International Journal of Quality & Reliability Management

The propagation of rework benchmark metrics for construction

P.E.D. LoveJ. Smith H. Li

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P.E.D. LoveJ. Smith H. Li, (1999),"The propagation of rework benchmark metrics for construction",
International Journal of Quality & Reliability Management, Vol. 16 Iss 7 pp. 638 - 658
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Peter E.D. Love, David J. Edwards, (2004),"Determinants of rework in building construction
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Peter E.D. Love, (2002),"Auditing the indirect consequences of rework in construction:
a case based approach", Managerial Auditing Journal, Vol. 17 Iss 3 pp. 138-146 http://
dx.doi.org/10.1108/02686900210419921
Peter E.D Love, Amrik S. Sohal, (2003),"Capturing rework costs in projects", Managerial Auditing Journal,
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IJQRM
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638
Received February 1998
Revised October 1998

The propagation of rework

benchmark metrics for
construction
P.E.D. Love and J. Smith

Deakin University, Geelong, Victoria, Australia, and

H. Li

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Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

Keywords Quality, Continuous improvement, Benchmark metric, Rework
Abstract Australian construction organisations have generally refrained from implementing
quality management principles. As a result, little is known about the costs of poor quality and the
impact it has on an organisation's performance and competitiveness. With respect to rework, it is
suggested that most organisations have learnt to accept it as part of their operations, inasmuch
as they have not realised its true extent or its influence on their own and a project's performance.
This paper uses a case study approach to develop a series of benchmark metrics for the causes
and costs of rework, which were derived from two construction projects that were procured by the
same contractor using different procurement methods. From the findings a conceptual model for
benchmarking and reducing rework throughout the quality-chain is presented and discussed.

Introduction
Organisations wishing to systematically improve their performance must
acquire knowledge. The early management theorist Fredrick Taylor in 1915
concluded that the success of management is based upon their ability to
become scientific where knowledge is characteristically acquired through
systematic observation, experiment and deductive reasoning. Similarly, the
key to continuing success in quality management is the ability to collect
information to improve the performance of a product or service. This
information should then be incorporated into the design of the new product or
service. Concurrently, this information can also be used to measure the
performance of the product or service so that continuous improvement is based
on measurement of performance where benchmarking can be effectively
implemented. This can provide the necessary feedback mechanism, which can
allow an organisation to learn and acquire knowledge and therefore strive for
industry best practice.
In the construction industry, however, organisations generally do not have
in place an effective organisational learning mechanism that can be used to
stimulate best practice, primarily because quality management principles and
tools have been neglected (Jaafari, 1996). Therefore, little is known about the
International Journal of Quality &
Reliability Management,
Vol. 16 No. 7, 1999, pp. 638-658.
# MCB University Press, 0256-671X

The authors would like to thank the contracting organisation and consultants for participating
in this study. Without their cooperation and support the research could not of been undertaken.
Furthermore, the authors are most grateful to Dr Segun Faniran and two anonymous referees
for their extremely useful and helpful comments on an earlier version of this manuscript.

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costs of poor quality and the impact it has on an organisation's performance

and competitiveness. With respect to rework, however, it is suggested that
most organisations have learnt to accept it as part of their operations, inasmuch
as they have not realised its true extent or its influence on their own and a
project's performance. As a result, it has become an endemic problem in the
construction industry. In Australia, the Construction Industry Development
Agency (1994) has estimated the costs of rework to be 12 per cent of project
costs. Thus, if a 12 per cent rework value was applied to the annual turnover of
the Australian construction industry, which was estimated at $A32 billion per
annum (Construction Export Group, 1993), then the cost of rework can be
approximated at $A4 billion per annum. With rework so large, the net benefits
of building and implementing best practice are substantial.
Research has found that the absence of a quality focus throughout the
supply-chain in construction often results in rework, which invariably takes the
form of changes, errors, and omissions and as a result adversely affects project
performance (Love et al., 1998a). This paper uses a case study approach to
develop a series of benchmark metrics for the causes and costs of rework,
which were derived from two construction projects that were procured by the
same contractor but using different procurement methods. From the findings a
conceptual model for benchmarking and reducing rework throughout the
quality-chain is presented and discussed.
Quality in the Australian construction industry
There is a considerable body of opinion within the Australian construction
industry, the legal fraternity, and the general public that buildings are not being
constructed to a satisfactory standard (Chan, 1996). The New South Wales
Royal Commission into Productivity in the Building Industry expressed
concern about the amount of contractual claims and disputes during the 1980s
(Gyles, 1992). The Commission's findings indicated that these claims and
disputes, which generally arise as a result of changes, errors, or omissions,
adversely affect the performance and quality of the finished product. Any errors
in meeting quality in technical performance or time more often than not result in
a loss to a contractor or the dissatisfaction of the client. This loss can be
described as the cost of poor quality and it is generally accepted that the range
can be between 15 per cent and 30 per cent of turnover (Bywater Camac, 1990).
One of the most critical issues facing construction organisations is their
inability to become quality focused. Recent research suggests that construction
companies have embarked on the quality journey because of Federal and State
government mandates, which prescribe that companies must be quality
assured (QA) to an internationally recognized standard (e.g. ISO 9000) to be
eligible for government contracts (Chan, 1996).
Most construction companies that become accredited to ISO 9000 are
expected to supply services or products that will meet the expectations of the
customer. However, QA is typically viewed as no more than an administrative
burden where no dialogue is conducted with users of the product or service

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640

(Love and Li, 1998). Consequently, the status quo of poor quality often prevails.
Moreover, the associated costs of QA have been found to be an encumbrance,
administratively, financially, and culturally to many companies. Thus,
companies eschew progressing to implement continuous improvement and
TQM principles. However, becoming quality assured is the first step in the
pursuit of quality. For QA to work effectively it needs to operate within a TQM
environment. In other words, QA is merely a technical inspection and
surveillance procedure that is just one of the components of a company-wide
application of TQM. Because companies cannot see the benefits of becoming
quality focused substandard products and services often result, which
inadvertently emerges as rework (Love et al., 1998). There is, therefore, an
increasing need to improve the quality and performance of operations in the
construction process, and thus reduce the incidence and effect of rework so as
to encourage industry best practice.
The need for rework benchmarks
Before rework can be significantly reduced and the overall performance and
output of a project improved, metrics for rework need to be established so that a
process of benchmarking can be initiated. Benchmarking focuses on the
importance of understanding the tasks and activities in a process that produce
an outcome and how improvements in processes can take place (Schaffer, 1992).
It is used to continuously measure an organization's products and services
against those of its competitors so that targets and priorities for gaining a
competitive advantage can be established and the search for best practice
initiated (Oakland and Sohal, 1996). According to Zairi (1996, p. 35) a benchmark
can be:
.
anything taken or used as a point of reference or comparison;
.
something that serves as a standard by which others may be served;
.
anything or something that is comparatively measurable; and
.
a physiological or biological reference value against which performance
is compared.
The establishment of a series of benchmarks as a point of reference can enable
industry clients, especially those who procure buildings on a regular basis,
contractors, and all stakeholders to compare their own output rates against
what has been found to be best practice performance amongst their national
and international counterparts.
For benchmarking to be effective at a project level, organisations need to
view it as a positive process of improvement rather than negatively as one that
exposes an organisation's weakness. Furthermore, benchmarking should be
viewed as an operational process of continuous learning and adaptation that
results in the development of an improved organisation.
It is often argued that the construction industry is unique when compared to
other industries and that there is limited scope for applying continuous

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improvement techniques because of the one-off nature of the product. However,

as shown in Figure 1, organisations are regularly involved with repeated
processes despite the one-off nature of the product, for example, estimating,
tendering, design, procurement, invoicing and so on. The processes by which
projects are procured are not subject to constant change and it is this stable
feature that allows learning to take place. Thus, it is merely the end product
that differs, not the process.

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641

Benchmarking
The concept of benchmarking has been successfully applied in many
manufacturing industries worldwide, yet in the construction industry little
attention has been paid to its potential implementation as a quality
improvement tool. This trend may be changing as some large construction
companies in Australia are recognizing that there is a need to develop internal
and competitive/functional benchmark measures in the search for best practice.
The absence of a quality focus in construction suggests that benchmarking
is not being used positively as a tool for servicing internal and external
customer requirements but more for measures such as project time
performance (CII, 1994). As noted in Figure 2 and with a quality program in
place, it is suggested that organisations in the construction industry should
establish benchmark measures that focus on (Oakland and Sohal, 1996):
PARENT
ORGANISATION

PEOPLE AND
PROCESSES

SERVICES

PROJECT

PRODUCT

Project
Organisation

Facility

Decision to build and establishment of requirements

Client/End User

Quality

Design
Design Team
(Architect etc)

Quality

Documentation (Drawings & Specification)

Contractor

Quality

Construction & Manufacture

Subcontractor
& Suppliers

Quality

Continuous Improvement

Figure 1.
Continuous
improvement in a
project environment

IJQRM
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Internal Benchmarking

PARENT
ORGANISATION
Benchmark Measures:
Efficiency & Effectiveness
Productivity
Quality
Impact

642

Competitive/Functional
Benchmarking

Benchmark Metrics

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INDUSTRY
BEST PRACTICE
Benchmark Metrics

Figure 2.
Benchmarking in the
construction industry

PROJECT
ORGANISATION
Benchmark Measures:
Efficiency & Effectiveness
Productivity
Quality
Impact

Benchmark Metrics

Competitive/Functional Benchmarking

PARENT/PROJECT
COMPARISONS
Benchmark Measures:
Efficiency & Effectiveness
Productivity
Quality
Impact

effectiveness these measures should reflect whether the organisation/

project/processes are achieving the desired results and accomplishing
the right things;
efficiency this measure is a process input issue and measures
performance of the process system for example, labor/staff efficiency,
material efficiency and information efficiency;
productivity these measures are concerned with relating the process
outputs to its inputs;
quality these measures are concerned with the voice-of-the-customer
measures and quality costs; and
impact these measures lead to key performance indicators for the
organisation/project and includes monitoring improvement over time.
Typical measures include, rework and material waste.

There is a need for both internal and competitive/functional benchmarks if the

industry is to improve its performance and productivity. While the benefits of
benchmarking are clearly evident and have been well documented (e.g. Zairi,
1996), construction organisations have been reluctant to embrace it with only
56 per cent of companies sampled by Morehead et al. (1997) using it as a
performance measure (Table I).
Because of the perceived diversity of processes and products associated with
the procurement of projects, the construction industry has been one of the last
industries to embrace objective performance measurement. This does not reduce
the potential benefits that could be derived from benchmarking, but gives an
indication that there is considerable work to be undertaken to define both the
area where the tool can be applied and the actual method of measurement.

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It would appear, however, that most organisations do not realise or have

ignored the fact that benchmarking and TQM are intimately linked (Zairi,
1996). In essence, a TQM focus provides the environment and framework for
organisations to become process focussed and benchmarking is used as an
enabler for measuring for continuous improvement. Without measures, an
organisation may not know what and how to improve its performance and
competitiveness.

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643

Benchmark metrics
A metric is a short-term quantitative measure and its uses for benchmarking
are numerous and varied. For example, they can be used as a financial
(business performance), technical (productivity measurement) and efficiency
(human contribution measurement) indicators (Zairi, 1996). In some industries
it is common to emphasise a few operating characteristics while in others the
focus is on a wide range of performance parameters.
In some cases the parameters that describe the system will be highlighted. In
others, it may be more common to examine the performance of sub-elements of
the system. Some measures are relatively easy to obtain while others may be
difficult to identify and may need to be estimated. If measures are obtained,
benchmarking can be a significant foundation for reducing rework at the parent
and project level, which in turn will improve the organisational performance.
There are numerous methods of measurement that need to be processed and
applied to help construction organisations improve their quality and
productivity. The cost of quality is just one type of measurement that can
provide the user with information about rework and activities designed for its
prevention. It is a measurement that could be considered after-the-fact, because
it occurs after the action has occurred. Thus, the measurement of rework
should be used as a mechanism to learn from the past to improve the future.
That is, measurement becomes a proactive project management activity on a
new project. This captures the essence of benchmarks as they do not remain
passive but become dynamic measures of performance, which can be used to
inform the organisation and project managers about particular activities and
processes at a parent and project level.
In the next section of this paper a case study is presented which attempts to
establish benchmark metrics for the cost of rework from two projects that were
Type of benchmarking
Relative project cost
Operating processes
Technology
Quality procedure
Customer service/satisfaction
Labour productivity
Occupational health and safety (OHS)

Construction (%) (n = 1,399)

62.5
50.0
45.8
58.3
58.3
58.3
64.6

Table I.
Benchmarks used by
the construction
industry

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644

procured by the same contracting organisation. The use of a case study is used
to gain a better understanding of why and how rework occurs. If processes are
to be optimised, they must be measured and understood in the context of their
attributes and characteristics.
Methodology
The contractor used for the research was the first building and construction
company to be certified to the dual standards of ISO 9001/AS 3901 and AS 2990
Cat. A in Australia. Since becoming certified in 1991, the company has
developed and implemented an effective continuous improvement program
that has been able to reduce the amount of rework experienced in its projects as
well as improve its position in the market place. The company has been the
recipient of numerous quality awards for its excellence in the pursuit of quality
and as a result is considered to be a best practice company (Whitford and
Andrew, 1994).
The authors established personal contact with senior management within
the contracting organisation to explain the nature and purpose of the research.
The projects used for the research were selected on practical grounds; namely
their availability. Meetings were conducted with site management and the
consultants to explain the nature of the research and the information required.
A full guarantee of confidentiality and anonymity was given, and the
independence and neutrality of the researchers was stressed.
Case study
A case study can be simply defined as ``methodology based on interviews,
which are used to investigate technical aspects of a contemporary phenomenon
with its real life context; when the boundaries between phenomenon and
context are not clearly evident; and in which multiple sources of evidence are
used'' (Yin, 1989, p. 3).
The authors have based their methodological framework on theoretical
replication. Yin (1989) supports this approach and specifically notes that
multiple cases should be regarded as multiple experiments and not multiple
respondents in survey and so replication logic and not sampling logic should be
used for multiple case studies. The case studies provide valid findings from
which other organisations can learn. The case studies used for establishing
initial benchmark metrics for rework were:
.

Project A consists of two six-storey residential apartment blocks,

which contained a total of 43 units. Underground parking, a landscaped
podium and swimming pool are among the facilities incorporated in this
development. The contract value for the development was $A10.96
million, with a contract period of 43 weeks (Table II). The project was
procured using a traditional lump sum contract, with the client
employing a project manager to act as their development representative.

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Project contract details

Original contract period (weeks)
Extension of time (weeks)
Original contract value ($)
Revised contract value ($)
Variations (client initiated changes) ($)
Rework variations ($)
Rework non-variations ($)
Rework defects ($)
Benchmark metric overall cost of
rework % contract value
.

Project A
Residential development
43
5
10,960,000
12,065,900
806,356
299,544
40,960
5,000
3.15

Project B
Industrial development
30
8
4,450,000
4,769,333
319,333

64,078
42,905
2.40

Project B consists of a two-storey industrial warehouse. The contract

value for the development was $A4.45 million, with a contract period of
30 weeks (Table II). The project was a negotiated document and
construct contract with a guaranteed maximum price and savings
participation incentive. A project manager was employed by the client to
act as their representative. A conceptual design was developed and the
contractor took responsibility for documenting and constructing the
facility.

The projects described clearly possess their unique characteristics, especially

in the context of the contractual arrangements implemented.
Operational definition of rework
To measure the cost of rework a simple operational definition was used:
Rework is the unnecessary effort of re-doing a process or activity that was incorrectly
implemented the first time.

In essence, rework results in higher costs in relation to the quality of the

product or service. The cost of rework is calculated by determining the
additional cost of re-doing or re-designing an activity or process.
Data collection
Data were collected from the date on which construction commenced on-site to
the completion of the defects liability period. Therefore, the rework costs
presented only take account of those costs that emerged on-site during the
production process of the project. For the projects described above, each site
was visited one to three times a week throughout the fieldwork and data
collection period for approximately four to five hours each visit. Two block
visits of four days to each project were also conducted. The block visits were
timed to coincide with periods of increased site activity.
The data collection procedure has followed the major prescriptions by most
textbooks in doing fieldwork research (e.g. Dane, 1990). A variety of sources
were used to derive the findings presented in this paper and include interviews,

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Table II.
Characteristics of
project A and project B

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646

observations, and documentary sources such as, variation registers site

instructions, requests for information, final accounts, progress reports, and
extension of time claims.
The authors have several years work experience with major building and
engineering contracting organisations and have used this experience, together
with a predefined interview protocol to determine the data needed. It is
noteworthy, however, that the authors have used the same procedure for
collecting data for each case presented (Yin, 1981). Bearing in mind the array of
evidence that was accumulated, great care was taken to ensure that the data
collected converged on similar facts (Jick, 1979).
Interviews
Interviews were conducted with the project manager on a weekly basis to
identify and determine the causes of rework events. On the identification of a
rework event each person involved in the process was interviewed to ascertain
its cause and effect. The duration of each interview ranged from 20 minutes to
40 minutes depending on the nature of the rework event. Every interview was
conducted on a one-to-one basis so as to stimulate conversation and break
down any barriers that may have existed between the interviewer and
interviewee.
The interviewee was allowed to talk freely without interruption or
intervention. In this way the interviewer acquired a clearer picture of their
perspective. Interviews were used to gain (Easterby-Smith et al., 1991):
.
an understanding of the constructs that the interviewee used as a basis
for forming opinions and beliefs about a rework event;
.
an understanding of the step-by-step logic of why and how rework
occurred; and
.
the confidence of the interviewee, to overcome the reluctance to be
truthful about an issue other than through a confidential one-to-one
situation.
The authors acted as a neutral medium through which questions and answers
were transmitted and therefore endeavored to eliminate bias. Essentially, bias
in interviews occurs when the interviewer tries to adjust the wording of the
question to fit the respondent or records only selected portions of the
respondent's answers. Most often, however, interviewer bias results from the
use of probes. These are follow-up questions and are typically used by
interviewers to get respondents to elaborate on ambiguous or incomplete
answers (Shaughnessy and Zechmeister, 1994).
With this in mind, in trying to clarify the respondent's answers the
interviewer was careful not to introduce any ideas that might form part of the
respondent's subsequent answer. Furthermore, the interviewers were also
mindful of the feedback respondents gained from their verbal and non-verbal
responses. Thus, the interviewer avoided giving overt signals such as smiling

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and nodding approvingly when a respondent failed to answer a question. It

was decided that such actions could lead to respondents withholding responses
to later questions. The interviewees reviewed the reports from the interviews
and their views were invited to ensure their accuracy.
Findings and discussion
Project managers and the like must acquire knowledge and understanding
about the magnitude and causes of rework that occur in their projects if
activities are to be designed to prevent its occurrence. If rework is not measured
then there is little they can do to make long-term performance improvements in
their projects and the performance of the construction industry. An initial step
to understanding how to reduce rework is to better understand the extent of the
problem by establishing benchmark metrics for its causes and costs.
Measuring rework
The development of a good measurement system for benchmarking in
construction must identify measures for the parent and project organisation
and specifically relate process performance to the needs of the process
customer. Consequently, all critical parts of the process must be measured. But
before these parts can be measured simple measures are needed to determine
the extent and nature of the problem at hand.
Previous research studies have derived aggregate measures for rework in
projects as well as identified the extent of the problem (Burati et al., 1992;
Hammarlund and Josephson, 1991). The measures derived from this study not
only address the magnitude and cause of rework but also the cost and nonproductive time due to specific causes, as well as the cost of rework to specific
parties. Ideally, benchmarks for rework should be zero, although it is
unreasonable to assume such a target in an environment so uncertain and
complex as construction. Thus, managers need to accept that rework will occur,
but the extent to which it occurs must be controlled and minimized.
The propagation of benchmark metrics for rework
Table II provides a benchmark metric for the cost of rework for the two
different project types procured by different contractual arrangements. In
project A, which was procured by a traditional system the cost of rework was
found to be 3.15 per cent of the contract value, and in project B which was
procured by a design and construct system it was 2.40 per cent. The rework
costs were determined by calculating the client initiated variations (that is, the
additional cost to the client) with variations that were not client initiated and
defective work.
The project managers in both projects had over 30 years experience in the
local industry, with several years' experience as carpenters and foremen prior
to joining the contracting organisation. Many of the subcontractors had worked
with project managers before on previous projects and as a result had
developed a relationship founded on trust.

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Both project managers were well respected by the site workforce because of
their understanding of the problems that often emerge on-site. As a result, there
were no non-conformances issued on either project, despite the contractors
prestigious corporate image built on their approach to quality. The contractors'
project managers preferred to operate on an informal basis with their
subcontractors. They initially gave the subcontractors informal warnings
about the quality of their work. If defective work was not rectified within 24
hours then a non-conformance would be issued.
In both projects the contractor required their subcontractors and suppliers to
have a quality management system in place so that the project could be
delivered effectively. However, this was hindered because the suppliers of
information, namely the design consultants were not QA accredited, nor did
they have a quality focus. Some of the information supplied by the designers
was inaccurate and incomplete and as result rework emerged downstream onsite. Using a classification similar to Burati et al. (1992) as described in the
Appendix, Tables III and IV highlight the cost of rework classified by the cause.
The main causes in project A were design changes, although the number of
rework incidents due to construction errors are significantly greater than any
other cause. The costs of a design change far exceed the costs of a construction
error, primarily because activities are programmed and materials are often
ordered in accordance with the original contract documentation. Whereas,
when a construction error occurred it was predominantly due to simple
mistakes made by subcontractors, for example installing a door incorrectly.
In project B, construction changes and errors were found to be the most
prevalent cause of rework. This was primarily due to the large amount of
prefabricated components and the lack of design standardization. Moreover,
the quality of finishes for trades such as painting, tiling and concrete placing
was considered to be of a low standard by the clerk of works. Typically, design
and construct projects have been criticized for their simplicity and poor quality;
in this case this was clearly evident. Common sources of the changes in both

Cause

Table III.
A summary of the cost
of rework causes for
project A

Design change
Design error
Design omission
Construction change
Construction error
Construction omission
Construction damage
Construction
improvement
Total

Number of
events

Nonproductive
time (days)

Total
cost ($)

Mean per
event ($)

Benchmark
metric for
causes % total
rework (%)

65
12
2
14
120
2
3

20
13
7
2
14

14

182,893
59,233
6,837
72,979
19,514
760
3,288

2,814
4,936
3,419
5,213
163
380
1,096

53.70
17.40
2.00
21.40
5.75
0.20
0.97

218

69

345,504

100

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Cause
Design change
Design error
Design omission
Construction change
Construction error
Construction omission
Construction damage
Construction
improvement
Total

Number of
events

Nonproductive
time (days)

Total cost
($)

Mean per
event ($)

Benchmark for
causes % total
rework (%)

10
6
1
25
37
20
29

2
7
0
5
13
0
9

11,100
11,020
300
25,840
27,575
5,340
13,190

1,110
1,837
300
1,034
745
267
455

10.38
10.30
0.28
24.15
25.78
4.99
12.33

38
166

3
39

12,618
106,983

332

11.79
100

projects were the end-users. Their input to the design and internal layout of the
facilities had not been clearly addressed by their project representative.
Consequently, as the buildings were being erected their dissatisfaction with the
product being procured began to emerge. Clearly, end-user involvement during
the development of the brief should minimize potential change orders.
Subcontract rework costs
The calculated costs of rework for each subcontract package for projects A and
B are tabulated in Tables V and VI respectively. Note that only those
subcontract trade packages where their contract value could be determined
have been tabulated and a benchmark presented. The party responsible for the
cost of rework was determined and can also be seen in Tables V and VI. It can
be clearly seen in project A that the contractor was directly responsible for only
$13,500 of rework costs.
Through discussions with the project manager in project A, it was found
that the contractors off-loaded any additional costs to their contract on to their
client and subcontractors. The rework costs for the ceilings and internal
partitions subcontract were due to end-users changing their minds with regard
to the layout of their apartments and clashes with the mechanical, electrical and
hydraulic services. Partitions had to be dismantled and this interrupted the
flow and sequencing of activities. This had demotivating effects on the
partition subcontractor and preceding subcontract trades and as result lowered
productivity levels. In an attempt to eliminate any further delays and maintain
their schedule, the subcontractor had to allocate additional resources to the
project, which were charged back to the client. The costs of rework to the
contractor resulted from additional resources being required to re-establish the
partition set out.
The mechanical and structural steel subcontracts were also significantly
affected by changes and errors as a benchmark of 10.59 per cent and 35.70 per
cent respectively for rework as a percentage of the subcontract value has been
established. As the costs of mechanical works form a substantial part of

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metrics
649
Table IV.
A summary of the cost
of rework causes for
project B

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650

Table V.
Benchmark costs of
rework for subcontract
packages in project A

Table VI.
Benchmark costs of
rework for subcontract
packages in project B

Subcontract package

Number of
Cost to
Cost to
Rework
rework subcontractor contractor Cost to benchmark
Value ($) events
($)
($)
client ($) metric (%)

Balustrades
Blockwork
Carpentry
Ceiling and partitions
Concrete
Doors
Electrical and fire
Formwork
Joinery
Landscape
Lifts
Mechanical
Metalwork
Painting
Piling
Plumbing and drainage
Reinforcement
Roofing
Structural steel
Tanking
Tiling

111,165
391,230
145,596
768,841
572,735
53,649
694,401
830,277
399,279
332,976
338,704
488,520
139,304
446,892
251,795
914,862
578,236
40,795
90,481
221,775
485,078

Subcontract package

Trade Number of
Cost to
Cost to
Rework
package
rework subcontractor contractor Cost to benchwork
value ($)
events
($)
($)
client ($) metric (%)

Blockwork
185,559
Carpentry
16,492
Carpet and vinyl
915
Ceiling and partitions
140,269
Concrete
1,032,626
Doors
33,445
Electrical and fire
571,750
Excavation
181,712
Lifts
111,000
Mechanical
288,200
Metal work
36,380
Painting
70,420
Piling
156,243
Plumbing and drainage 320,000
Roofing
135,464
Specialist shelving
151,795
Structural steel
230,273
Tiling
10,307
Windows and glazing
30,345

7
4
5
32
3
9
30
4
7
11
1
17
7
13
2
19
6
4
8
1
5

6
1
2
7
10
7
20
1
2
8
7
12
1
13
6
11
4
2
4

300
3,400

750
0
300
1,250
2,950
500
250

1,000
300
450
2,800
450
2,260
200
300

1,000

25

2,275
700
25
550

500
750
1,920
300
3,500
3,495
2,900
250
1,850
50
50

8,900
1,500

2,000
1,000

500
500

2,000

1,175
1,250
150

5,083
3,775
5,860
7,500
150

4,895

1,950
1,500
6,825
3,100
350
345

1,912
8,000
5,121
51,062
1,431
1,788
29,250

10,434
708
50,735
1,192
1,338

32,000
6,503

32,000

4,757

625

100
6,500
100
125
3,960

~
195

250
10,375

45

1.99
2.91
3.52
7.90
0.51
3.89
4.68
0.48
0.13
3.21
0.21
10.59
1.07
0.40
1.11
3.60
1.60
0.49
35.70
0.90
1.19

0.98
7.58
27.32
6.26
0.57
11.74
1.81
4.13
0.59
0.26
5.28
7.65
2.24
1.70
3.43
11.50
2.15
3.88
1.45

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modern day buildings, it is therefore necessary that immediate priority is given

to quality improvement initiatives that focus on subcontract packages that are
most likely to negatively influence project performance.
In the structural package in project A, the objective measure used indicates a
benchmark metric 35.7 per cent of the original subcontract value, which is
significantly high for a subcontract package that is less than 1 percent of the
overall contract value. A close investigation found that the root causes of
rework in this package were poor decision making, communication and
coordination between architect and engineer. Similarly in project B, the carpet
and vinyl flooring subcontract has a substantial amount of rework in relation to
its contract value, which is also less than 1 percent of the overall contract value.
However, the rework costs of this package are negligible when compared with
other packages. Thus, process knowledge and constant measurement of rework
are required if realistic benchmarks are to be established.
The contractor was asked to keep a log of the time spent checking
architectural and engineering drawings for project A. It was found that
approximately 860 hours were allocated to ensuring the drawings supplied the
information necessary to construct the building. For the contractor this equates
to an additional indirect cost of $A86,000 (assuming a charge rate of $A100 per
hour). Such a non-value adding activity could have been avoided if the design
coordination had occurred during the earlier stages of the project. A similar
procedure was followed in project B, but as the contractor was responsible for
design coordination these costs were very difficult to identify. Like project A,
the consultants provided very poor documentation.
Prior to the subcontract packages going out to tender the foreman estimated
that he spent approximately an additional 12 hours a week ensuring the
drawings were sufficient for subcontractors to price. Again for the contractor
using the same rate this equates to an additional indirect cost of $A36, 000. No
account was taken for the subcontractors' costs. However, it is suggested that
these costs could be considerably higher in relation to their individual contract
values. Such additional costs could have been avoided if the designers in both
projects had been committed to a quality management system with a common
quality objective.
Rework prevention
All parties, with the exception of the contractor, in both projects largely ignored
the costs associated with rework prevention. In fact it was perceived that there
was a culture of complacency inasmuch as there was often a time lag before the
problem became apparent. When the problem did occur it became more difficult
and expensive to rectify because there was often a delay between the occurrence
of the rework event and when it was originally identified and assessed.
According to Deming (1986), prevention is typically cheaper than rework. In
fact prevention costs are discretionary, because an organisation can determine
when and where it wants to implement them. Krishnamoorhi (1989) found that
there is a direct correlation with an increase of prevention and the reduction in

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652

rework and concluded that it is necessary to know how the cost of expenditures
relates to quality to justify budget allocations. Brown (1991) found that every
dollar spent in reducing rework costs could significantly improve profits. With
this in mind, prevention clearly is the most appropriate action that industry
practitioners should seek to undertake as it can help reduce internal and
external failure costs inasmuch as mistakes are eliminated. In the case of
inspection, if mistakes are found, there will still be an internal failure cost
because of the rework required. Therefore, it can be seen, especially in the case
of the contractor described above that inspection does not build quality into the
process whereas prevention can.
The need for a quality focus
The reported costs of rework figures in the case studies are significantly lower
than the 12 per cent quoted by Burati et al. (1992). This leads the authors to
suggest that the nature of the project, contractual arrangement, effectiveness of
the project team and the quality of the subcontractors will have a bearing on
the cost of rework experienced. The rework experienced in these projects could
have been greater if it were not for the contractor's project managers' proactive
approach to planning and scheduling. That is, they were able to identify
potential problems before they emerged on-site. By checking and inspecting
contract documentation the contractor acted as a quality buffer, though this
often resulted in the contractor having to wait for elements to be re-designed
and for additional information, which further meant that project activities were
disrupted and re-scheduled. This meant that considerable amounts of nonproductive time were experienced as noted in Tables III and IV (69 days and 39
days respectively).
The non-productive time experienced in project A is significantly greater
than that in project B. Interviews with the architects revealed that their internal
management had not effectively planned the design and documentation phases
of the project. They had numerous commissions being undertaken
simultaneously with project A and as a result had limited resources to attend to
all the clients' needs and requirements. Consequently, the documentation
provided to the contractor failed to provide the information that was needed to
manage the construction process. Arge (1995) suggests that direct and constant
communication between the architect and client/end-user is a critical factor that
can affect the quality of the end product. Arge further notes that if architects
are to deliver clients/end-users quality architecture, they need to improve their
internal management practices and consider limiting the commissions they
undertake.
Notably, the designers in both projects did not follow nor implement quality
management procedures and practices because the immediate benefits were not
considered tangible. Nevertheless, it must be stressed that it may appear that an
organisation is spending money on effective and practical quality management
systems without seeing any benefits. However, it must be seen as an investment
in efficiency and effectiveness. The effective implementation of TQM and its

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associated tools and techniques could solve most rework problems before they
occur. According to CIDA (1995) projects that have a formal quality
management system in place record lower levels of rework. They found the
average cost of rework, as a percentage of contract value, for projects with a
quality system can be as low as 0.72 per cent. Conversely, those projects without
a quality system in place were found to have an average cost of rework 6.5 per
cent. Similarly, Burati et al. (1989) states that when TQM is applied throughout
a project, rework can be virtually non-existent, especially if incentive schemes
are introduced. As rework is reduced, performance, productivity, and quality
will improve, which will reduce costs and increase profit.
Managing the interfaces in the quality-chain
To reduce rework in construction a conceptual model for benchmarking the
interfaces of the quality-chain is proposed in Figure 3. Rework essentially
originates from the design process. Indeed it would appear that because quality
is not ingrained within the culture of architectural and engineering practices
the notion of the customer-supplier relationship is abated, which has
ramifications throughout the quality-chain in a project. Juxtaposed with poor
internal management practices this could be a recipe for rework occurring
downstream in the construction process. Therefore, at parent level, senior
management must develop a corporate strategy that focuses on developing a
quality culture, which seeks to develop an inherent customer-supplier focus. By
implementing a continuous improvement philosophy built on a sound QA base
that utilises benchmarking as its driving force for best practice, an
organisation's performance and competitive advantage may improve.
Benchmarking core business processes should form an integral part of the
organisation's corporate strategy. Only when all parent key organisations
involved in a project are benchmarking will the performance of the industry
begin to improve (Ireland, 1996). Implicitly, this will require each organisation
involved in those interfaces identified in Figure 3 to develop benchmarks for
those processes used to support its internal and project-based operations.
By improving the parent's project-based processes, rework may be reduced,
which may improve customer satisfaction and project performance. Though we
do suggest that improvements in overall project performance will be dependent
on the ubiquitous nature of best practice programmes initiated by those
organisations participating in the project.
The factors impacting design effectiveness and the subsequent impact of
changes on construction cost and schedule have been well documented in the
construction management literature over the last ten years. Despite these
problems being well known and understood by industry practitioners, very few
improvements have been made in the construction industry. Thus, in an
attempt to achieve dramatic improvements in project performance numerous
researchers and practitioners in construction have suggested that business
process re-engineering could be the panacea for success (Mohamed and Tucker,
1996; Ireland, 1994). However, before such an approach can implemented a

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PARENT ORGANISATION
Corporate Strategy (Vision, mission and competitive advantage)
Commitment & Leadership to change
Customer & supplier focus
Partnership development

654
PROJECT ORGANISATION

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Design Process
(Upstream)
Input

Concept
(Client Requirements)

Performance Measurement
Continuous Improvement Cycle
Improvement

A P

QUALITY CHAIN

C D
QA

Conversion

Design

Benchmark
Time

VARIABILITY REDUCTION

Construction Process
(Downstream)

Documentation
(Drawings &
Specification)

Benchmark

Output

Construction &
Manufacture

Operation of
Facility

Figure 3.
A conceptual model for
benchmarking the
interfaces of the qualitychain

Input

Benchmark
Conversion

Benchmark
Output

INDUSTRY BEST PRACTICE

culture founded on quality is needed to act as the primary enabler for change
(Love and Gunasekaran, 1997). Those TQM practices that could be employed to
reduce rework and improve project performance include:
.

Concurrent engineering can be used as the strategy for reducing the

overall time and cost of a project by minimising potential causes of rework
and errors that are often attributed to poor design and documentation
(Love et al., 1998b). Winner (1988) found that rework could be reduced by
75 per cent through product and process design optimisation.

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Quality function deployment can be used to develop the client

requirements in a holistic and integrated manner so that requirements
can be totally satisfied and as a result minimise downstream changes
(Mohamed, 1995).
Failure mode and effect analysis (FMEA) can be used to identify all
possible failures that could occur in a product, component, process, or an
organisation as well as the most probable ones, the mode in which they
occur, and their effect. Layzell and Ledbetter (1997) suggest the use of
FMEA as a technique to assess the impact of a failure can improve
decision-making and thus reduce rework.
Activity-based costing can be used to identify value-added and nonvalue-added activities in an organisation. Together with activity-based
management it can be used to identify the activities that should be
managed and controlled in order to reduce rework (Gunasekaran and
Sarhadi, 1998).

Such TQM practices should be seen as the vehicles for performance

measurement and benchmarking recognised as the driver for best practice.
Conclusion
While recognizing that the benchmark metrics for the cost of rework can be a
potential goal or target for the industry they are indicators only and have
limited application to the project types presented. The range of contractual
arrangements and the diversity of participating organisations militate against
the use of fixed or static measures. The rework costs found in the case studies
compare favorably against the finding of 12.4 per cent presented by Burati et al.
(1992). However, the costs of rework between each country should not be
considered to be authoritative, but merely indicative, as levels and
interpretations of quality will differ between each country. Local practices,
industry culture and contract arrangements may also have a significant
influence on the incidence and cost of rework in any situation and locality.
Moreover, the quality management systems implemented may have been more
stringent in the projects sampled by Burati et al. (1992) than the case studies
presented here.
The identified measures could be difficult to practically implement as
metrics for competitive/functional benchmarking for project comparison
purposes. For instance, the diversity of site accounting practices between
contractors and the absence of systematic approach to quality, commonly
accepted definitions, protocols and terminology indicate that at best only
approximate estimates can be attained.
It also has to be recognized that to the authors' knowledge no such research
or industry indicators have been established to date in Australia. Consequently
we suggest that simple, but effective benchmarks for measuring rework (such
as the ones described here) can be used as an initial measure for comparing
projects. These benchmarks can provide useful comparative data and would be

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656

of great interest to larger client organisations that control vast construction

programmes such as those controlled by large corporations, state government
agencies, and departments.
In an attempt to achieve industry best practice a conceptual model has been
proposed, which identifies the interfaces of the quality chain in construction where
benchmarks for rework need to be established. We have suggested that before
benchmarking can become an industry norm, senior management must be
committed to implementing TQM and specifically a customer-supplier focus. Only
when all participants in the procurement process are committed to quality will the
direct and indirect costs of rework experienced in projects be minimised.
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Appendix: definition of rework causes

Design generated rework was categorized as follows in accordance with circumstances that
occurred:
(1) Change made by the design team that results in rework, for example:

658

Construction

Client/client representative

Occupier

Manufacture

Unknown

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(2) Error an error made by the design team.

(3) Omission an omission made by the design team.
(4) Operational improvement a non-mandatory improvement in design.
Construction generated rework was categorized as follows in accordance with circumstances
that occurred:
(1) Change. Change made during construction that results in rework for example:
.

Construction

Site conditions

Client/client representative

Occupier

Manufacture

Unknown

(2) Error error made during construction.

(3) Omission omission during construction.
(4) Damage damage caused by other trades or weather.
(5) Operational improvement a non-mandatory improvement in construction.

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2-15. [Abstract] [PDF]
16. Eddie W.L. Cheng, Heng Li, Peter E.D. Love, Zahir Irani. 2001. Network communication in the
construction industry. Corporate Communications: An International Journal 6:2, 61-70. [Abstract] [Full
Text] [PDF]

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17. Jim Smith, Peter E.D. Love, Ray Wyatt. 2001. To build or not to build? Assessing the strategic needs
of construction industry clients and their stakeholders. Structural Survey 19:2, 121-132. [Abstract] [Full
Text] [PDF]
18. Jim Smith, Peter E.D. Love. 2001. Adapting to clients needs in construction a dialogue. Facilities 19:1/2,
71-79. [Abstract] [Full Text] [PDF]
19. Peter E.D. Love, Gary D. Holt. 2000. Construction business performance measurement: the SPM
alternative. Business Process Management Journal 6:5, 408-416. [Abstract] [Full Text] [PDF]
20. Peter E. D. Love, Purnendu Mandal, Jim Smith, Heng Li. 2000. Modelling the dynamics of design error
induced rework in construction. Construction Management and Economics 18, 567-574. [CrossRef]
21. Peter E. D. Love, Heng Li. 2000. Quantifying the causes and costs of rework in construction. Construction
Management and Economics 18, 479-490. [CrossRef]
22. Peter E.D. Love, Heng Li, Zahir Irani, Gary D. Holt. 2000. Rethinking TQM: toward a framework
for facilitating learning and change in construction organizations. The TQM Magazine 12:2, 107-117.
[Abstract] [Full Text] [PDF]
23. Peter E.D. Love, A. Gunasekaran. 1999. Learning alliances: a customersupplier focus for continuous
improvement in manufacturing. Industrial and Commercial Training 31:3, 88-96. [Abstract] [Full Text]
[PDF]