Demolition bookkeeping: disposal, scrap and equipment

Demolition is paid to take things away, and it pays twice when it is done well: once by the customer, and again by whoever buys the scrap metal and salvage. It also costs twice: once in equipment and crew, and again at the landfill, the transfer station and the recycler.

Most demolition books record the customer’s payment and the landfill bills and not much else. The margin is hidden in the parts they leave out.

Disposal is a direct cost

Tipping fees, roll-off containers and hauling are among the largest costs on most demolition jobs, and they arrive on separate invoices, often weeks after the work. Every one belongs on the job it served.

Track disposal per job by material — mixed debris, concrete, wood, metal — and by facility. Disposal rates differ between facilities and change over time, and knowing what each job type actually cost to dispose of is what makes the next estimate accurate. See how to bid a job.

Scrap and salvage are revenue

Scrap metal sold to a recycler, and salvaged materials sold or reused, are income — record them as their own revenue line, by job, not as a reduction of disposal cost.

Netted against disposal, scrap hides both numbers: you cannot see what disposal really costs or how much scrap is worth. And scrap prices move. A job priced assuming a scrap credit is exposed when the price falls; tracked separately, you can see that exposure.

Recycler settlement sheets are source documents — match them to jobs the same way you would a supplier invoice.

Equipment by the hour

Excavators with demolition attachments, skid steers, loaders and trucks are most of the capital. Give each machine an hourly cost — ownership plus operating, including attachments and wear parts — and charge it to jobs. The method is the same as excavation; see excavation bookkeeping.

Hazardous materials

Asbestos, lead paint and other regulated materials usually have to be surveyed and abated before demolition, often by licensed specialists. Survey and abatement costs belong to the job, and they are among the most common reasons a demolition job goes over budget.

Where abatement is discovered after the contract is signed, it is a change order — documented and approved before the work. See change orders and getting paid. The regulations themselves vary by state and are outside the scope of this guide.

Interior and selective demolition

Interior strip-outs and selective demolition for remodels are smaller, labor-heavy jobs with different margins from full structure demolition. Separate them with classes or income accounts; they are often the steadier work that carries the business between large jobs.

Commercial and public work

Commercial and public demolition brings bonding, insurance requirements, pay applications, retainage and sometimes prevailing wage. See getting bonded, retainage explained and prevailing wage and certified payroll.

Crew cost and insurance

Demolition crews carry expensive workers’ compensation classifications and liability premiums. Cost crew hours at the burdened rate — wage plus payroll taxes, workers’ compensation and benefits — and make sure employees are classified correctly for your insurance audit. See surviving your workers comp audit.

Related

• Restoration bookkeeping
• General contractor bookkeeping
• Construction bookkeeping, step by step

General information, not tax or legal advice. Hazardous material and disposal regulations vary by state.