Metal fabrication · Manufacturing
Reconcile the steel you bought with the tonnes you billed on every fabrication job
A fabricator is paid by the tonne or by the job. It loses money in the gap between the steel it bought and the steel it billed. We reconcile that gap on every job, along with the labour contractors, outside processing and site erection that usually sit outside the cost sheet.
In one paragraph
Fabricators are often paid per kilogram of finished weight but spend by the plate, the offcut and the welder's hour. They build structural steel, sheet-metal work, tanks, skids and process equipment for EPC contractors, plant owners and OEMs. Most turn over ₹10–250 crore. Cost is driven by plate and section sizes, cutting wastage and the hours of contract welders and fitters. The owner or managing director usually leads the work.
Owner or managing director
The economics
How the money moves in this trade
Fabrication cost is mostly steel and labour. Steel is bought in standard plate and section sizes and cut to the drawing, leaving offcuts and scrap that may or may not be reused. Billing is commonly on theoretical or drawing weight, so wastage, over-thickness or rework is cost the customer does not pay for. Labour is often supplied by contractors on piece rates or per tonne. Welding consumables, gases and outside processes such as galvanising, painting or blasting come on top.
Larger jobs are billed through running account bills certified by the customer's engineer. Retention is held back, and site erection runs months after shop work ends. Customers may supply their own steel for conversion, which brings job-work records and material-return obligations. A shop can be busy all year and still not know which jobs paid for the others.
The problem
Where the numbers usually break down
Billed weight and consumed weight are never compared
Steel issued to a job is not reconciled with the weight billed, so wastage above the norm stays invisible.
Offcuts and scrap leak value
Usable offcuts are not recorded for reuse and scrap sales are not matched to the jobs that generated them.
Labour contractor bills are paid without a measure
Contractors are paid per tonne or per day without the quantity being checked against the job's actual progress.
Running bills lag the work done
Work completed at site waits weeks for measurement and certification, while the contractor and steel supplier must be paid now.
Customer-supplied steel drifts from the books
Material received for conversion is tracked loosely, and returns of scrap and finished goods are not reconciled to what was received.
What we do
The work, and the result each part produces
Job costing on a weight basis
Steel issued, steel billed, labour, consumables and outside processing recorded per job and compared with the estimate per tonne.
Each job shows its true cost per tonne.
Steel and scrap reconciliation
Opening stock, purchases, issues, offcuts and scrap sales reconciled monthly in weight and value.
Wastage above the norm is traced to a job.
Labour contractor control
Contractor bills checked against measured quantities and job progress before payment, with statutory compliance records collected.
You pay for work done, and only once.
Running bill and retention tracker
Work done, billed, certified and paid tracked per job, with retention release dates diarised.
Unbilled work is converted to bills quickly.
Job-work material accounting
Customer-supplied steel tracked in, through and out, and kept consistent with the job-work records your customer reports under GST.
Customer material reconciles at both ends.
Site erection costing
Erection labour, cranes, travel and site overheads booked to the job they belong to.
Site work stops eroding shop margin unseen.
Where we start
The first steps of an engagement
Steel registers and running bills
We ask for steel purchase and issue records, drawing-weight billing for recent jobs, scrap sale invoices, labour contractor bills and the running-bill and retention file.
Steel bought against steel billed
For a sample of completed jobs, steel issued is reconciled with weight billed, offcuts and scrap sold, and wastage is measured against the estimate.
Measured quantities before contractor payment
Contractor bills start being checked against measured quantities and job progress before payment, and each job gets its own steel issue record.
A cost-per-tonne report by job
The first report shows estimated against actual cost per tonne for the jobs reviewed, with wastage, labour and outside processing shown separately.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Cost per tonne, estimated against actual, by job
- Wastage as a share of steel issued
- Scrap recovery against expected scrap
- Labour cost per tonne, by contractor
- Unbilled work and retention outstanding
- Customer-supplied material reconciled
Who it suits
Written for, and not the right fit for
- You need pressure-equipment design approval or statutory inspection — that sits with the competent authority and approved inspectors.
- You need the annual audit or tax-audit report signed — an independently engaged CA signs it, and our steel and job-work reconciliations are among the records it draws on.
- Structural steel, sheet-metal, tank and process-equipment fabricators.
- Fabricators working for EPC contractors on running-bill terms.
- Shops relying on labour contractors for most of their welding and fitting.
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗Payroll and labour compliance
Every payroll cycle reconciled, with the statutory workflow attached.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
What is a reasonable steel wastage norm for fabrication?
It depends on the work — plate-heavy jobs and section-heavy jobs differ a lot. We'd build the norm from your own completed jobs rather than use an industry figure, and then track each job against it.
Who is responsible for labour contractor compliance?
Registrations and filings remain the contractor's and your responsibility. We check that contractors' statutory records are collected before payment and keep the payment trail consistent with them.
Should a fabricator bill on drawing weight or actual weight?
Not necessarily. Many customers insist on it. What matters is that your quoted rate per kilogram covers the wastage you actually incur, and that only becomes clear when the two weights are compared.
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