KPIOperations & Supply Chain

Rework Cost as % of Contract Value

Cost of defective work requiring correction as a percentage of total contract value

What is Rework Cost as % of Contract Value?

Rework cost as a percentage of contract value is the cost of redoing work as a share of the total contract value. It shows how much is lost to fixing mistakes.

Rework eats into margin and delays delivery, so keeping it low protects profit.

How this KPI is measured

Function
Operations & Supply Chain
Sub-function
Quality
Industry
Construction & Engineering
Type
Lagging
Impact
Financial control
Unit
%
Measurement frequency
Monthly
Formula
(Cost of rework / Total contract value) × 100

How to calculate it

Divide the cost of rework by total contract value, and multiply by 100.

For example, if rework cost 120,000 on a contract worth 4,000,000, the figure is 3%.

Include labour, materials and delay costs of rework, and record causes such as design changes, errors or poor workmanship.

Where it is used

  • Protecting margin

    See lost profit.

  • Improving quality management

    Target causes.

  • Comparing projects

    Learn from best.

How to improve it

Tips and common mistakes

  • Separate client-driven change from mistakes.
  • Include hidden costs like delay.
  • Share lessons across projects.

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