What is slippage? When is it OK? Ever? Never? When does slippage become big enough to be called “sloppage”? Is slippage a legitimate cost? If it is, who should pay it? Who is accountable for slippage? Is slippage like sales tax? Should it be the same for everything? Should we assume slippage is unavoidable and add it to our estimate? Then what happens if there is slippage on slippage — do we call that “slidage”? OK. I know. Enough already.
The term slippage is widely used in construction and by some of the best in the business — it is used properly by some and as an excuse by others. For the sake of this discussion, I am going to dismiss those who use sloppy management and estimating techniques and expect good results. Permissible slippage should only come from estimates that are done properly and management that is effective and attentive. We will deal with the good estimate folks for most of our discussion.
If we define slippage in the classical sense, we would call it the efficiency with which the job is executed both from a material and labor standpoint; but that’s not entirely accurate in practice. When we estimate a job at $1,000 and it winds up costing $1,080 without a change in work scope, we would have a slippage of $80 or 8 percent and that is a lot; on a million dollar year, that would be $80,000, by anyone’s standards some serious bread. What amount of difference would you be willing to “tsk tsk” and call it the way the cookie crumbles? Two percent slippage seems to be an acceptable level. I am not trying to pick a fight over words, or a percent, but it is very, very important to know slippage for what it is.
Accurate estimates come from good plans and with accurate job scope descriptions; we prepare a take off showing quantities by size, type or character so that we can accurately get pricing. An important part of an estimate is the computation of waste. The portion of the materials that is not usable productively, is lost, damaged or misused is reasonably defined as waste; it is not waste if you can return it for full credit. Waste depends upon the amount of the material, packaging and in some cases vendor policy about returns for credit. Consider the following examples. 1) I built a two-story office building several years ago. I used approximately 80,000 modular bricks, the coursing was normal, and the brick was a uniform color and was easy to lay. I checked with the supplier and used a waste factor of 2 percent or allowed for 1,600 extra bricks without using halves. The brick cubes were a 400 count (lucky, but it’s a remodeler thing). If I had to bust into a new cube for 50 bricks to finish the job, it would increase my product waste 0.5 percent, but let’s say that my waste allowance was correct at 2 percent and my job came in on budget using most of the waste I had included — hence there was no slippage. 2) Next, I built a house and the house had 22,000 bricks and if I used a 2 percent waste factor (440 bricks), essentially one cube, I have less elbow room within the waste factor. If I run even slightly over, I have to buy another cube and that doubles my waste to 4 percent; the extra waste would be slippage. 3) If I do a normal remodel that has 8,000 bricks and if I use the same waste, 2 percent, I can only lose 160 bricks before I’m stuck, so I have much less wiggle room; all that has to happen is bad coursing and if I have to buy another cube, now my waste has turned into 5 percent or 2.5 times what I estimated for waste. Every one of these examples is a good possibility, but if we call waste slippage, we don’t have an accurate picture of why our job would have finished over budget. Furthermore, we didn’t get to mark up the waste if it turned out to be slippage.