Industrial Equipment, Machinery & Capital Goods worked example

Project Margin Leakage at 81% exposure share assigned to project: a worked example

This scenario runs the project margin leakage calculation on the strong side: 81% exposure share assigned to project, with every other input held at its documented default. Use it when tracking cost creep from engineering changes, rework, late suppliers, site delays, discounts, and customer concessions.

The inputs for this scenario

  • Margin leakage events: 16 events (unchanged)
  • Average cost per leakage event: 4,200 $ / event (unchanged)
  • Exposure share assigned to project: 81 % (raised for this scenario; the documented default is 70)
  • Fixed unresolved project cost: 22,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Variable project margin leakage = margin leakage events × average cost per leakage event × exposure share assigned to project) to the inputs above produces each figure below.
  • At this operating point the engine returns 76,432 $ for total project margin leakage, the number this scenario is built around.
  • At this operating point the engine returns 4,777 $ / event for average cost per leakage event.
  • At this operating point the engine returns 54,432 $ for variable project margin leakage.
  • At this operating point the engine returns 22,000 $ for fixed unresolved project cost.

How this compares with the baseline

  • Against the tool's baseline example, where exposure share assigned to project sits at 70% and the headline result is 69,040 $, this scenario comes in 10.71% above the baseline at 76,432 $.
  • Use it at gate reviews or monthly cost reviews to size accumulated margin erosion before it becomes an end-of-job surprise. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Total project margin leakage: 76,432 $ (headline result)
  • Average cost per leakage event: 4,777 $ / event
  • Variable project margin leakage: 54,432 $
  • Fixed unresolved project cost: 22,000 $

Run it with your numbers

  • Every input above is editable in the live Project Margin Leakage calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.