A waste factor is a percentage added to a calculated material quantity to cover the gap between the formula and what a crew actually uses.
Common starting points are 5 to 10 percent for hot mix, more on overlays of rutted lots and less on fresh milling, and 5 to 10 percent for concrete flatwork to cover uneven subgrade, bowed forms and the last wheelbarrow. For sealcoat it covers a surface that drinks more than the coverage rate assumed.
Apply it to the quantity before you price it, so it lives in the material line where you can see it instead of hiding in a contingency.
A rule-of-thumb factor gets you started. A better one comes from your own jobs: actual quantity divided by calculated quantity, tracked by job type over a season.