CHAPTER 0: 1ST DAY AT CLASS
Course code and name:
(BBX31404) Economics of EVERY MONDAY
Welding and Procurement
Faculty: Faculty of Technical
8.00 AM – 2.00 PM
and Vocational Education Lecture’s Name: Mohd Faizal Bin
(FPTV) Tukimon
Semester and Year: Semester 1
B-C11-002-GS
2025/2026
RULES IN CLASS
• Always ready for class 5 minutes before the class begins.
• Attendance (>80%)
→1 absent, 1st warning letter
→ 2 absent, 2nd warning letter
→3 absent without reason, FAILED!
→Every assignment or project needs to be submitted on the due
date. Late submission will result in (–) or FAILURE.
→Always behave in class and respect each other.
Course Overview
→ Study of cost, efficiency, and procurement in welding.
→ Combines technical skills (process, material, labour) and economic
reasoning (budgeting, cost control).
→ Helps engineers make smart cost decisions without sacrificing weld
quality.
→ Relevant to industrial practice, sustainability, and resource
management.
→ Key skills: cost estimation, project planning, and supplier evaluation.
Course Learning Outcome (CLO)
• CLO 1 – Welding Cost Calculation
→ Identify and calculate welding cost (machine, material, labour).
→ Apply cost formulas accurately using real or assumed data.
• CLO 2 – Effective Costing & Influencing Factors
→ Analyze factors that influence welding cost (labour, efficiency, consumables).
→ Suggest improvements for cost reduction.
• CLO 3 – Procurement & Record Management
→ Understand how to prepare procurement documents (tenders, quotations).
→ Relate welding economics to financial and project management systems.
Assessment Overview
Weight Distribution:
➢2 Assignment (30%): Cost analysis using
formulas or a case study. Test (20%):
Covers theory, formulas, and concept Main Focus:
questions. (WEEK 14) → Continuous assessment
➢Project (25%): Engineering economy & → Balance between technical
procurement analysis. (WEEK 14) work and economic analysis.
→ Teamwork and communication
➢Portfolio (15%): Documentation + reflection also evaluated.
of learning activities. (WEEK 13)
➢Presentation (10%): Share project findings
with visuals. (WEEK 14)
CHAPTER 1: BASIC
ECONOMIC IN WELDING
Prepared by: Mohd Faizal Bin Tukimon
Sem 1 2025/2026
Topic
• 1.1 Labor and overhead in welding
• 1.2 Material in the welding process
• 1.3 Simple calculation in the welding process
• 1.4 Cost analysis in the welding
What Is Economics of Welding?
TECHNICAL DEFINITION
SIMPLE DEFINITION It is the process of evaluating welding
operations in terms of costs, productivity, and
Economic in welding is the study of cost and
profitability, by comparing alternative welding
efficiency in welding operations to achieve the
methods, consumables, and materials to
best quality weld at the lowest possible cost.
determine the most economical approach for a
given fabrication task.
TYPE OF WELDING
• Helps select the best process, consumables, and equipment with
minimum cost.
• Focuses on cost efficiency, not only weld quality.
• Supports decision-making in:
• Welding process selection
• Labour and material planning
• Budget allocation and procurement
• Promotes sustainable and competitive fabrication.
“In welding, every decision, the process, the material, or the parameter
has a cost impact.”
TOPIC 1.1
LABOR AND OVERHEAD IN WELDING
Labour in welding refers to Key Points: Example:
the human effort and time •Major component of direct welding If a welder earns RM30/hour
required to perform welding Key Points:
cost. and takes 2 hours to complete
operations, including setup, •Includes costs like electricity,
Overhead in welding •Depends on skill level, hourly rate, a joint → Labour cost = RM60.
welding, equipment depreciation, supervision,
refers inspection, and
to the indirect and productivity of the welder.
finishing activities. maintenance, factory rent, and
costs required to •Includes time for preparation, actual
administrative expenses. Example:
support welding welding, and post-weld cleaning or
•Usually calculated as a percentage of If overhead is 40% of labour
activities that cannot be inspection.
direct labour or material cost. cost → For RM60 labour,
directly assigned to a •Measured in labour hours or cost per
•Ensures total cost reflects true overhead = RM24.
single weld, but are hour.
production expense, not just what
necessary for production
happens at the welding arc.
to occur.
•Overhead helps in determining real
profitability of welding projects.
Direct vs. Indirect
Welding Costs
Direct Costs (CL):
Indirect Costs (CO): % from CL
•Labour (welding operator time)
• Other Equipment
•Consumables (wire, electrodes, TOTAL
gas)
• Maintenance COST,
• Supervision & administration TC
•Power used directly for welding
• Utilities and factory support
•Easily measured and linked to
costs
the weld
Important equation , CL + CO = TC
TOPIC 1.2
MATERIAL IN WELDING PROCESS
Definition
❑ Material in welding refers to all substances consumed
or involved in producing a welded joint including:
✓ the base metals,
✓ filler materials,
✓ shielding gases,
✓ fluxes, and
✓ electrodes
COMPONENT DESCRIPTION EXAMPLES
BASE METALS The parent materials or parts being joined 1. Mild Steel (A36)
during welding. Their type determines the 2. Stainless Steel (SS304 / SS316)
filler, process, and parameters used. 3. Aluminium Alloy (AA6061)
FILLER The metal added to fill the joint and create 1. ER70S-6 (Carbon steel MIG wire)
MATERIALS the weld bead. Usually in wire, rod, or strip 2. ER308L (Stainless steel TIG wire)
form. 3. ER5356 (Aluminium TIG/MIG wire)
SHIELDING
GASES
Gases that protect the molten weld pool
from atmospheric contamination (oxygen,
1. Argon (Ar) — Inert, for TIG/MIG on most
metals
❑ These materials
nitrogen, hydrogen). 2. Carbon Dioxide (CO₂) — Active gas for MIG
on carbon steel
directly affect the
3. Argon + CO₂ Mix (80/20) — Common blend mechanical
for GMAW
FLUXES Chemical compounds that clean the metal 1. Rutile-based flux (smooth arc, easy slag
properties, cost,
surface and prevent oxidation during removal) and quality of the
welding. Often used in SMAW, FCAW, and 2. Basic/low-hydrogen flux (for high-strength
SAW. steels) weld.
3. Silica–manganese flux (used in Submerged
Arc Welding)
ELECTRODES Conductive rods or wires that carry current 1. E6013 — General-purpose SMAW electrode
to the weld and sometimes act as filler (mild steel)
metal themselves. 2. E7018 — Low-hydrogen electrode (structural
steel)
3. E308L-16 — Stainless steel electrode (SS
welding)
TOPIC 1.3
SIMPLE COST CALCULATION IN WELDING PROCESS
Definition
Simple cost calculation in welding is the process of
estimating the total welding cost by summing all
direct and indirect cost components such as: → It helps determine the true cost per
weld and supports better decision-
❖ Labour, making in process selection and project
❖ Materials, planning.
❖ Equipment,
❖ Energy, and
❖ Overhead involved in producing a welded joint.
1. Main Cost Components:
2. Basic Formula:
• Labour Cost: Total Welding Cost = 𝐶𝐿 + 𝐶𝑀 + 𝐶𝐸 + 𝐶𝑂
Welder’s working time × hourly rate.
• Material Cost: where
Filler, gas, flux, and base material used. 𝐶𝐿 =Labour cost
• Equipment / Machine Cost: 𝐶𝑀 =Material cost
Cost of using welding machines, including 𝐶𝐸 =Equipment/machine cost
power consumption. 𝐶𝑂 =Overhead cost
• Overhead Cost:
Indirect costs such as maintenance,
supervision, and factory expenses.
4. Factors Influencing Total Cost:
3. Purpose of Cost Calculation:
•Welding speed and deposition rate.
•To compare alternative welding processes. •Joint design and thickness.
•To find most cost-efficient parameters. •Equipment efficiency.
•To assist in budgeting and quotation •Skill level of welder.
preparation.
EXAMPLE 1
1. A company performs a welding operation using the Gas Metal Arc Welding (GMAW) process.
The following data are given for one weld joint:
Cost Component Details
Labour cost RM 25/hour × 2 hours
Material cost RM 30 (wire + gas)
Equipment cost RM 10/hour × 2 hours
Overhead 30% of labour cost
1. Calculate the total welding cost for this operation.
2. Determine the percentage contribution of each cost component (labour,
material, equipment, overhead) to the total welding cost.
3. Briefly state one method to reduce the total welding cost.
ANSWER
1
Calculate Each Cost Component
• Labour cost (Cₗ):
= 25 × 2 = 𝑅𝑀50
2 Calculate Total Welding Cost
𝐶𝑡𝑜𝑡𝑎𝑙 = 𝐶𝐿 + 𝐶𝑀 + 𝐶𝐸 + 𝐶𝑂
𝐶𝑡𝑜𝑡𝑎𝑙 = 50 + 30 + 20 + 15 = 𝑅𝑀115
• Material cost (Cₘ):
= 𝑅𝑀30
Component Cost (RM) % Contribution = (Cost ÷ Total) × 100
• Equipment cost (Cₑ):
= 10 × 2 = 𝑅𝑀20 Labour 50 (50 ÷ 115) × 100 = 43.5%
• Overhead cost (Cₒ): Material 30 (30 ÷ 115) × 100 = 26.1%
= 30% of Labour = 0.3 × 50 = 𝑅𝑀15 Equipment 20 (20 ÷ 115) × 100 = 17.4%
Overhead 15 (15 ÷ 115) × 100 = 13.0%
Total 115 100%
ANSWER
3 Final Answers 4
Suggest One Cost Reduction Method
1. Total Welding Cost = RM 115
Increase deposition rate or use more efficient
process (e.g., Laser Welding instead of GMAW) →
reduces labour time and total cost. 2. Cost Distribution:
• Labour = 43.5%
Alternative method: Use bulk gas purchase or • Material = 26.1%
optimize joint design to reduce material • Equipment = 17.4%
consumption. • Overhead = 13.0%
3. Cost Reduction Idea: Increase welding efficiency or
reduce labour time.
EXAMPLE 2
2. A fabrication company needs to join two mild steel plates with a 2.0 m butt weld.
The welding engineer is considering two processes:
1. Calculate the total
•Method A: Shielded Metal Arc Welding (SMAW)
welding cost for each
•Method B: Gas Metal Arc Welding (GMAW)
process (SMAW and
GMAW).
The following data are provided:
2. Compare the total cost
between the two
Parameter SMAW (Method A) GMAW (Method B)
methods.
Labour rate (RM/hr) 28 30 3. Identify which process is
Welding time (hours) 2.5 1.5 more economical and
explain why, based on the
Equipment cost (RM/hour) 12 15
given parameters.
Material cost (electrode/wire + gas) 45 35
Overhead 40% of labour cost 30% of labour cost
1 ANSWER
SMAW (Method A)
Given:
2 Cost
Component
SMAW
(RM)
GMAW
(RM)
Difference Lower Cost
•Labour = RM 28/hr × 2.5 hr = RM 70.00 Labour 70.00 45.00 25.00 GMAW
•Equipment = RM 12/hr × 2.5 hr = RM 30.00 Equipment 30.00 22.50 7.50 GMAW
•Material = RM 45.00 Material 45.00 35.00 10.00 GMAW
•Overhead = 40% of Labour = 0.40 × 70 = RM 28.00 Overhead 28.00 13.50 14.50 GMAW
𝐶𝑡𝑜𝑡𝑎𝑙, 𝑆𝑀𝐴𝑊 = 70 + 30 + 45 + 28 = 𝑅𝑀173.00 Total Cost 173.00 116.00 57.00 GMAW
GMAW (Method B)
GMAW has a lower total welding cost (RM 116) compared to
Given:
•Labour = RM 30/hr × 1.5 hr = RM 45.00
3 SMAW (RM 173) — a cost reduction of about 33%.
The cost saving mainly comes from:
• Shorter welding time → lower labour and equipment
•Equipment = RM 15/hr × 1.5 hr = RM 22.50 costs.
•Material = RM 35.00 • Higher deposition rate and efficiency → less filler and
•Overhead = 30% of Labour = 0.30 × 45 = RM 13.50 gas consumption.
𝐶𝑡𝑜𝑡𝑎𝑙, 𝐺𝑀𝐴𝑊 = 45 + 22.5 + 35 + 13.5 = 𝑅𝑀116.00 • Lower overhead percentage due to less manual work.
Therefore, GMAW is the better choice for this job — especially
for longer welds or production environments.
• What is the minimum amount
of labour rate for GMAW to be
non-economical compared to
SMAW?
• Present awaiting~
TOPIC 1.4
COST ANALYSIS IN WELDING
Purpose of Cost Analysis
1. To identify the true cost of
producing a weld (not just material 4. To support decision-making for
cost). process selection, material choice, and
resource planning.
2. To control and reduce unnecessary
expenses in welding operations. 5. To prepare accurate quotations or
tenders for fabrication projects.
3. To compare different welding
processes or parameters and choose 5. To evaluate profitability and
the most economical option. productivity of welding jobs.
6. To improve efficiency by finding the
balance between cost, quality, and
time.
Category Parameter Symbol / Unit 3. Filler Metal Required
Labour Time, rate, efficiency (tL), RM/hr
(considering efficiency):
𝑊
Material Filler weight, cost per kg, efficiency (Wf), RM/kg, η 𝑊𝑓 =
𝜂
Machine/Equipment Operating cost, power usage RM/hr
Overhead % of labour or total direct cost % 4. Welding Time:
Deposition Rate Amount of filler deposited per hour kg/hr 𝑊𝑓
𝑡=
Deposition Efficiency Ratio of deposited to used filler % 𝑅𝑑
[Link]
Weld Volume / Area Based on joint geometry mm³, mm² 𝑅𝑑 =deposition rate (kg/hr)
5. Cost Components:
Common Equations Used
❖ Labour Cost: 𝐶𝐿 = 𝑡 × 𝑅𝐿
[Link] Volume: ❖ Material Cost: 𝐶𝑀 = 𝑊𝑓 × 𝑅𝑀
𝑉 =𝐴×𝐿 2. Weight of Weld Metal:
❖ Equipment Cost: 𝐶𝐸 = 𝑡 × 𝑅𝐸
where 𝑊 =𝑉×𝜌
❖ Overhead Cost: 𝐶𝑂 = Percentage of 𝐶𝐿
𝐴= cross-sectional area of weld [Link]
(mm²), 𝜌= density of metal (kg/m³)
6. Total Welding Cost:
𝐿= weld length (mm) 𝐶𝑡𝑜𝑡𝑎𝑙 = 𝐶𝐿 + 𝐶𝑀 + 𝐶𝐸 + 𝐶𝑂
EXERCISE
COST ANALYSIS IN WELDING
Terima Kasih
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