During which stage is the 'Develop Target Cost' step crucial?

The 'Develop Target Cost' step is crucial during the predesign stage because this phase is essential for establishing a cost framework that will guide the project through its various developments. In the predesign stage, organizations need to align their project objectives with financial expectations, making it vital to determine a target cost that reflects the intended value and financial feasibility of the project.

This target cost sets the benchmark for later stages and helps ensure that design and construction efforts stay within budget, allowing for the identification of cost-saving opportunities early in the process. It is during this stage that stakeholders can evaluate whether the project can be realistically completed within the desired financial limits before significant resources are committed. This proactive approach can prevent costly revisions later in the process when changes may be much more expensive to implement.

In contrast, the other stages focus on refining designs, executing production plans, and implementing the project, where specific costs may change based on design decisions made during predesign, making them less suitable for developing a target cost.