Design to cost uses cost as a design criteria for the engineering and production teams, to avoid having engineers designing a $300k "Ferrari solution", when all the customer really need and can afford is a $10k "Fiat" (ironically Fiat owns Ferrari). This concept is one of the key success criteria of IKEA. Design to cost in the context of a proposal is a cost target which estimators should consider but cannot be bound by, else there is a risk that the estimate will not stand-up to scrutiny.  It indicates what the proposal team believes is a realistic target both in terms of estimating and in terms of resulting in a final proposal cost which is competitive. Click here for more information.

The DTC column represents the target or design-to cost to guide estimators as they do a more detailed cost estimate for the resources required to deliver each WBS.  Cost targets are normally managed centrally by the proposal team:

1. Enter the design-to cost target at any level of your WBS hierarchy. We entered a $50,000 target for Non-recurring Engineering here
2. The DTC is summed up and "rolled-up" the WBS, so that the DTC or cost target for the parent WBS (1 Proposal in this case) is the sum of all DTC inputs for WBS elements under this node. The DTC of $170,000 is made up from $20K +  $100K + $50K
3. At this point the "DTC Variance" is zero because DTC is being rolled up your WBS structure accurately

You can assign or modify the DTC or cost target at any level of your proposal WBS, including at the top level (Proposal). When you edit the DTC at a higher level WBS element the system automatically keeps track of the "variance" between the DTC it calculated by rolling up the DTC from lower level WBS elements vs. the user-input DTC at the higher level or parent WBS:

1. In the screen shot below the user modified the design to cost for "1 Proposal" from $170,000 to $250,000
2. Since the sum of DTC for lower level WBS elements is still $170K, and the user modified this to $250K, there is now a variance of $80K. You can add the DTC variance column to your table if you can't see it
3. The DTC variance at the very top level is still $0 because the sum of lower level DTC (i.e. the sum of "1 Proposal" and any other level 1 WBS elements there might be) is $250K which is the same as the total bid DTC value. DTC variance is only calculated when and where you manually edit the rolled up DTC

You manually edit the higher level DTC (from $170K to $250K in this example) when you don't know how the design to cost should be broken down into lower level WBS elements. For example you might know how $170K is broken down into sub-WBS elements but while you believe the total DTC is $250K you simply don't have a clue (yet) how the final $80K should be broken down