A factory renovation budget must include the production that stops
A factory project can look inexpensive on a construction quotation and still be the most expensive schedule for the business. A full shutdown may shorten mobilisation and reduce protection work, but every lost production day can erase contribution margin and put customer deliveries at risk. Zoned work or weekend work may carry a contractor premium and temporary-routing cost while preserving more normal output. The useful comparison is therefore not the lowest building quote alone; it is construction economic cost, unrecovered production contribution, outsourced-production premium, temporary operation, restart cost, and peak monthly cash considered together.
This calculator normalises ten trade groups: demolition and disposal, structural reinforcement, floors and finishes, roof and waterproofing, electrical power, HVAC and extraction, fire safety, production utilities, equipment relocation and commissioning, and design, permit, and project management. It then applies the same scope to full shutdown, zoned work, and weekend work while allowing each schedule to have its own premium, duration, full-stop days, partial-operation loss, outsourcing recovery, temporary cost, and restart cost. The result identifies the lowest-cost schedule that also stays within the production-loss and peak-cash limits entered by the user.
Loss to avoid
Approving the lowest construction quote before downtime loss, outsourcing cost, VAT cash, and the peak funding month are visible.
Decision to make
Choose the lowest total economic cost among schedules that satisfy both the allowable lost-day limit and the available peak cash limit.
Next action
Reconcile contractor programmes with line-level output and contribution data, then confirm every permit and operating constraint with the responsible authority and specialists.
Boundary
The tool does not approve structural safety, a building permit or report, change of use, factory-registration change, environmental controls, electrical work, hazardous materials, or fire compliance.
Reconcile all ten trade groups before comparing contractors
Contractors often use different headings and boundaries for the same physical work. One electrical quote may include final machine connections while another places those connections under equipment relocation. A headline-total comparison can therefore reward an omitted scope or count one task twice. Reclassify each quote into the ten groups below, use a consistent supply-price basis, and record exclusions, owner-supplied items, testing, temporary works, and disposal assumptions before entering values.
Scope and reconciliation checks for ten factory renovation trade groups| Trade group | Typical included scope | Reconciliation question |
|---|
| Demolition and disposal | Strip-out, separation, lifting, transport, and lawful waste disposal | Are temporary works, equipment dismantling, and waste categories included once? |
| Structural reinforcement | Foundations, slabs, steel, openings, and seismic or load reinforcement | Are machine bases separated from building reinforcement? |
| Floors and finishes | Industrial floors, walls, ceilings, coatings, and hygienic finishes | Do clean, fire-resistant, or chemical-resistant specifications match? |
| Roof and waterproofing | Roof replacement, leak repair, insulation, and daylight openings | Is reinstatement around ducts and rooftop equipment included? |
| Electrical and power | Incoming supply, panels, feeders, grounding, lighting, and machine power | Are capacity upgrades, final connections, and testing included? |
| HVAC and extraction | Heating, cooling, ventilation, extraction, local exhaust, and ductwork | Are process exhaust and general ventilation clearly separated? |
| Fire safety | Detection, alarm, suppression, sprinklers, interfaces, and related design | Are interfaces with ceilings, power, HVAC, and commissioning included? |
| Production utilities | Compressed air, steam, gas, water, drainage, and process pipework | Does the boundary meet each machine connection without a gap? |
| Relocation and commissioning | Dismantling, lifting, moving, alignment, calibration, trials, and ramp-up | Are electrical, pipework, validation, and repeat tests counted once? |
| Design, permits, and PM | Survey, design, supervision, inspection, public fees, and project management | Which public fees and specialist services have a different VAT treatment? |
Why this calculator does not insert a market price per square metre
Factory scope varies with structure, clear height, equipment loads, available electrical capacity, emissions controls, cleanliness, hazardous materials, live-site restrictions, and regional logistics. A public average can hide precisely the specialist work that drives a particular project. The values in the calculator are an illustrative scenario for learning the model, not a quotation benchmark. Replace every trade amount with a documented project quote on a consistent date, currency, and tax basis.
Measure production loss with contribution margin, not total revenue
A stopped factory does not normally lose the whole selling price of every unmade unit. Raw materials, packaging, transaction fees, and some variable energy may be avoided when output is not produced. The unit contribution margin, meaning selling value less avoidable variable cost on the management-accounting basis selected by the business, is the more useful starting point. Multiply normal good units per day by unit contribution margin to obtain normal daily contribution margin.
1. Equivalent lost days
Full shutdown days + partial-operation days × partial production-loss rate.
2. Unrecovered units
Daily good units × equivalent lost days × (1 − outsourced recovery rate).
3. Downtime economic cost
Unrecovered units × unit contribution margin + outsourcing premium + temporary operation + restart and delay cost.
A contribution-weighted partial loss rate is usually better than a simple share of lines. If one of three lines stops but that line produces half of factory contribution, a 33% rate understates the impact. Prepare normal good output and unit contribution by product or line, calculate each line daily contribution, and divide the contribution exposed during the work window by the plant total. Where product mix or demand changes by season, run separate cases rather than blending incompatible periods into one optimistic average.
Separate outsourced recovery from its incremental cost
Units that can be supplied through qualified outsourcing are removed from unrecovered contribution loss. The calculator then adds the incremental cost per outsourced unit: the external purchase and handling cost less internal variable costs avoided by not producing that unit. Adding the full outsourced purchase price and the full internal contribution loss for the same recovered unit would double-count cost. Capacity reservations, qualification batches, extra freight, quality inspection, and yield differences should be included where they are genuinely incremental.
Full shutdown, zoned work, and weekend work solve different constraints
The three programmes must contain the same completed scope and acceptance standard. If zoned work omits an equipment replacement or weekend work excludes commissioning, the apparent saving is a scope difference rather than a scheduling advantage. Ask each contractor to submit an activity programme, outage register, temporary-works plan, production interface matrix, commissioning sequence, and assumptions behind the schedule premium.
Comparison of factory renovation scheduling strategies| Strategy | Direct-cost pattern | Production-loss pattern | Critical checks |
|---|
| Full shutdown | Potentially lower premium, fewer remobilisations, and simpler segregation | Every full-stop day affects the complete production basis entered | Finished-goods cover, customer commitments, one-time power and utility isolation, restart validation |
| Zoned work | More barriers, temporary routes, repeat commissioning, supervision, and longer preliminaries | Partial loss depends on line sequence and shared-service interference | Cross-contamination, logistics conflict, common utilities, fire routes, and safe separation |
| Weekend work | Weekend or night labour, repeated mobilisation, short work windows, and reinstatement increase premium | Less normal-hour loss, but partial restrictions can continue for more calendar weeks | Noise limits, work permits, outage windows, handback before shift start, and incomplete-work contingency |
How VAT, economic cost, cash outflow, and peak funding differ
Korea Value-Added Tax Act Article 30, in the version effective January 2, 2026, states a 10% rate. The calculator uses 10% only as an editable default. It does not decide whether every trade is taxable, whether an invoice supports recovery, whether the business may deduct all input VAT, or when a refund is available. VAT cash is calculated from the taxable share and included in construction cash outflow, while only the nonrecoverable share remains in construction economic cost.
The simplified monthly schedule places the advance payment in month one, the completion payment in the final month, and spreads progress payments plus operating cash evenly across the chosen duration. This common convention makes alternatives comparable but is not a forecast of an actual contract. Replace it in the approval model with certified-progress timing, equipment deposits, invoice dates, retention, financing draw rules, and expected VAT recovery dates.
Economic cost
Supply cost + nonrecoverable VAT + unrecovered contribution + outsourcing premium + temporary operation + restart and delay cost.
Cash outflow
Supply cost + all VAT paid + outsourcing premium + temporary operation + restart and delay cash. Lost contribution affects value but is not added again as a supplier payment.
Step-by-step workflow
- Enter the renovation area and the number of affected production lines. Keep the area definition identical to the contractor quotation, whether gross, usable, or work-zone area.
- Reconcile each contractor quotation into the ten trade groups. Use supply prices consistently and place omitted owner costs, professional services, testing, and public fees in the correct group.
- Enter contingency, taxable share, VAT rate, and recoverable VAT share. The three payment percentages must add to exactly 100% because they allocate construction cash across the programme.
- Set available peak monthly cash and the maximum equivalent lost days. These are approval constraints, not outputs to be adjusted merely to make a preferred programme pass.
- Prepare normal daily good units, unit contribution margin, and incremental outsourced cost from production and management-accounting records. Use one internally consistent period and product mix.
- For every strategy, enter schedule premium, duration, full shutdown days, partial-operation days, partial loss rate, outsourcing recovery, temporary-operation cost, and restart or delay cost.
- Compare total economic cost, total cash outflow, equivalent lost days, peak month, funding gap, and feasibility. The recommendation considers both constraints before ranking economic cost.
- Export the assumptions into the investment paper and replace the simplified monthly curve with the negotiated construction programme before commitment.
Worked example: the cheapest construction plan is not the cheapest business plan
The default illustration represents a 2,400 m² factory with three affected production lines. Its ten trade quotes total KRW 690,000,000 before schedule premium, contingency, and VAT. Contingency is 10%, all supply cost is treated as taxable at a 10% VAT rate, and input VAT is assumed fully recoverable for the economic-cost illustration. Construction payments are split 20% advance, 60% progress, and 20% completion.
Normal output is 1,200 good units per day and unit contribution margin is KRW 18,000, so normal daily contribution is KRW 21,600,000. Qualified outsourced production can recover part of the lost quantity at an incremental cost of KRW 4,000 per recovered unit. Available peak monthly cash is KRW 330,000,000 and the maximum allowed equivalent loss is 12 days.
Worked comparison of full shutdown, zoned work, and weekend work| Measure | Full shutdown | Zoned work | Weekend work |
|---|
| Schedule premium | 0% | 10% | 18% |
| Programme duration | 3 months | 5 months | 6 months |
| Equivalent lost days | 18 days | 15.2 days | 9.2 days |
| Construction economic cost | KRW 759,000,000 | KRW 834,900,000 | KRW 895,620,000 |
| Downtime economic cost | KRW 375,560,000 | KRW 314,480,000 | KRW 202,808,000 |
| Total economic cost | KRW 1,134,560,000 | KRW 1,149,380,000 | KRW 1,098,428,000 |
| Total cash outflow | KRW 860,540,000 | KRW 986,630,000 | KRW 1,029,014,000 |
| Peak monthly cash | KRW 342,506,667 | KRW 307,532,800 | KRW 302,859,935 |
| Constraint result | Fails both | Fails lost days | Passes both |
Reading the result
Full shutdown has the lowest construction economic cost, yet its contribution loss makes it more expensive than weekend work and its peak exceeds available cash by KRW 12,506,667. Zoned work remains more expensive than both alternatives and exceeds the allowed lost-day limit by 3.2 days. Weekend work costs more to construct but produces the lowest total economic cost, the lowest peak monthly cash, and the only feasible result under both limits. Its advantage over the next higher-cost alternative can absorb about 1.9809 days of additional full-shutdown-equivalent loss at its own marginal daily cost before the economic ranking changes.
Use sensitivity cases before approving the programme
A single base case can conceal a fragile recommendation. Rerun the model with lower output, higher contribution, delayed contractor progress, a failed outsourcing qualification, longer commissioning, and lower recoverable VAT. A useful decision paper shows which assumption can reverse the ranking and names the manager who owns that risk.
Demand and margin case
- Use the committed order book as well as an average-volume case.
- Test a higher-margin product mix during the planned outage window.
- Separate a lost sale from output that can be produced later without losing the customer.
Schedule and restart case
- Add realistic access, isolation, curing, inspection, and requalification time.
- Test one extra full-stop day and a lower partial-production rate after restart.
- Include scrap, calibration material, engineering labour, and customer approval where relevant.
Outsourcing case
- Confirm capacity, tooling, quality approval, confidentiality, logistics, and minimum-order terms.
- Test zero recovery if qualification or customer approval is uncertain.
- Use incremental cost rather than the supplier invoice alone.
Cash and tax case
- Match payment dates to certified progress and equipment milestones.
- Test VAT recovery later than the construction peak or partial nonrecovery.
- Include financing fees and interest in the approval cash model if a gap remains.
Korean legal and compliance review boundaries
The sources below were checked through the Korean National Law Information Center OPEN API on August 13, 2026. They define review gates; except for the editable 10% VAT default, the calculator does not turn their requirements into an automatic legal conclusion. A project may also require separate environmental, occupational-safety, electrical, energy, hazardous-material, land-use, industrial-complex, or local-authority review depending on site, process, equipment, and work method.
Current Korean legal sources and factory renovation review boundaries| Source checked | Version | Planning boundary |
|---|
| Value-Added Tax Act, Article 30 | Law ID 001571 · MST 276117 · effective January 2, 2026 | Confirms the 10% statutory rate used only as the editable default; taxability, input-credit eligibility, invoice evidence, and timing remain separate reviews. |
| Building Act, Articles 11, 14, and 19 | Law ID 001823 · MST 273437 · effective February 27, 2026 | Permit, report, major-repair, and change-of-use questions depend on actual building and work scope. |
| Industrial Cluster Act, Article 16 | Law ID 001463 · MST 284085 · effective July 1, 2026 | Factory registration and change-registration requirements must be checked against the operating change; paragraph 4 includes a two-month application rule for covered changes. |
| Industrial Cluster Act Enforcement Rule, Article 11 | Law ID 006335 · MST 285509 · effective April 9, 2026 | Lists covered factory-registration changes, including specified company, area, and industry changes subject to the exact conditions in force. |
| Fire Facilities Construction Business Act, Articles 11 and 13 | Law ID 009500 · MST 259473 · effective January 31, 2025 | Fire-facility design and commencement-report obligations need review by qualified parties for the actual work. |
Confirm applicability before tender and again before work starts
Law amendments, delegated rules, local interpretation, building records, registered factory details, tenant obligations, industrial-complex agreements, and the final construction method can change the required path. Record the statute version, inquiry date, authority response, designer or engineer opinion, and the person responsible for each condition. Recheck current official text when the programme or scope changes; this page is planning information and is not legal, tax, accounting, engineering, or safety advice.
Information to collect before the investment meeting
Scope and site evidence
- As-built drawings, structural records, utilities capacity, equipment loads, and hazardous-material survey.
- Normal access routes, temporary routes, fire escape, hygiene barriers, and contractor welfare space.
- Ten-trade quote comparison with inclusions, exclusions, quantity, specification, testing, and handover.
- Permit, report, factory-registration, environmental, electrical, fire, and lease review log.
Production and customer evidence
- Line and product daily good output, yield, bottleneck capacity, and contribution margin.
- Committed order book, safety-stock days, seasonal peaks, customer notice, and late-delivery consequences.
- Outsourcing capacity, qualification, customer approval, tooling, freight, yield, and incremental unit cost.
- Restart curve, validation batches, maintenance labour, quality release, and contingency inventory.
Schedule and safety evidence
- Integrated construction and production programme with isolations, access windows, hold points, and handbacks.
- Temporary operations, dust and contamination control, noise, lifting, hot work, and lockout planning.
- Line-by-line shutdown ownership, go or no-go conditions, incomplete-work recovery, and emergency response.
- Commissioning, calibration, trial production, quality release, and customer reapproval sequence.
Tax and funding evidence
- Supply-price and VAT basis for every quote, invoice recipient, deduction view, and expected refund timing.
- Advance, progress, retention, completion, equipment-deposit, and public-fee payment calendar.
- Available internal cash, committed finance, draw conditions, interest, fees, and covenant headroom.
- Named owners for cost, schedule, production, safety, quality, tax, and legal assumptions.
Frequently asked questions
Does the calculator estimate a standard factory renovation price?
No. Factory construction scope and price vary too widely for a responsible hard-coded market rate. Enter reconciled project quotations and use the displayed illustration only to understand the calculation.
Should lost daily sales be entered as the production loss?
Normally no. Use contribution margin after avoidable variable cost unless the business has a documented reason for another decision measure. Confirm the management-accounting basis and avoid counting fixed cost twice.
Can stock built before the shutdown be treated as recovered production?
Only where that stock truly preserves deliveries without moving an equivalent shortage to another customer or later period. Model demand timing, shelf life, warehouse capacity, working capital, and the post-project replenishment plan separately.
Why does recoverable VAT remain in the cash result?
Recoverable VAT may leave the bank before it is credited or refunded. It is removed from economic cost to the recoverable extent but remains in construction cash outflow. Build actual invoice and recovery timing into the final funding plan.
Does the recommended schedule become an approved construction programme?
No. It is the lowest entered economic cost among options that meet the two numeric constraints. Engineering feasibility, safe segregation, contractor resources, permits, quality controls, customer commitments, and contractual risk still need approval.
Is delay tolerance a legal extension or contractual float?
No. It is a decision metric: the cost advantage over the next more expensive comparison divided by the selected schedule marginal extra full-stop-day cost. Contract notice, liquidated damages, customer remedies, and technical float are separate.
What if different lines have very different contribution or shutdown windows?
Calculate a contribution-weighted partial loss rate when the windows overlap. If timing or economics differ materially, run the calculator for separate line groups and reconcile common construction cost once in the approval model.
Source date and maintenance note
The legal sources were verified on August 13, 2026 through the Korean National Law Information Center OPEN API. Contractor prices, productivity, contribution margin, outsourcing capacity, payment timing, and construction premiums are not official common values and are never updated automatically by this calculator.
- Value-Added Tax Act: Law ID 001571, MST 276117, Article 30, effective January 2, 2026.
- Building Act: Law ID 001823, MST 273437, Articles 11, 14, and 19, effective February 27, 2026.
- Industrial Cluster Act: Law ID 001463, MST 284085, Article 16, effective July 1, 2026.
- Industrial Cluster Act Enforcement Rule: Law ID 006335, MST 285509, Article 11, effective April 9, 2026.
- Fire Facilities Construction Business Act: Law ID 009500, MST 259473, Articles 11 and 13, effective January 31, 2025.
Reconcile the quotes and compare all three programmes now
Replace the example values with the ten trade quotes, real payment terms, production contribution, and qualified outsourcing recovery for your project. Use economic cost, equivalent lost days, and peak cash together, then carry the stated legal, engineering, safety, quality, and operating review gates into the approval record.