The Economics of Deconstruction

The ReUse People Specials

I am amazed at the number of contractors and salvage organizations that think they can perform deconstruction at no cost to the client, by covering expenses through the sale of the salvaged materials.

I’m reminded of the brick seller whose brother asked him why he was charging only 10 cents a brick when the bricks cost him 12 cents. He responded that since he’d just gotten into the business and things were slow, he’d make up for the difference in future volume (!)

I understand that there are opportunities out there to salvage old barns in particular, and that it often pays to purchase one of these iconic structures for the sole purpose of reclaiming the lumber. However, as old barns disappear, this business model will go the way of the typewriter.

If your mission is to divert materials away from the landfill so they can be reused, the economics are pretty clear. Take the standard 2,000 square-foot single-family home, reasonably well maintained, but with dated fixtures and single glazed windows.

The cost to deconstruct this home would include labor, job supplies, supervision, trucking and disposal of materials that cannot be reused, such as composition shingles, concrete, asphalt and stucco (whether landfilled or recycled). The concrete foundation and driveways would be left for a contractor with the necessary heavy equipment to remove them.

Following is my estimate of what the complete deconstruction would cost. Naturally, costs vary from organization to organization and city to city.

Labor. A crew of five would need a minimum of two weeks (10 working days) to complete the job. At $14/hour ($16 for the crew chief), total daily cost would be $576, or $5,760 for the job. Payroll taxes and workers compensation insurance take the total to $7,200. That’s without job benefits of any kind.

Job supplies. This includes such items as dust masks, ear plugs, water and replacement of broken tools. In my experience, costs are 3 to 5% of total labor, or a minimum of $216.

Supervision. To ensure the job is done properly and safely, progress should to be monitored daily. Typically this is done by the person responsible for bidding or obtaining the job. Costs, including payroll taxes, workers compensation and transportation for daily 1-hour visits at $30/hour, plus 30 minutes travel to and from, total $600 ($30/hour x 2 hours x 10 days).

Trucking. A project this size would require about three 24-foot truckloads, one box truck for fixtures and two flatbed for lumber. If the driver is a crew member with a regular driver’s license, no additional driver cost need be incurred. Vehicle rental would be about $150/day for two days. With fuel added, the total cost would be $400 to $600. If using your own truck, expenses still include depreciation, registration, insurance and maintenance. But we’ll use the lower number - $400.

Disposal. A project this size would require three 40-yard roll-offs or debris boxes. These boxes, including pick up, delivery and disposal run from $350 to $900. I’ll assume $500/box or $1,500. As far as I’m concerned, the deconstruction contractor is responsible for removing waste and debris. Failing to do so is unsafe, annoying to neighbors, and lousy marketing.

Total so far: $9,916.

But wait, we’re not done yet. What about overhead? Most contractors must also consider the expense of bookkeeping, office supplies, marketing and sales, liability insurance, the boss’s exorbitant salary, rent, benefits (if any), depreciation, postage, printing, accounting/legal, and utilities. Typically in a large, well-run organization, overhead would be about 10%. For smaller organizations it might be as high as 20%. Let’s agree on 15%.

Now the total cost is $11,403.

Finally, don’t forget profit. Even nonprofit organizations need to put something away for when the market softens, and it will. You also need a cushion in order to grow. As a business grows, expenses typically increase ahead of revenue earned and cash collected. A retained profit helps bridge the gap. Today, contractor profits range from 10 to 50%. If you can’t justify a 50% percent profit, then figure 10%. That adds $992 to the prior total.

Total cost to the customer: $12,395.

Deconstruction is an economic activity. Charge for it — don’t give it away in order to obtain materials.

Next month I’ll address the value of the materials and three specific problems that must be overcome—all relating to cost.

 

Employment Opportunity

TRP is seeking a versatile individual for the position of Crew Chief. Primary responsibilities include managing 5 and 10 person crews on deconstruction projects, maintaining jobsite safety and assisting the TRP deconstruction manager with estimating and bidding. The candidate must be bilingual (English/Spanish), adept in the use of Microsoft Office, knowledgeable concerning residential construction, and skilled in oral/written communication. Compensation is a combination of base salary plus incentive. TRP offers health care, the usual holidays and vacations, flexible spending accounts, a 401(k) program, and an outstanding work environment.

Specials of the Month

At the Oakland warehouse we are featuring windows. Receive 25% off the price of any window in the warehouse through November 30.

The ReUse People Specials
The Los Angeles warehouse is featuring windows and lumber units. Receive 25% off the price of any window or new-growth lumber unit (excludes redwood, old growth and 1x material) in the warehouse through November 30.
The ReUse People Specials
The San Bernardino warehouse is having a STOREWIDE SALE. Receive 50% off the price any item in the warehouse through November 30.

New Inventory

The Oakland warehouse has received new shipments of versatile flagstone. Get some while supplies last!

 

New inventory at the Los Angeles warehouse includes floating cherry-wood wall shelves in various sizes, a cherry-wood bathroom vanity with white marble countertop, and vintage switch-plate covers in several styles.

The ReUse People Specials The ReUse People Specials The ReUse People Specials

Location and Contact Information

TRP ReUse Warehouse - Oakland
9235 San Leandro Street
Oakland, CA  94603
(510) 383-1983; toll-free 888-588-9490
Hours: Mon-Sat 9:00-6:00 Closed Sunday

TRP ReUse Warehouse - Los Angeles
3015 Dolores Avenue, Los Angeles, CA 90065
818-244-5635
Hours: Mon-Fri 10:00-5:00; Sat 10:00-4:00

TRP-HACSB ReUse Warehouse - San Bernardino
660 East Orange Street
San Bernardino, CA  92410
(909) 388-6475
Hours: Tue-Sat 9:00-6:00 Closed Monday and Sunday

Please visit our partnering warehouses:
Habitat for Humanity ReStores, Orange County (two convenient locations)
The Home Improvement Store That Builds Homes
1656 West Katella Avenue, Anaheim, CA 92802
(Euclid and Katella Avenue)
(714) 434-6266
Mon-Fri 9:00 am- 8:00 pm;
Sat 9:00 am- 6:00pm;
Sun 11:00 am- 5:00 pm

The Home Improvement Store That Builds Homes
1400 Village Way, Santa Ana, CA 92705
(McFadden Place Shopping Center, exit 55 Freeway at McFadden)
(714) 434-6266
Mon- Sat 9:00 am- 6:00 pm;
Sun 10:00 am- 5:00 pm

Habitat for Humanity ReStore, Kansas City
4701 Deramus, Kansas City MO 64120
(816) 231-6889
Hours: Mon-Fri 10:00-6:00; Sat 9:00-4:00; closed Sunday

The ReUse Warehouse
1400 East Geer Street
Durham, NC 27704
(919) 219-4913
Hours: Mon-Fri, 2:00-6:00; Sat, 9:30-5:00

Second Chance Building Materials Center
1423 West Grove Street
Boise, ID 83702
(208) 331-2707
Hours: Mon-Sat, 9:00-6:00; Sun, 12:00-5:00

Roaring Fork Valley Habitat for Humanity
7025 Hwy 82
Glenwood Springs, CO 81601
(970) 945-7733
Hours: Mon-Fri, 10:00-5:30; Sat, 10:00-5:00; Sun, 11:00-4:00

Stardust Building Supply
3901 E. Thunderbird Road
Phoenix, AZ 85032
(602) 459-9803
Hours: Mon-Sat, 8:00-6:00; Sun, 10:00-4:00

Habitat for Humanity ReStore, Salt Lake Valley,
1276 South 500 West
Salt Lake City, UT 84101
(801) 263-0136
Hours: Mon-Sat 9:00am-6:00pm; closed Sunday

Habitat for Humanity ReStore, Summit & Wasatch Counties
6280 N. Silver Creek Drive, Silver Summit, UT
(435) 487-9015
Hours: Wed-Sat 10:00-6:00; closed Sunday

Recycle Utah
1951 Woodbine Way Park City, UT 84060
(435) 649-9698
Hours: Mon-Sat 8:00-5:30; Sun 10:00-4:00

Reuse Depot
50 West Madison
Maywood, IL 60153
(708) 223-0502
Hours: Wed-Mon 10:00-6:00p; Closed Tuesdays

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