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60-Second Contractor Solution Blog

Money from the Scrap Heap

January 14, 2013
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A customer wrote me an email awhile back inquiring about what my family did with the scrap metal from jobsites and he wanted to know what other companies I work with do as well. The reason he asked was that he was looking to work out a procedure and a policy that would be fair and equitable to the company and to all his staff.

Frankly, I hadn’t thought about this issue for quite awhile. And to be honest it’s because I’ve been out of the business for 10 years now. Even though I’m working with clients every day nobody had mentioned this as being an issue until now.

But being a curious sort, I asked around and found a myriad of potential solutions. Here’s a quick recap starting with how my company handled it when I was working there:

  1. For years and years before my brothers and I entered the business, my dad kept the scrap money and put it to work at the company. It was at a time when he was building the company and every penny counted.
    When my brothers and I came onboard full time and the money from scrap metal from jobs became less meaningful, we decided we just let the guys keep it. But that backfired. The reason is all of a sudden the guys were changing perfectly good pipe beyond the scope of work and figured in the bid process for their own purposes!
    That’s when I told my brothers that we should require that all scrap be delivered to the shop and that the exact install instructions were to be followed. We also told them we’d be pooling what was collected and we’d throw a party or setup a fishing trip with the money at the end of the year…and that all of the money would be put to the staff’s benefit. That worked the best.
  2. Some contractors I have worked with told me they chose to split it 50/50. The collection process is the same when it comes to strict guidelines for what is deemed to be scrap and what is not and how to sort it out when they get to the shop so it can be carted off properly to the recycling center. Then the funds are segregated so they can be split at the end of the year between company and team members.
  3. And, yes…there are those contractors who rightfully feel the legitimate scrap is company property to do as they see fit. That means all scrap gets turned in and sorted so it, too, can go to the recycling center and the reimbursement check ends up in the corporate bank account to add profits and income to the company.

I really don’t have an overly strong opinion about which of these three approaches is best when it comes to your company. What I do know is until you have a written policy to spell it out and you make sure everyone is trained on the process from start to end, issues and hard feeling are sure to crop up.

So, be proactive!



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