Calculating a material waste factor

      How to determine a wastage factor to be applied when pricing work. November 29, 2000

Question
How can I calculate the correct scrap ratio with panels and be able to get a percentage ratio in order to add on to the pricing of my cabinets?

Forum Responses
That will vary from shop to shop and job to job. Keeping track of your jobs will be the only way to know. I use Excel for costs tracking, set up a spreadsheet and every job I do, note how many sheets were used and how many square feet of panels were actually needed. Take the difference and divide it by the actual panel square feet. That will be the percentage to add.

If you figure you need 291 square feet of panels and use 10 full sheets, you would need to add 10% to 291 to get 320.

Itís also good to make notes of each job so you can tell if it was a simple job or all odd sizes for future reference. It may seem like it will take a while to get enough info, but it adds up faster than you think.



The last post is on the mark, but needs to put another shot into the bullís eye.

You also need to calculate the amount of time to pickup and dispose of the scrap, and your tipping fees by percentage of scrap. Those figures need to be added in to get a true scrap ratio cost.

Some companies op to include them as "house cleaning" and "disposal fee" on their spread sheet. Even with these costs, which then generally figure into overhead, you still need to have a tracking to find either an average or a percentage that you can use.



If you're adding on a percentage to your net material requirement for costing, don't add a "waste" factor or you'll be making a mistake I see lots of guys do. If your waste factor is 20%, 25%, 30%, 35%, 40%, 45%, or 50%, add 26, 34, 44, 55, 67, 82, and 100 percent respectively, to your net material requirement to get your actual material costs.

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Have you reviewed the related Knowledge Base areas below?
  • KnowledgeBase: Business: Estimating/Accounting/Profitability

  • KnowledgeBase: Business: Project Management

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