What does a stockout cost in a project environment?
One missing item delays the whole site or the handover.
Where you lose money
Delay costs and penalty clauses. Every day of late handover has a price, often set out in the contract.
Waiting crews. Your own people and subcontractors stand idle on costs that keep running.
Rescheduling. Booking skilled workers and equipment again pushes the whole project back.
An unhappy start. The client takes their building or installation into use with the delay still fresh in memory.
How do you calculate it?
- Delay cost = delay days per year from missing material × penalty or cost per day
- Waiting crews = delay days × crew cost per day
- Total impact = delay cost + waiting crews
Explanation
In a project environment there is often a domino effect: one missing item pushes back the site or the handover, and every day has a price that is often set out in the contract. The crew cost per day covers your own people and subcontractors who stand idle or have to be rescheduled.
A high availability percentage is reassuring and says little. A site follows a critical path: if 95% of the material is delivered on time and the missing part is on that path, everything stops. So measure material availability against the schedule: which deliveries determine the next step, and how often that step was delayed by material.
The unhappy start is not in the calculation: the client takes their building or installation into use with the delay still fresh in memory. The estimate is therefore conservative.
Curious what this costs you?
A short conversation, then a personalised calculation for your situation.