# PPAP Late Approval Cost of Delay Calculator

> Source: https://netray.co/tools/ppap-late-approval-cost-of-delay-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Put a dollar figure on a slipping PPAP so you can justify overtime, extra gage capacity or an outside lab to the program owner.

## Category

cost-finance

## Industry

Automotive

## Audience

- Program manager
- Supplier quality engineer
- Plant manager

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Planned weekly volume affected

**Key:** weekly

**Type:** number

**Default:** 4000

**Min:** 0

**Step:** 100

**Unit:** parts

#### Contribution margin per part

**Key:** margin

**Type:** number

**Default:** 18

**Min:** 0

**Step:** 0.5

**Unit:** $

**Help:** Selling price minus variable cost.

#### Weeks of delay

**Key:** delay

**Type:** slider

**Default:** 6

**Min:** 0

**Max:** 26

**Step:** 1

**Unit:** weeks

#### Share of lost volume recovered later

**Key:** recover

**Type:** slider

**Default:** 30

**Min:** 0

**Max:** 100

**Step:** 5

**Unit:** %

**Help:** Catch-up production once approved. Zero if the customer resources the volume elsewhere.

#### Premium freight per week

**Key:** freight

**Type:** number

**Default:** 6500

**Min:** 0

**Step:** 250

**Unit:** $

#### Customer chargebacks per week

**Key:** chargeback

**Type:** number

**Default:** 12000

**Min:** 0

**Step:** 500

**Unit:** $

**Help:** Line-down fees or expedite charges, if your contract has them.

#### Interim containment per week

**Key:** interim

**Type:** number

**Default:** 3500

**Min:** 0

**Step:** 250

**Unit:** $

**Help:** Extra inspection, sorting or dedicated staff while approval is pending.

**Outputs:**

#### Unrecovered margin

**Key:** lost

**Expr:** weekly * margin * delay * (1 - recover / 100)

**Format:** currency

#### Premium freight

**Key:** freight_tot

**Expr:** freight * delay

**Format:** currency

#### Chargebacks

**Key:** cb_tot

**Expr:** chargeback * delay

**Format:** currency

#### Interim containment

**Key:** int_tot

**Expr:** interim * delay

**Format:** currency

#### Total cost of delay

**Key:** total

**Expr:** lost + freight_tot + cb_tot + int_tot

**Format:** currency

**Primary:** true

#### Average cost per week of delay

**Key:** per_week

**Expr:** if(gt(delay, 0), total / delay, 0)

**Format:** currency

**Primary:** true

**Description:** A quick number for the weekly program review.

**Chart:**

#### Cost of delay vs weeks late

**Type:** line

**X:** delay

**From:** 0

**To:** 26

**Steps:** 27

**Series:**

- total
- lost

**Disclaimer:** Planning estimate only. Contract terms, interim approval rules and customer remedies vary and are not modeled.

## Content

**Intro:** A PPAP that slips rarely shows up as one big invoice. The cost arrives as lost margin, premium freight, chargebacks and extra inspection, spread across departments. This calculator adds those lines so the cost of waiting is as visible as the cost of fixing the problem.

**Sections:**

#### How to use it

**Body:** Enter the weekly volume the customer expects from this part, the margin per part and how many weeks you think approval will slip. Decide honestly how much of the lost volume you could build later; zero is right if the customer moves it. Then add weekly premium freight, any contractual chargebacks and the cost of interim containment such as 100 percent sorting. The total and per-week figures update, and the chart shows how fast the cost grows as the delay lengthens.

#### What is included

**Body:** Unrecovered margin is weekly volume times margin times weeks delayed times the share you do not recover. Freight, chargebacks and containment are weekly amounts times weeks. These are cash costs you can document. Not included are harder items: reputation effects on sourcing decisions, engineer overtime across the team, and the cost of capital tied up in finished goods waiting for approval. Add them in your own business case if they are material.

#### Using the answer

**Body:** Compare the weekly cost of delay with the cost of the fix. If an outside lab for dimensional layouts costs a fraction of one week of delay, the decision is easy. The per-week figure is also useful for escalation: a program manager who sees a five-figure weekly bleed will prioritise gage time, sample parts and customer engineering review differently than one who sees only a red status.

#### Common mistakes

**Body:** Applying full margin to all delayed volume overstates the loss when parts are built to stock and shipped after approval. Ignoring interim containment understates it, since customers often permit shipment under interim approval only with extra controls. Counting the same freight twice across programs also happens. Keep the scope to this one part number and one customer.

**Cta:** Netray can help bring open PPAP status, demand and cost data together from your ERP so delay exposure is visible on one page.

**Faq:**

#### What is an interim approval?

**Answer:** Customers can allow limited shipments before full approval, often with extra controls, a defined quantity or expiry date. The terms are set by the customer's own procedure, so confirm them in writing before relying on it.

#### Should I use margin or revenue?

**Answer:** Use contribution margin, meaning price minus variable cost. Fixed cost is incurred whether or not you ship, so revenue overstates what the delay actually costs you.

#### How do I estimate recovery?

**Answer:** Ask whether the customer will accept catch-up shipments and whether you have spare capacity. If the customer has resourced volume to another source, recovery is zero.

#### Can I use this for a whole program?

**Answer:** Yes, sum the volume and margin across parts, but build separate runs for parts with very different margin or delay length, because averages hide the expensive ones.

## Search terms

cost of delayed ppap, ppap delay cost, launch delay cost calculator, late ppap approval impact, apqp delay financial impact, cost of delay calculator manufacturing, interim approval cost, premium freight launch

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