[Alneyan]

If memory serves, scrapping happens after retrofitting, so you will need to have the resources available right at the beginning of the turn to retrofit something. Scrapping facilities won't do anything (or so they say, I am too lazy to check the figures), but gifts/trades should go before retrofitting. In one KOTH game, I tried to retrofit a colony ship by scrapping a warship (I was dead broke), but that didn't work.

You will also need to have enough storage to do your retrofitting, which could be another problem if you are planning on retrofitting many ships at once (or a Stellar Manipulation vessel).