A method for jointly evaluating and optimizing the functional performance and production costs of a design is introduced to produce high quality designs with better life-cycle performance and shorten product development lead-times. Various design approaches considering both functional performance and production costs are investigated. A method for associating performance with costs based upon a combined feature, tolerance and production process model is introduced. The methods are illustrated using a typical design example of the hole feature. The study contributes to optimal design theory, and forms the basis for integrated concurrent engineering design.