Aerospace & Defense Manufacturing worked example

Defense Delivery Penalty Exposure at 86% enforceable penalty share: a worked example

What does the result look like when enforceable penalty share reaches 86%? The full calculation is worked below with real intermediate numbers. a program manager needs to estimate financial exposure from late defense production deliveries

The inputs for this scenario

  • Late defense deliverable units: 14 units (unchanged)
  • Penalty exposure per unit: 4,200 $ / unit (unchanged)
  • Enforceable penalty share: 86 % (raised for this scenario; the documented default is 75)
  • Fixed expedite or recovery cost: 18,500 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Enforceable penalty cost = late units × penalty per unit × enforceable penalty share) to the inputs above produces each figure below.
  • At this operating point the engine returns 69,068 $ penalty exposure for defense delivery penalty exposure, the number this scenario is built around.
  • At this operating point the engine returns 4,933 $ / unit for penalty exposure per unit.
  • At this operating point the engine returns 50,568 $ penalty exposure for enforceable penalty cost.
  • At this operating point the engine returns 18,500 $ for fixed expedite or recovery cost.

How this compares with the baseline

  • Against the tool's baseline example, where enforceable penalty share sits at 75% and the headline result is 62,600 $ penalty exposure, this scenario comes in 10.33% above the baseline at 69,068 $ penalty exposure.
  • A figure at this level is achievable when enforceable penalty share is genuinely sustained, not just peaked for a shift. The enforceable share is a judgment call; actual enforcement depends on contract language, government discretion, and any excusable-delay or cure provisions this calculator cannot read.

Results at a glance

  • Defense delivery penalty exposure: 69,068 $ penalty exposure (headline result)
  • Penalty exposure per unit: 4,933 $ / unit
  • Enforceable penalty cost: 50,568 $ penalty exposure
  • Fixed expedite or recovery cost: 18,500 $

Run it with your numbers

  • Every input above is editable in the live Defense Delivery Penalty Exposure calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.