This article was downloaded by: [The Aga Khan University]

On: 10 October 2014, At: 19:04

Publisher: Taylor & Francis
Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered
office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

Civil Engineering and Environmental

Systems
Publication details, including instructions for authors and
subscription information:
http://www.tandfonline.com/loi/gcee20

Calculating total rework costs in

Australian construction projects
a b
Peter E. D. Love & David J. Edwards
a
We-B Centre, School of Management Information Systems , Edith
Cowan University , Joondulap, Perth, WA, 6027, Australia
b
Off-highway Plant and Equipment Research Centre (OPERC),
Department of Civil and Building Engineering , Loughborough
University Loughborough , Leicestershire, LE11 3TU, UK
Published online: 25 Jan 2007.

To cite this article: Peter E. D. Love & David J. Edwards (2005) Calculating total rework costs in
Australian construction projects, Civil Engineering and Environmental Systems, 22:1, 11-27, DOI:
10.1080/10286600500049904

To link to this article: http://dx.doi.org/10.1080/10286600500049904

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the
“Content”) contained in the publications on our platform. However, Taylor & Francis,
our agents, and our licensors make no representations or warranties whatsoever as to
the accuracy, completeness, or suitability for any purpose of the Content. Any opinions
and views expressed in this publication are the opinions and views of the authors,
and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content
should not be relied upon and should be independently verified with primary sources
of information. Taylor and Francis shall not be liable for any losses, actions, claims,
proceedings, demands, costs, expenses, damages, and other liabilities whatsoever
or howsoever caused arising directly or indirectly in connection with, in relation to or
arising out of the use of the Content.

This article may be used for research, teaching, and private study purposes. Any
substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,
systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &
 Conditions of access and use can be found at http://www.tandfonline.com/page/terms-
and-conditions
Downloaded by [The Aga Khan University] at 19:04 10 October 2014
 Civil Engineering and Environmental Systems
Vol. 22, No. 1, March 2005, 11–27

Calculating total rework costs in Australian

construction projects
PETER E. D. LOVE*† and DAVID J. EDWARDS‡
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

†We-B Centre, School of Management Information Systems, Edith Cowan University,

Joondulap, Perth WA 6027, Australia
‡Off-highway Plant and Equipment Research Centre (OPERC), Department of Civil
and Building Engineering, Loughborough University Loughborough,
Leicestershire LE11 3TU, UK

(Received 30 August 2004; revised 12 October 2004)

In recent years, academic research has focused on identifying the factors that cause construction project
rework in an attempt to eradicate its occurrence. The success of these previous studies has been mixed
most notably because industry lacked a clear and universal definition of rework. Consequently, findings
emanating from studies conducted to date cannot be compared or contrasted and neither can the work be
brought together as a homogenous whole. To address this current deficiency, this study first examined
previous rework definitions and a priori research in order to develop a clear definition that would
placate industry concerns. This definition was then used as the basis for a national questionnaire
survey in Australia, which sought to collate data on the total cost of rework; where total cost is a
function of direct and indirect rework costs. A total of 161 construction professionals (from a range of
occupations) participated in this study and provided much needed evaluations and personal knowledge
of rework costs for recently completed projects. The costs of rework were found to be significant,
with the mean direct and indirect cost of rework as a percentage of contract value being 6.4% and
5.9%, respectively. There were significant differences identified between the estimates propagated by
respondents, this being between design consultants and project managers. Additionally, there were no
significant differences found between rework costs and procurement methods used and project types.
The article concludes by suggesting that further work is required to develop a system which is capable
of identifying rework and estimating the costs.

Keywords: Australia; Costs; Defects; Deviations; Failures; Non-conformance; Rework

1. Introduction

Rework is a significant factor that contributes to time and cost overruns in construction projects
(Love 2002a), and having acknowledged this, academics and practitioners have attempted to
identify its causes (e.g., Burati et al. 1992, Willis and Willis 1996, Barber et al. 2000, Joseph-
son et al. 2002, Love and Smith 2003, Love et al. 2003). Yet, according to Love and Edwards
(2004) the intricately ‘complex’ interwoven array of factors (and variables within factors) that

*Corresponding author. Email: p.love@ecu.edu.au

Civil Engineering and Environmental Systems

ISSN 1028-6608 print/ISSN 1029-0249 online © 2005 Taylor & Francis Group Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/10286600500049904
 12 P. E. D. Love and D. J. Edwards

contribute to rework occurrence obscure any specific cause and effect relationship that may
exist. This is because of the interdependency of work arrangements, dynamic social interac-
tions between project participants, and the socio-economic and political structure that exist.
While causation diagnostics are problematic, any equally difficult situation may arise with
the quantification of rework costs principally because there is no universal agreement which
adequately defines rework. For example, Josephson et al. (2002) erroneously used the term
‘rework’ to present findings from research that examined ‘defects’. Other research has tended
to only investigate specific attributes of rework, such as defects, rather than investigating it as
a total entity. Consequently, a myriad of definitions have emanated from academic literature,
each serving to blur and distort the boundaries that clearly delineate rework from other factors.
Furthermore, reported studies that have sought to determine rework costs have been limited
in terms of the scope, size, type and value of projects examined (e.g., Burati et al. 1992, Willis
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

and Willis 1996, Love and Li 2000, Josephson et al. 2002). Against this contextual backdrop,
this article identifies the attributes of rework in order to establish a lucid definition. The work
then builds upon this definition to develop a questionnaire survey which sought to collate data
on rework costs from a diverse and representative (of industry) range of construction projects.

2. Attributes of rework

Terms such as quality deviation, non-conformances, quality failures, and defects have often
been considered to be synonymous with rework (e.g., Burati et al. 1992, Abdul-Rahman 1993,
Josephson and Hammarlund 1999, Barber et al. 2000, Josephson and Larsson 2001, Josephson
et al. 2002). Moreover, changes, errors, and omissions are implicitly incorporated within these
terms (Farrington 1987). Figure 1 identifies the various terms obtained from the literature,
which have historically been used to denote aspects of rework. These terms have often been
used interchangeably and as a result, a degree of ambiguity with the definitions of what
constitutes rework costs exists. For example, the terms quality failure and defects have been
used interchangeably within the same study (Hammarlund and Josephson 1991, Josephson
and Hammarlund 1996, Josephson and Hammarlund 1999). In addition, the aforementioned
terms have also been used interchangeably to describe errors (Josephson and Bröchner 1999,
Josephson and Larsson 2001). Even more surprising is that Josephson et al. (2002) even used
the term ‘rework’ to present the findings reported in their previous research that examined
defects and errors (Hammarlund and Josephson 1991). Moreover, they report the same case
studies’ findings presented in their 1999 paper Automation in Construction (Josephson and
Hammarlund 1999), but the data collection methods are significantly different. Thus, the

Attributes of System Variation

Deviation
Change
Error
Omissions
Task and/or process Rework
Defect
having to be rectified
Failure
Damage
Repair
Non-conformance

Figure 1. Defining attributes of rework.

 Calculating total rework costs 13

reliability and validity of the findings presented in Josephson et al. (2002) are questionable.
The inapt differentiation between terms such as quality failures, defects, and errors can lead
to inaccurate and incomplete measurements for rework and possibly inappropriate strategies
for reducing its occurrence.
Farrington (1987; p. 170) and Burati et al. (1992; p. 35) used the term quality deviation to
examine an aspect of rework in construction projects. They defined quality as the ‘conformance
to established requirements’ and a deviation as ‘changes to the requirements that result in
rework, as well as products or results that do not conform to all the specification requirements,
but do not require rework’. Farrington (1987) and Burati et al. (1992) purposefully used the
term deviation, rather than the terms failure or defect to indicate that a product or result that
does not conform to all specification requirements does not necessarily constitute an outright
failure. A deviation, therefore, may be classified as an imperfection, non-conformance, or
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

defect on the basis of its severity (Farrington 1987, Burati et al. 1992). In attempting to
further define a quality deviation, Farrington (1987) makes reference to changes, errors, and
omissions that may occur during design and construction. Farrington (1987; p. 27) provides
further elucidation thus:

• a change – ‘a directed action altering the currently established requirements’;

• an error – ‘any item or activity in a system that is performed incorrectly resulting in a
deviation’; and
• an omission – ‘any part of a system including design, construction, and fabrication, that has
been left out resulting in a deviation’.

Abdul-Rahman (1993) used the term cost of non-conformance as defined in British Standard
BS6143: Part 2 (1992) to determine an attribute of rework. Here, non-conformance costs were
defined as ‘the cost of inefficiency within the specified process, i.e., over resourcing of excess,
materials and equipment rising from unsatisfactory inputs, errors made, rejected outputs, and
various other modes of waste’. Using the BS6143: Part 2 (1992) for identifying the costs of
quality, or otherwise known as quality costs, Barber et al. (2000) define rework as a ‘quality
failure’, which is a subsection for measuring non-conformance costs. Here, quality failures
are classified as:

• internal failures – cost incurred due to scrapping or reworking defective product or

compensation for delays in delivery; and
• external failures – cost incurred after the delivery of a product to the customer (costs of
repairs, returns, dealing with complaints and compensation).

A repair, which is ‘the process of restoring a non-conforming characteristic to an acceptable

condition even though the item may not still conform to the original requirement’ (Ashford
1992; p. 193) can also be included as rework. Bearing in mind the aforementioned definitions,
a repair in some instances may not actually constitute rework if it remains a non-conforming
item. Ashford (1992; p. 194) uses the definition of rework provided by BS 4778:1987, Part
1, which defines it as ‘the process by which an item is made to conform to the original
requirement by completion or correction’. The Construction Industry Development Agency
(1995), however, defined rework as ‘doing something at least one extra time due to non-
conformance to requirements’. When reflecting upon these definitions, it can be seen that a
combination of attributes contribute to rework occurrence. Building upon these earlier studies
and taking into account the disparate range of definitions that currently exist, this article
defines rework as ‘the unnecessary effort of re-doing a process or activity that was incorrectly
implemented the first time’ (Love 2002a).
 14 P. E. D. Love and D. J. Edwards

3. International rework related cost studies

3.1 Australia

Cusack (1992) revealed that documentation errors are a major cause of rework and that projects
without a quality system in place typically experience a 10% cost increase because of rework.
Burroughs (1993) reported that a major Australian contractor had experienced rework costs
of 5% of contract value in one of their major projects, which were attributable to poor doc-
umentation produced by design consultants. Furthermore, it was found that the concreting
subcontract experienced a cost increase of 31% because of rework. Gardiner (1994) estimates
that rework costs stemming from design consultant errors could be as high as 20% of their fee
for a given project.
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

The Construction Industry DevelopmentAgency (1995) found that poor communication, the
use of traditional lump sum procurement methods, and the lack of a formal quality management
system were major factors that contributed to rework in projects. It was found that rework costs
for traditional lump sum methods exceeded 15% of a project’s contract value. However, those
projects that had a formal quality management system in place recorded significantly lower
levels of rework. Lomas (1996) of Barclay Construction Ltd (Australia) reported that prior to
the implementation of the quality assurance (QA) system, it was estimated that rework costs
were 5% of contract value. Upon QA implementation, rework was found to be less than 1% of
contract value in almost all projects. Lomas (1996) found that QA contributed to an aggregate
saving to the company in excess of Aus $4.2 million in 1996, which equated to approximately
1% of turnover.
Love and Li (2000) examined rework costs in a residential project and a warehouse project
and found them to be 3.15% and 2.40% of each project’s contract value, respectively. In the
residential project, which was procured using a traditional lump sum contract, change orders
accounted for 2.7% rework costs, with the remaining 0.45% due to contractor and subcontractor
errors and defects. In the warehouse project, which was procured using a design and construct
contract, rework costs were distributed amongst the client and occupiers, contractor, and
subcontractor at 0.5%, 1.46% and 0.43%, respectively. In this instance, 49% of rework costs
were due to construction changes and errors.

3.2 Singapore

The Construction Industry Development Board (CIDB) (1989) in Singapore stated that an
average contractor was estimated to spend between 5% and 10% of the project costs doing
things wrong and rectifying them. The CIDB concluded that a proper quality management
system would cost in the range of 0.1–0.5% of total project cost. The cost of system imple-
mentation should however be balanced against an anticipated 3% saving in total project cost
(or a return of around five times the original quality outlay).

3.3 Sweden

Hammarlund et al. (1990) recorded quality failures throughout the construction of a commu-
nity service building and found 79% of the failure costs arose from 20% of the quality failures
registered. Approximately 34% of the failures were related to site management, 20% each
were attributable to design, workmanship, and material delivery. Josephson and Hammarlund
(1999) conducted a series of studies between 1994 and 1996 to examine the causes and costs
of seven building projects. The number of defects recorded ranged from 283 to 480 and these
 Calculating total rework costs 15

had an associated cost which ranged from 2.3% to 9.3% of the production cost. In addition,
it was found that 32% of the defect costs originated from the early stages of a project e.g.,
during client and design team interaction), 45% originated on-site and were attributable to
site management and subcontractors, and 20% from materials, plant, and equipment, and
lack of motivation due to ‘carelessness or forgetfulness’ was attributed as a cause for 50% of
defect costs. Similarly, 29% of defect costs were attributable to lack of knowledge, 12% poor
information, 6% risk, and 3% stress.
Nylén (1996) sought to determine quality failures in four major railway engineering projects
in Sweden. In the four cases studied, 232 failures during the production phase of the project
were identified, which contributed to 10% of each project’s production costs. Surprisingly,
10% of the failure costs contributed to 90% of the total failure costs incurred, of which the
client was the perpetrator for 72% of these costs. Furthermore, Nylén (1996) found that 51%
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

of failure costs were attributed to communication problems between the client and consultants
during the design process.

3.4 United Kingdom

Abdul-Rahman (1993) found non-conformances in a water treatment plant accounted for

2.5% of contract value. That said, he specifically noted that not all non-conformances could
be identified because of resource constraints and availability of site personnel. Abdul-Rahman
(1993; p. 56) states, ‘assuming that the rate at which the cost of non-conformances occur is
constant throughout construction then the total cost of non-conformance is estimated to be 6%
of the estimated project cost’. This figure did not reflect the full extent of rework that occurred,
as many client-initiated variations were not included in the analysis. Abdul-Rahman (1993)
also examined non-conformances costs in a highway project. Non-conformances were found
to account for 5% of the tender value. This project implemented a quality system and the costs
reported did not include material wastage and head office overheads, so it was suggested by
Abdul-Rahman (1993) that a project with a poor quality management would incur a higher
figure.
Barber et al. (2000) revealed that quality failure costs were 16% and 23% of contract
value. However, these estimates included an allowance for the cost of delay. If these were
removed, then the costs of failure would amount to 6.6% and 3.6% of the direct cost of
rework. Barber et al. (2000) found that 20% of the failures accounted for 80% of the cost
of total failures incurred. When the causes of these major categories were traced, Barber
et al. (2000) noted that they were usually not root causes. They found that a catastrophic
chain reaction of (almost insignificant) events commences with a ‘perceived’ small problem
which remains largely unnoticed and unrectified. Later in (or post) the construction phase,
the problem gathers momentum as knock-on effects crystallise and expand the problem far
beyond original perceptions. Design-related errors were found to account for 50% of failure
costs.

3.5 USA

Farrington (1987) found that the average cost of rework (including re-designs) in nine industrial
engineering projects was 12.4% of the total installed project cost. Furthermore, design changes,
errors, and omissions averaged 78% of the total of deviations and 79% of the total deviation
costs, whereas construction deviations averaged 16% of the total number of deviations and
17% of the total deviation costs. Noteworthy, these findings have also been subsequently
reiterated (and thus, validated) in Burati et al. (1992). Willis and Willis (1996) revealed that
 16 P. E. D. Love and D. J. Edwards

the total quality cost, which is the cost of prevention and appraisal plus the cost of failure
and deviation correction, was 12% of total labour expenditures for design and construction.
This 12% was made up of 8.7% prevention and appraisal and 3.3% deviation correction. In
addition, the sources of deviation correction causes were attributable to design error (38%),
vendor error (30%), and designer change (29%).
Although previous research has sought to determine the direct (tangible) costs of rework,
the indirect (intangible) costs remain unexplored in construction. This is because it is difficult,
if not impossible, to quantify such costs in pure monetary terms. Bowersox et al. (1985)
estimated that the cost of rectifying a poor quality product or service could be more than eight
times its original cost. Likewise, Sörqvist (1998) and Love (2002b) revealed that a multiplier
effect of at least three to five was directly related to the indirect effects of a quality failure.
Barber et al. (2000) suggest that when indirect costs are considered, the total cost of rework
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

can be as high as 23% of contract value.

4. Research method

A questionnaire (containing 116 measurement scales) was developed on the basis of a cul-
mination of literature review and pilot studies and sought to examine the influence of project
characteristics, organisational management practices, and project management influences on
rework costs. Respondents were asked to provide an estimate as to the direct and indirect
costs of rework that occurred in the project they selected. Rework costs are very rarely, if
ever, measured in construction, so the estimates provided by respondents are based on their
cognisance of the project they have selected. Rework costs are analysed in terms of total,
direct, and indirect costs with respect to respondents’ estimates, procurement methods, and
project types.
Stratified random sampling was used to select the study sample from the telephone direc-
tory, Yellow Pages. This sampling technique ensured that duplication of selected projects was
minimised by the geographical dispersion of the questionnaires throughout different states
in Australia. Prior to determining the main study’s sample size, a pilot survey was under-
taken with 30 randomly selected firms, which comprised of architects, project managers, and
contractors from the Geelong and Melbourne region, in the State of Victoria. The objective
of the pilot was to test the questionnaire’s potential response rate and the suitability and
comprehensibility.
Each firm was contacted by telephone and informed of the research aim and objectives. On
obtaining their further interest and collaboration with the work, the pilot questionnaire was
mailed, with a stamped addressed return envelope enclosed, for respondents’ returns, com-
ments, feedback, and completion. Respondents were also asked to critically review the survey’s
design and structure. A total of 25 responses were received (representing an 83% response
rate) and all were positive and confirmed that the questionnaire should remain unaltered for
the main survey. The respondents who returned the questionnaire comprised architects (30%),
contractors (50%), and project managers (20%).
In the main survey, 420 questionnaires were distributed to practitioners (architects, con-
tractors, electrical engineers, mechanical engineers, project managers, QSs, and structural
engineers) throughout Australia. A total of 136 valid responses were received from the main
survey, representing a much lower response rate than that recorded for the pilot study and thus
reinforcing the inherent value of preliminary telephone calls. Pilot questionnaires were added
to the sample as no changes were made to it, thereby giving a total of 161 valid responses
 Calculating total rework costs 17

Types of Respondents

QS
9.9% Architect
24.8%
Project manager
23.0%

Structural engineer
5.0% Contractor
32.9%
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

Electrical engineer
.6%

Mechanical engineer
3.7%

Figure 2. Respondents by profession.

(or 36% response rate). This response rate is considered within the range of acceptability for
a survey work focusing on gaining responses from industry practitioners (Alreck and Settle
1985).
Figure 2 provides a breakdown of the valid responses by respondent type and reveals that
contractors, architects, and consultant project managers accounted for approximately 81% of
the respondents. Although, superficially it would appear that QSs, structural, mechanical, and
electrical engineers are underrepresented, it should be noted that many consultancy firms offer
project management services and as a result, may have undertaken a role of project manager
for a project they selected.

5. Data reliability

Data reliability is related to data source and is therefore inextricably linked to the position held
by the person who completed the questionnaire (Oppenheim 1992). Thus, it was imperative
that respondents had detailed knowledge about the procurement processes associated with
a project. With this prerequisite requirement in mind, the questionnaire was mailed to the
senior personnel within the organisations identified. From the 161 completed questionnaires
it was apparent that most respondents held senior positions within their organisations. It was
therefore confirmed that direct mailing to individuals in organisations seemed to have achieved
its objective of reaching those who were closely involved with delivering construction projects.
Figure 3 provides a breakdown of the respondents by State.
As there were low response rates from the QSs and the engineering profession, the
respondents were re-categorised under the following headings for analysis purposes:

• design consultants, who comprised architects, QSs, structural, mechanical, and electrical
engineers (44%);
• contractors (33%); and
• consultant project managers (23%).
 18 P. E. D. Love and D. J. Edwards

Respondents by State

Western Australia
1.9%

South Australia
9.9%

Victoria
Queensland
45.3%
24.8%
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

New South Wales

18.0%

Figure 3. Firms by state.

6. Findings and discussion

Rework costs are very rarely, if ever, measured by Australian construction organisations, so the
estimates provided by respondents were based on subjective evaluations and their personal
knowledge of the project (Love 2002b). The total rework costs were calculated by adding
the direct and indirect estimates provided by the respondents. Table 1 presents a summary
of individual participants’ estimates of rework. The mean (M) and standard deviation (SD)
of total rework costs for the 161 construction projects were 12.0% and 13.56%, respectively
(figure 4).
Respondents’ estimates for direct rework costs were M = 6.4% and SD = 7.78%, and for
indirect rework costs were, M = 5.6%, SD = 7.19% (figures 5 and 6). It can be seen from
table 2 that the total costs of rework were found to vary considerably between projects. Some
respondents reported rework costs to be less than 1% of a project’s original contract value,
whereas others reported them to be as high as 80%. The degree of variability in the estimates
given by the respondents suggests that construction professionals may be unsure about the
actual costs of rework that were incurred in the projects they selected.
To test whether there were significant differences between the estimates of the respon-
dents for rework costs (direct and indirect), a one-way analysis of the variance (ANOVA)
was undertaken. Table 1 reveals that there were differences between the design consul-
tants (M = 8.0%, SD = 9.3), contractor (M = 5.8%, SD = 7.2%), and project manager

Table 1. Direct and indirect rework cost estimates by respondent type.

Direct rework costs Indirect rework costs

Std. Std. Std. Std.

Respondent N Mean deviation error Min Max Mean deviation error Min Max

Design consultant 71 8.0 9.3 1.1 0.50 50.00 6.77 8.34 0.99 0.00 50.00
Contractor 53 5.8 7.2 1.0 0.10 30.00 5.46 6.87 0.94 0.00 30.00
Project manager 37 4.3 3.9 0.6 0.50 15.00 3.64 4.37 0.71 0.00 20.00
Total 161 6.4 7.8 0.6 0.10 50.00 5.62 7.18 0.56 0.00 50.00
 Calculating total rework costs 19

60

50
Number of Projects

40

30
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

20

10 Std. Dev = 13.56

Mean = 12.0
0 N = 161.00
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
80.0
Total Rework Cost (% Contract Value)
Figure 4. Total rework costs as a percentage of original contract value.

70

60

50
Number of Projects

40

30

20

10 Std. Dev = 7.78

Mean = 6.4
0 N = 161.00
0.0 10.0 20.0 30.0 40.0 50.0
5.0 15.0 25.0 35.0 45.0
Direct Cost of Rework (% Contract Value)
Figure 5. Direct rework costs as a percentage of original contract value.
 20 P. E. D. Love and D. J. Edwards

100

80
Number of Projects

60

40
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

20
Std. Dev = 7.19
Mean = 5.6
0 N = 161.00
0.0 10.0 20.0 30.0 40.0 50.0
5.0 15.0 25.0 35.0 45.0

Indirect Cost of Rework (% Contract Value)

Figure 6. Indirect rework costs as a percentage of original contract value.

(M = 4.3%, SD = 3.9%) in their estimates of direct rework costs. Levene’s test of homo-
geneity of variances was violated (p < 0.05), which indicates that the population variances
for each respondent type were not equal (table 2). The ANOVA revealed significant differ-
ences between respondents’estimates of direct rework costs, F (2, 158) = 3.028 and p < 0.05
(table 3). The results of Tukey’s HSD post hoc test in table 4 identified that the differences in
the estimates for direct rework costs were between design consultants and project managers
(p < 0.05).
Consultant project managers typically act as the client’s representative for projects, and
thus would possess reasonable knowledge to be familiar with the direct rework costs (in
the form of change orders and defects), as they invariably manage time and cost schedules.
Project managers, however, may not be aware of the direct rework costs associated with

Table 2. Test of homogeneity of variances for

direct rework costs.

Levene statistic df1 df2 Sig.

6.158 2 158 0.003

Table 3. ANOVA for direct rework costs.

Sum of squares df. Mean square F sig.

Between groups 357.74 2 178.87 3.028 0.051

Within groups 9332.36 158 59.07
Total 9690.10 160
 Calculating total rework costs 21

Table 4. Tukey’s HSD post hoc multiple comparisons for direct rework costs.

95% Confidence interval

Mean
Role type Role type difference Std. error Sig. Lower bound Upper bound

Design consultant Contractor 2.165 1.395 0.267 −1.104 5.435

Project manager 3.675† 1.558 0.048 0.023 7.327
Contractor Design consultant −2.165 1.395 0.267 −5.435 1.104
Project manager 1.510 1.646 0.630 −2.349 5.368
Project manager Design consultant −3.675† 1.558 0.048 −7.327 −0.023
Contractor −1.510 1.646 0.630 −5.368 2.349
†
The mean difference is significant at the 0.05 level.
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

re-documenting aspects of the project after clients have requested design changes and/or
omissions. Client involvement in projects has been identified as a factor that can contribute
to project success, though their involvement may also contribute to the occurrence of rework
(Love 2002b). For example, drawing on the qualitative comments that were provided by
the respondents, a project manager stated that the ‘client was a decision-maker and actively
involved in construction, resulting in scope and design changes throughout the construc-
tion’. This in turn can lead to design consultants having to re-document or provide additional
documentation, which can significantly affect their fee, as they are often not reimbursed for
this service (Tilley and McFallan 2000).
The descriptive statistics revealed that there were differences between the design consultants
(M = 6.77%, SD = 8.34%), contractors (M = 5.46%, SD = 6.87%), and project managers
(M = 3.64%, SD = 4.37%) in their estimates of indirect rework costs (table 2). Levene’s test
of homogeneity of variances was not violated (p < 0.05), which indicates that the population
variances for each group were equal (table 5). The ANOVA test revealed that there were no
significant differences between respondents’ estimates for indirect rework costs, F (2, 158) =
2.364, p < 0.05 (table 6). No post hoc test was required because no significant differences
between respondents’ estimates for indirect costs were identified.
Noteworthy, design consultants’ estimates are almost twice as much as those estimated
by project managers, which again demonstrate the variability associated with rework cost
estimates, albeit not for the same projects. For both direct and indirect rework costs, contractors’
estimates are approximately mid-way between design consultants’ and project managers’.
This implies that contractors may well have a better understanding of actual rework as they
invariably operate at the implementation interface between design and construction. When

Table 5. Test of homogeneity of variances for

indirect rework costs by respondent type.

Levene statistic df1 df2 Sig.

3.591 2 158 0.030

Table 6. ANOVA for indirect rework costs by respondent type.

Sum of squares df. Mean square F Sig.

Between groups 240.032 2 120.016 2.364 0.097

Within groups 8020.848 158 50.765
Total 8260.880 160
 22 P. E. D. Love and D. J. Edwards

respondents were asked to compare the rework costs of their selected project with others that
they had been involved 12% stated that they were comparable to ‘a very large extent, 16%
a large extent, 37% ‘some extent, 26% ‘a minor extent’, and 9% ‘not at all’. The mode was
found to be ‘to some extent’, and thus it can be concluded that the estimated rework costs
reported are generally representative of industry practice in Australia.

6.1 Rework costs and procurement methods

Previous research undertaken by Walker (1994) and Love (2002a) found that there were
no significant differences between procurement methods and the cost and schedule growth
experienced in Australian projects.Yet non-traditional procurement methods are typically used
to compress design and construction time by overlapping activities and therefore because of
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

the degree of concurrency between activities, it can be assumed that they would be subject to
higher rework levels than traditional methods. Accordingly, Hoedemaker et al. (1999) suggest
that there is a limit to the number of tasks that can be undertaken in a concurrent manner.
Beyond this specified limit, the probability of rework as well as time and cost overruns being
experienced significantly increases.
With traditional procurement methods, the design and contract documentation is supposed
to be complete before construction commences on-site and thus change orders, which can
result in rework, should be minimal. However, the quality of documentation, particularly in
terms of its completeness, may differ if strict time constraints are imposed on the design team
to prepare and develop the brief, design, and contract documentation. Such a constraint can
lead to errors and omissions in documentation and the occurrence of rework. This in turn may
have a negative impact on fees and the design team’s morale (Love 2002b).
Table 7 presents the descriptive statistics for direct and indirect rework costs for the different
procurement methods used in the sampled projects. An ANOVA test was used to determine
whether rework costs significantly differed between procurement methods used. Levene’s test
of homogeneity of variances was not violated for direct and indirect costs (p < 0.05), which
indicates that the population variances for each group were equal for both dependent variables
(tables 8 and 9). The ANOVA revealed that there was no significant difference between each

Table 7. Direct and indirect rework costs for procurement methods.

Direct rework costs Indirect rework costs

Std. Std. Std. Std.

Procurement method N Mean deviation error Min Max Mean deviation error Min Max

Traditional lump sum 84 7.03 8.27 0.90 0.50 50.00 5.63 6.61 0.72 0.00 30.00
Traditional cost plus 1 20 – – 20.00 20.00 10.0 – 2.76 10.00 10.00
Traditional with 5 10 14.28 6.38 1.00 35.00 4.50 6.18 1.00 0.00 15.00
provisional quants
Design and manage 2 5.5 6.36 4.50 1.00 10.00 1.0 1.14 1.11 0.00 2.00
Construction 26 4.11 4.15 0.81 0.50 15.00 4.48 5.67 1.65 0.00 20.00
management
Management 1 2.0 – – 2.00 2.00 0.0 – – 0.00 0.00
contracting
Design and build 32 5.90 7.11 1.25 0.10 30.00 6.29 9.38 0.00 50.00
Novation 6 9.16 11.02 4.49 0.50 30.00 9.91 10.44 4.26 0.50 25.00
Turnkey and package 2 4.70 0.42 0.30 4.40 5.00 8.0 9.89 7.00 1.00 15.00
deal
Build-own-operate- 2 1.5 0.70 0.50 1.00 2.00 2.0 1.41 1.00 1.00 3.00
transfer
Total 161 6.44 7.78 0.61 0.10 50.00 5.62 7.18 0.56 0.00 50.00
 Calculating total rework costs 23

Table 8. Test of homogeneity of variances for

direct rework costs by procurement method.

Levene statistic df1 df2 Sig.

1.627 9 151 0.112

Table 9. Test of homogeneity of variances for

indirect rework costs by procurement method.

Levene statistic df1 df2 Sig.

0.998 9 151 0.444

Downloaded by [The Aga Khan University] at 19:04 10 October 2014

group’s estimates of direct rework costs, F (9, 151) = 1.004 and p < 0.05 and indirect rework
costs, F (9, 151) = 0.624 and p < 0.05 (tables 10 and 11). No Tukey’s HSD post hoc tests
were performed for both direct and indirect rework costs because at least one procurement
method category had fewer than two cases.

6.2 Rework costs and project types

Refurbishment and renovation projects are considered to be prone to higher rework costs than
new build projects because of the degree of uncertainty and complexity associated with the
building work to be undertaken (Jaafari et al. 1994). In fact, NEDO (1987) and Naoum and
Mustapha (1994) indicate that project types are linked to the concept of complexity and thus
influence project performance. Bresnen et al. (1988), however, disagree with this viewpoint
and state that facility type is an attribute rather than a causal factor and thus will not influence
project performance.
Table 12 presents the descriptive statistics for direct and indirect rework costs for the different
project types for the sampled projects. It can be seen that direct rework costs were higher than
the reported mean identified by respondents for the ‘fit-out’and ‘refurbishment and renovation’
projects, whereas projects which encompassed some degree of refurbishment/renovation/
fit-out/new-build (combination) were considerably few. Thus, an ANOVA was used to deter-
mine whether there were significant differences between project types for rework costs.
Levene’s test of homogeneity of variances for both direct and indirect rework cost was not
violated (p < 0.05), which indicates that the population variances for each group are equal

Table 10. ANOVA for direct rework costs by procurement method.

Sum of squares df. Mean square F Sig.

Between groups 574.108 9 60.790 1.004 0.439

Within groups 9142.990 151 60.550
Total 9690.098 160

Table 11. ANOVA for indirect rework costs by procurement method.

Sum of squares df. Mean square F Sig.

Between groups 296.193 9 32.910 0.624 0.775

Within groups 7964.687 151 52.746
Total 8260.880 160
 24 P. E. D. Love and D. J. Edwards

Table 12. Direct and indirect rework costs for project types.

Direct rework costs Indirect rework costs

Std. Std. Std. Std.

Project type N Mean deviation error Min Max Mean deviation error Min Max

New build 90 6.10 7.18 0.75 0.10 35.00 5.69 7.70 0.81 0.00 50.00
Refurb/Reno 43 7.29 9.73 1.48 0.50 50.00 5.60 6.43 0.98 0.00 30.00
Fit-out 14 7.78 7.70 2.06 1.00 30.00 6.10 7.90 2.11 0.50 30.00
New build/Refurb 11 4.95 4.67 1.41 0.50 15.00 5.81 5.92 1.78 0.00 20.00
Combination of all 3 3.33 1.52 0.88 2.00 5.00 0.66 0.577 0.33 0.00 1.00
Total 161 6.44 7.78 0.61 0.10 50.00 5.62 7.18 0.56 0.00 50.00
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

Table 13. Test of homogeneity of variances for

direct rework costs by project type.

Levene statistic df1 df2 Sig.

1.085 4 156 0.366

(tables 13 and 14). The ANOVA revealed that there were no significant differences between
each project type for direct rework costs, F (4, 156) = 0.489 and p < 0.05 and indirect rework
costs, F (4, 156) = 0.371 and p < 0.05 (tables 15 and 16).
The reported estimates for rework costs are comparable with previous studies (e.g., Davis
et al. 1989, Abdul-Rahman 1993, Josephson and Hammarlund 1996, Nylén 1996, Love and Li
2000). However, such studies, with the exception of Barber et al. (2000), fail to differentiate
or acknowledge a distinction between direct and indirect costs. Thus, the mean rework costs
(direct and indirect) reported are considered benchmarks that can be used to pursue best
practice in the Australian construction industry. To make practitioners aware of the actual
costs of rework there is a need for a system that is able to capture and identify rework, so
appropriate prevention techniques can be identified and implemented in future projects (Love
and Li 2000). For example, the quality cost system developed by Burati et al. (1992), which
was subsequently adopted and refined by Love and Irani (2003) is very effective for identifying
rework costs, and with further development could be utilised as a rework measurement system.
The implementation of such a system requires cooperation, coordination, and commitment by
all those involved in a project. In addition, the way in which projects are procured may also

Table 14. Test of homogeneity of variances for

indirect rework costs by project type.

Levene statistic df1 df2 Sig.

0.671 4 156 0.613

Table 15. ANOVA for direct rework costs by project type.

Sum of squares df. Mean square F Sig.

Between groups 120.038 4 30.009 0.489 0.744

Within groups 9570.06 156 61.347
Total 9690.09 160
 Calculating total rework costs 25

Table 16. ANOVA for indirect rework costs by project type.

Sum of squares df. Mean square F Sig.

Between groups 77.887 4 19.472 0.371 0.829

Within groups 8182.993 156 52.455
Total 8260.880 160

need to change, as information about changes, errors, and omissions needs to be exchanged
freely between participants.
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

7. Conclusion

The specific problem of rework has continually plagued construction industry efforts to raise
production performance and company profitability, this despite the cumulative efforts of
various academics and industry practitioners. One of the main problems has been developing
a definition of rework that is universally acceptable to industry practitioners. As a result, fore-
casts of total rework costs cannot be compared on an equal basis, where total rework consists
of the summation of both indirect and indirect costs. Although the calculation of such can be
arduous and time-consuming task, there is a need to do so in order that benchmark standards
of performance can be developed and used to monitor rework cost occurrence.
In this study, 161 construction professionals completed a questionnaire, which sought to
uncover the exact costs attributable to project rework. The costs of rework were found to
be significant, with the mean direct and indirect cost of rework as a percentage of contract
value being 6.4% and 5.9%, respectively. There were significant differences identified between
the estimates propagated by respondents, this being between design consultants and project
managers. Additionally, there were no significant differences found between rework costs
and procurement methods used and project types. Despite the revealing findings presented in
this research, it is apparent that future research is required to further investigate the rework
conundrum in greater detail. Specifically, an automated information system is required that
will detect and quantify rework and will be used by construction practitioners. Such a tool
could be paper based or a more advanced information technology toolkit. Regardless of which
platform is finally pursued, there is an imperative need to enhance current knowledge and
tackle the rework problem with greater vigour. Only then will industry see real benefit in
terms of higher performance output and profitability.

Acknowledgements

The authors would like to thank the reviewers for their constructive comments. We would
also like to acknowledge the financial support provided by Australian Research Council
[DP-0453258].

References
Abdul-Rahman, H., The management and cost of quality for civil engineering projects. PhD thesis, University of
Manchester Institute of Science and Technology (UMIST), Manchester, UK, 1993.
Alreck, P.L. and Settle, R.B., The Survey Research Handbook, 1985 (Richard D, Irwin Inc: Homewood, Illinois,
USA).
Ashford, J.L., The Management of Quality in Construction, 1992 (E & F Spon: London).
 26 P. E. D. Love and D. J. Edwards

Barber, P., Sheath, D., Tomkins, C. and Graves, A., The cost of quality failures in major civil engineering projects.
Int. J. Qual. Reliab. Manage., 2000, 17(4/5), 479–492.
Bowersox, D.J., Carter, P.L. and Monckza, R.M., Materials logistics management. Int. J. Phys. Distribution Logist.,
1985, 23(5), 46–51.
Bresnen, M.J., Haslam, C.O., Beardsworth, A.D., Bryman, A.E. and Hell, T.E., Performance on Site and the Building
Client. Occasional Paper 42, Chartered Institute of Building, Ascot, UK, 1988.
Burati, J.L., Farrington, J.J. and Ledbetter W.B., Causes of quality deviations in design and construction. ASCE
J. Constr. Eng. Manage., 1992, 118(1), 34–49.
Burroughs, G., Concrete quality assurance: the contractors role. Quality Assurance in the Construction Industry, 1993
(Concrete Institute of Australia: Melbourne, Australia).
Construction Industry Development Agency (CIDA), Measuring Up or Muddling Through: Best Practice in the
Australian Non-Residential Construction Industry, 1995 (Construction Industry Development Agency and
Masters Builders Australia: Sydney, Australia).
Construction Industry Development Board (CIDB), Managing Construction Quality. A CIDB Manual on
Quality Management Systems for Construction Operations, 1989 (Construction Industry Development Board:
Singapore).
Downloaded by [The Aga Khan University] at 19:04 10 October 2014

Cusack, D., Implementation of ISO 9000 in construction, in ISO 9000 Forum Symposium, Gold Coast, Australia,
November, 1992.
Davis, K., Ledbetter, W.D. and Burati, J.L., Measuring design and construction quality costs. ASCE Journal of
Construction Engineering and Management, 1989, 115(3), 385–400.
Farrington, J.J., A methodology to identify and categorize costs of quality deviations in design and construction. PhD
thesis, Graduate School of Clemson University, USA, 1987.
Gardiner, J., Management of design documentation, where do we go from here? In Construction and Management,
Recent Advances, edited by R.R. Wakefield and D.G. Carmichael, pp. 113–118, 1994 (Balkema: Rotterdam).
Hammarlund, Y. and Josephson, P.-E. Sources of quality failures in building, in Proceedings of the European Sym-
posium on Management, Quality and Economics in Housing and other Building Sectors, Lisbon, Portugal, 30
September–4 October, 1991, 671–679.
Hammarlund, Y., Jacobsson, S. and Josephson, P.E., Quality failure costs in building construction, in Proceedings of
the CIB W55/W65 Joint Symposium, International Council for Building Research Studies and Documentation,
Sydney, 1990a, 77–89.
Hoedemaker, G.M., Blackburn, J.D. and Van Wassenhove, L.N., Limits to concurrency. Decision Sciences, 1999,
30(1), 1–17.
Jaafari, A., Chan, M.A. and Cassab, R., Quality management in the Australian construction industry. In Construction
and Management, Recent Advances, edited by R.R. Wakefield and D.G. Carmichael, pp. 89–112, 1994 (Balkema:
Rotterdam).
Josephson, P.-E. and Hammarlund, Y., The costs of defects in construction. In The Organisation and Management of
Construction: Shaping Theory and Practice, volume 2, edited by D. Langford and A. Reich, pp. 519–528, 1996
(E&FN Spon: London).
Josephson, P.-E. and Bröchner, J., Strategies for error reduction in building: attitudes to continuity and control in seven
projects, in Proceedings of the 1st Nordic Conference on Construction Economics and Organization, Göteborg,
Sweden, 12–13 April 1999, 265–272.
Josephson, P.-E., and Hammarlund, Y., The causes and costs of defects in construction. A study of seven building
projects. Automat. Constr., 1999, 8(6), 681–642.
Josephson, P.-E. and Larsson, B., The role of early detection of human errors in building projects, in Proceedings
of the CIB World Building Congress – Performance in the Product and Practice, Wellington Convention Centre,
Wellington, New Zealand 2–6 April, 2001 (CD-ROM Proceedings).
Josephson, P.-E., Larsson, B. and Li, H., Illustrative benchmarking rework and rework costs in Swedish construction
industry. ASCE J. Manage. Eng., 2002, 18(2), 76–83.
Lomas, K., Quality pays. Eng. Aus., 1996, February, pp. 26.
Love, P.E.D. and Li, H., Quantifying the causes and costs of rework in construction. Constr. Manage. Econ., 2000,
18(4), 479–490.
Love, P.E.D., Influence of project type and procurement method on rework costs in building construction projects.
ASCE J. Constr. Eng. Manage., 2002a, 128(1), 18–29.
Love, P.E.D., Auditing the indirect consequences of rework in construction: a case based approach. Manage. Auditing
J., 2002b, 17(3), 138–46.
Love, P.E.D. and Irani, Z. A., Project management quality cost information system for the construction industry.
Inform. Manage., 2003, 40, 649–661.
Love, P.E.D. and Smith, J., Bench-marking, bench-action and bench-learning: rework mitigation in projects. ASCE
J. Manage. Eng., 2003, 19(4), 147–159.
Love, P.E.D. and Edwards, D., Forensic project management: the underlying causes of rework in construction projects.
Civil Environ. Eng. Syst., 2004, 12(3), 207–228.
Love, P.E.D., Irani, Z. and Edwards, D., Learning to reduce rework in projects: analysis of firms learning and quality
practices. Project Manage. J., 2003, 34(3), 13–25.
Naoum, S. and Mustapha, F.H., Influences of the Client, Designer and Procurement Methods on Project Performance,
in Proceedings of CIB W-92 Procurement Systems Symposium, East Meets West, Department of Surveying, The
University of Hong Kong, 4th–7th December, Hong Kong, 1994, 221–228.
 Calculating total rework costs 27

National Economic Development Office (NEDO), Achieving Quality on Building Sites, 1987, pp. 18–19.
Nylén, K.-O., Cost of failure in a major civil engineering project. Licentiate thesis, Division of Construction Manage-
ment and Economics, Department of Real Estate and Construction Management, Royal Institute of Technology,
Stockholm, Sweden, 1996.
Oppenheim, A.N., Questionnaire Design, Interviewing, and Attitude Measurement, 1992 (Pinter, Publishers: London).
Sörqvist, L., Poor quality costing. PhD thesis, No. 23, The Royal Institute of Technology, Department of Materials
Processing Production Engineering, Stockholm, Sweden, 1998.
Tilley, P.A. and McFallan, S.L. Design and Documentation Quality Survey Designers’ Perspectives. BCE DOC
00/113. CSIRO – Building, Construction and Engineering, Melbourne, Australia, 2000a.
Walker, D.H.T., An investigation into the factors that determine building construction time performance. Unpublished
Ph.D. Thesis, Department of Building and Construction Economics, Faculty of Environmental Design and
Construction, Royal Melbourne Institute of Technology, Melbourne, Australia, 1994.
Willis, T.H. and Willis, W.D., A quality performance management system for industrial construction engineering
projects. Int. J. Qual. Reliab. Manage., 1996, 13(9), 38–48.
Downloaded by [The Aga Khan University] at 19:04 10 October 2014