release milestone, the current estimate stood at $15,050, 6% over target, with the business case able to absorb about 2%.

The team reviewed the seven modules. The airend and controls were at target. The motor was $180 over, the cooler $260 over, the enclosure $240 over and the oil separator $170 over.
The cooler gap had been closing for two milestones and had a design change in progress: redesign continued.
The motor gap came from a premium-efficiency motor required by the target markets; the team accepted it explicitly as a value feature and documented the rationale.
The enclosure and separator were sent to renegotiation with quotes from alternative suppliers.
Projected closure left a total gap of about $330, 2.3%, slightly above tolerance, so the project manager escalated with two options: accept a small price increase or delay an optional feature.

Result. Management chose a modest list price adjustment supported by the efficiency benefit. By launch, the gap was $290. The review template became standard for the business unit because it made accepted gaps visible rather than implicit.

Open it in the FieldKit Design to Cost app → Get the Design to Cost template pack — join the waitlist

Common pitfalls and how to avoid them

Measuring only the total gap, which hides modules that are drifting.Review gap and trend module by module.
Letting gaps be accepted by silence.Require an explicit decision and written rationale for every accepted gap.
Counting planned savings as achieved.Show current cost and projected cost separately, and credit savings only when confirmed by quotes or design release.
Escalating only at launch.Define in advance the total gap that triggers escalation, and apply it at every milestone.

Frequently asked questions

What is target costing?

Target costing starts from the price the market will pay and the profit the business needs, and derives the allowable cost of the product. That target is then broken down to modules and components, and the design is developed to meet it. It reverses the cost-plus logic, where price is set from whatever the design turns out to cost.

What should you do when a product is over its target cost?

For each module over target, decide whether to redesign, renegotiate with suppliers, or accept the gap with a clear rationale, such as a feature customers value. Check the trend: a gap that is closing may need no new action. If the total accepted gap threatens the business case, escalate to reconsider price, scope or timing.

How often should target cost attainment be reviewed?

At every project milestone at minimum, and more often during detailed design, when most decisions are made. Linking reviews to existing gates and to the regular cost dashboard refresh keeps the effort small and ensures decisions are taken while design changes are still affordable.

Origin

Target attainment tracking — target costing literature (Kato & Boer, 1996).

Used in these playbooks

Gate cost review pack 1 day

One day before each gate: dashboard refreshed, variances explained, attainment measured — and the go/no-go decision documented.

Related methods

More in “Track”

Keep the target visible: dashboards, gates and ownership.