Class Book ■/? *^ ♦s^ Gopyrightli^. COPYRIGHT DEPOSre PRACTICAL TALKS ON CONTRACTING BEING REPRINTS FROM THE CONTRACTOR OF VALUABLE PAPERS BY FRANK B. GILBRETH C. A. W O R D E N A. O. DAVISON and E. S. HANSON PUBLISHED BY THE CONTRACTOR PUBLISHING COMPANY MONADNOCK BLOCK, CHICAGO 1910 CONTENTS Page Systematizing a Contractor's Office . By Frank B. Gilhreth 3 Organization — How to Effect and Maintain It. By A. O. Davison 10 Between Profit and Loss By E. S. Hanson 20 Office System for Construction Work . . By A. O. Davison 50 Liability Insurance for Contractors . By C. Arthur Worden 76 Important Things to Consider in Estimating. By A. O. Davison 81 Purchasing Records for Contractors . By C. Arthur Worden 93 Tool and Equipment Records . . . . By C. Arthur Worden 102 Contractor's Daily Reporting System . By C. Arthur Worden 106 Earthwork Records By C. Arthur Worden 110 The Operation of Camps and Commissaries. By A. O. Davison 113 How Contractors Use Photography . . . By E. S. Hanson 122 Copyright 1910 By E. H. Baumgartner PRACTICAL TALKS ON CONTRACTING SYSTEMATIZING A CONTEACTOR'S OFFICE.* BY FRANK B. GILBRETH. IN THIS paper I have endeavored to give a description of the lessons that we learned during the years of evolution of the present system in our office. Systematizing a de- partment, an office, or a business, is accomplished by one, or both, of the two following methods: (1) By efforts of the members of the organization, (2) By efforts of professional systematizers. For the original idea of system in our office, I desire to acknowledge my indebtedness to my friend, the late Wm. H. McElwain, the possessor of one of the master commercial minds of America. The success of his whole tremendous busi- ness was, to use the words of his own statement to me, "Due to having his entire system in writing." Mr. McElwain's further advice was to carry the systematization of our busi- ness as far as possible by our own efforts before calling in the professional systematizer — that is, to use both methods sug- gested above in the order given. After a system has been put in writing and perfected along simple lines by the men who have built up the business, it is easy for the professional sys- tematizer to understand instantly the methods in use at the time he undertakes his task. He can then suggest changes and improvements, which can be adopted with no shock to the business. *Paper read at Third Biennial Meeting of the American Public Works Association. 4 Practical Talks on Contracting When experts attempt to install system for a concern that has not been systematized by its own organization, a shock is bound to occur. If it is desired to introduce expert advice before any attempt is made to systematize by the organization itself, there is no such protection against shock as to take the precaution of carrying on the old system at the same time that the new system is being installed and tried out. Keep the old system in a separate building, if necessary, but keep it in operation until the new system has proved itself, by actual use, to be superior to the old. The expense of temporarily maintaining a duplicate accounting department, for example, is very little compared with the protection, speed, order, rivalry and value of actual comparison. As a result of our own experience, we believe that the best way to systematize a contractor's business is along the lines suggested by Mr. McElwain. We believe that the funda- mental laws governing systematization are clearly defined. They can be used and adapted to any line of business by the men in that business. The procedure in systematizing by the evolution method is as follows : (1) Have each member of the office put in writing a de- scription of the way he actually does his work. Not at first of the ideal way that the work should be done, but of the real way, the way in daily use. If an attempt is made at first to write down the ideal way, the entire benefit of the scheme will be lost. The rules must be historical, descriptive and no nearer perfect that are the members of the organization. The rules must be in such form that they can and will be obeyed without having perfect human beings to fill each position. These written descriptions should be put in the form of rules for the next clerk below, who needs description, instructions and guidance as to the work he is eventually to do. (2) After each member of the organization has submit- ted his rules describing the way he actually does each part of his work, have the entire collection typewritten. A complete Systematizing an Office 5 copy should be handed to the head of each department for correction and improvement. The corrected copies should be then inspected by the general manager. (3) During the various inspections of the rules, it will usually develop that some members of the organization have not been able to express their ideas well. It will also de- velop that some one clerk has a talent for wording rules par- ticularly well. Select this clerk to revise and arrange in proper order the entire collection of rules. If an announce- ment is made at the time the rules are first written that the clerk submitting the best set of descriptive rules will be made "System Clerk/' better offerings from all employes will result, and a higher standard will be secured. The system clerk should see that each rule describes the easiest way to accom- plish the act that it describes. Few people realize that a simple system that can be enforced easily is much better than an ideal system that is difficult to enforce. Only simple sys- tem is good system. Have the rules expressed in the simplest, most concise manner possible. (4) Have the revised rules typewritten again, and give a complete copy to each member of the office force. Also dis- tribute notices of prizes that will be given to those who sug- gest improvements that are adopted. We have found that $1 for each suggestion adopted, and three special prizes of $2, $3 and $5 each for the best suggestions during the month will bring in many improvements. Clerks will use every ef- fort to discover improvements not only for the prizes, but also for the promotion that always rewards a clerk who can con- stantly suggest better ways of doing work. Our experience proves that immediately after all' of the clerks have received a complete copy of all the rules governing all other departments as well as their own all hands will dis- cover and suggest eliminating mles requiring unnecessary labor. Suggestions for improvements will then come thick and fast. The $6 boy will understand the work of the $12 boy. He will consider himself lucky to fill the place of the 6 Practical Talks on Contracting $12 boy above him for $9. The $12 boy will be able to do the work of the young man who is getting $24 per week. It means a raise of pay and more earning power for every mem- ber of the office organization. This process will extend up to the heads of departments, who can spend their time more profitably on new work that requires judgment, leaving routine work to be handled by the clerks under them. Too much stress cannot be laid upon the importance of re- ceiving, rewarding and incorporating suggestions from any and all members of the organization. It encourages all clerks not only to make the best use possible of their own experience, but also to investigate what is going on in other organizations and to read magazines of "Short Cuts" in business. This reading brings the organization into sympathy with the best work of system experts and labor saving devices, and paves the way for the successful entry of the professional sys- tematizer into the office. Such reading of short cuts and im- proved business methods also stimulates the interest in "Mo- tion Study." This "Motion Study" is an object of particular interest to us, and is put into practice by us on all of our work, both office and field. It consists of observing and noting the mo- tions used to do any piece of work, of eliminating the un- necessary motions, determining how the work may be done with the least possible number of motions, and, finally, of reducing the necessary motions to the shortest possible dis- tance in feet and inches. In the office this study involves the discovery of the form, methods, etc., that will save motions of each and every clerk. In our office we make use of every device that we know of to save motions. For example: (1) "Eye saving^' devices. (a) Different forms, especially manifold sheets, made of different colored paper, the color showing to which special destination each copy of the form is to be sent. It is ob- Systematizing an Office 7 viously quicker to collect or file, sa}^, all the blue copies than to read the destination directions on each sheet. (b) Distinguishing numbers or initials on the lower cor- ner for T. L. (tool list), U. C. E. (unit cost report), to save reading of the entire forms. (c) On all typewritten letters a list of articles to be en- closed or sent under separate cover is placed at the lower left hand corner. This makes it needless for the mail clerk to read the entire letter to see what is to be enclosed. (2) "Hand saving^' devices. (a) Printing on forms all wording that is in continual use to save pen motions. (b) Several phrases or sentences on such forms as tele- phone blanks, etc., all but one of which may be crossed out when form is used. (c) General use of self-inking rubber stamps. These save the motions of inking on a pad. The place for the thumb is cut off flat to save the motions of turning the stamp right side up, as well as to save taking the eyes off the work. It is attached to a weight that will carry it back into place when it is not in use. (3) "Foot saving" devices. (a) Placing all files and furniture so as to have the shortest possible distance, measured in feet and inches, for the travel of the clerk who uses them. (b) A definite place for every piece of paper that is handled in the office, both before and after it is filed. (4) "Memory saving'^ devices. (a) Each file plainly labeled. (b) All similar files labeled in the same sequence. (c) Daily calendar made out ahead, an automatic mem- ory of date of events, etc. These are only a few of the many examples that might be cited. It is impossible to go farther into detail in this paper. In our business the written system for the office work has grown 8 Practical Talks on Contracting into systems for the various departments. For work in the field, the written system has evolved into a field system, a con- crete system, a bricklaying system, etc. The general benefits that are sure to come from this evolu- tional form of system are: ( 1 ) There is no general upheaval, nor the slightest shock to the business. The installation of the system has cost noth- ing. (3) All members of the organization are working under- standingly toward the same desired end. (3) A corps trained on the duplicate plan system is evolved simultaneously with the system. (4) Clerks can be instantly shifted to accommodate the business, for vacations, illness, promotion, and immediate de- mands of any or all departments and to sudden increase of business. (5) From its beginning the system will be popular with the clerks. Every one of them profits by it. It reduces their labor. It fits them for constant promotion, and gives them continued opportunity to win prizes. It provides places for the advancing young man, also for the faithful routinist. (6) Competitive spirit is always active, yet "team work" is assured. (7) The resulting system is exactly suited to the particu- lar ofiice in which it is evolved, as it is the outgrowth of that office and its particular requirements. (8) Growth is an integral part of the conception, and therefore the system will be elastic and adapted to great fluc- tuations in the amount of business in hand. After the evolutional system has been installed and is suc- cessful, it is time to call in the professional systematizer. There is hardly a business that is not large enough to warrant the advice of a system expert. This expert, having made system a life study, will surely be able to bring from his ex- perience and observations behind the scenes of the inside workings of fifty offices some points that will be of great Systematizing an Office 9 value to the fifty-first. He will find in that office an organi- zation to appreciate his study, and on the alert to receive his suggestions. His improvements will correct and improve the growing system with no resulting check to the growth. There are three obstacles which the man who undertakes to systematize his office must overcome. The first obstacle is the fear one naturally has of being called theoretical instead of practical, of being called "a dreamer^^ instead of '^a doer." When it is realized that that man can manage the details of his work by putting in writing a description of the simplest and the swiftest routine best fitted to handle large undertakings in a business-like way, all such criticism will die. The second is, thinking that his system can ever be com- plete. By its very nature the system of a growing business is a growing thing. It must be constantly adapted, constantly increased, constantly improved. The third obstacle is so-called "red tape,'^ and the fear of it. No good system is ever "red tape." In fact "red tape" is simply bad system, system that has never been tackled by all the individuals of a loyal and interested organization deter- mined to answer the following questions: ( 1 ) How can we simplify ? (2) How can we eliminate ? ( 3 ) How can we condense ? The whole secret of success is in a constant endeavor to answer these questions. This constant attention can be given only by the organization itself. 10 Practical Talks on Contracting ORGANIZATION— HOW TO EFFECT AND MAIN- TAIN IT. BY A. 0. DAVISON. IN THIS day and age of keen competition and gigantic un- dertakings, to be thoroughly successful, any and all lines of business must be based on proper organization. In the rapid march of progress the time has passed when one man can own and operate a business of the proportions necessary to keep abreast of the times and attend to all of the necessary details thereof himself. It is, therefore, necessary for the owner or owners to surround themselves with competent men, particularly adapted to that part of the business which it is necessary to entrust to their care. One of the best examples of organization today is to be found in our modern circus managements. On account of the almost daily handling and transportation, installing and dis- mantling of the enormous properties and paraphernalia of a large aggregation of this kind, which is equal almost to the entire makeup of a small-sized city, it is necessary to have a large and capable force of executive men to handle such an outfit with economy and dispatch. The established mercan- tile or manufacturing businesses, of course, require compe- tent and experienced heads in all departments; but by reason of this class of business being permanently located, the men in executive positions have more time for consideration, and as their plans can be more carefully worked out the require- ments are vastly different. Next, perhaps, to the management and manipulation of circus enterprises the management and handling of construc- tion work requires men of sounder judgment and better re- sources than in any other line of occupation. The Head: To start with, a successful contractor himself Organization 11 should be a man of strong determination, sound judgment and one well able to control himself in cases of extreme emergency, and resourceful to the last ditch. There is no line of work in which there are so many elements of risk as that which con- tinually confronts the contractor. This fact is illustrated in almost every contract after actual operations are begun. Where there is foundation work to be done the nature of the excavations are, as a rule, shown by borings; but it is very frequently the case that conditions have to be contended with that are entirely foreign to such borings. Contractor Moist Be Resourceful. Then the contractor has things to contend with which are undoubtedly not included in the figures from which his esti- mates were prepared, and, consequently, he should be able to cope with such conditions and be resourceful enough to pro- vide ways and means for so doing, which will keep his ex- penses within or near the estimates made. In the case of river work he has the elements to contend with, which cannot be calculated and figured in his estimate, except in a general way, and his resources are again taxed to keep his operating expenses down to the minimum. General Manager: A man for the position of general manager on construction work should be selected for his ex- ecutive ability, experience, and his powers of organization. He should, like the contractor himself, be a man of strong de- termination and of great resources. He should be capable of the entire management of the business from an operation standpoint, and through him the owner or head of the con- cern should handle and control the work in all its branches. To the man in this position should be given authority to make all purchases, draw up all contracts for materials, hire all heads of subordinate departments, and in fact, he should be vested with the authority to handle and operate the work in all its branches. It should be the duty of his office to see that all materials and supplies are ordered at the proper time and 12 Practical Talks on Contracting delivered on the work where and when needed in order that no delays may arise from the absence of materials and sup- plies for the proper and economical handling of the work. It should also be the duty of the general manager to take up all Plan for Organizing a Contractor's Forces. matters with the head of the concern which require the atten- tion of that department. The man in this position should be very diplomatic. It is so often the case that jobs of construction work are located in out-of-the-way places and, as a rule, it will be the only time during the lifetime of the residents that anything outside of the usual course of their occupations will occur in their im- mediate vicinity. They, as a rule, do not take into considera- tion any future good results which may be derived from the work being done in their vicinity, but their only thought seems Organization 13 to be "How much money can we get out of the contractor?" The price asked for any right-of-way privileges and conces- sions of any description are usually about four or five times more than should be asked. The man having charge of mak- ing contracts, securing privileges, concessions, etc., should be a man able to exercise a great deal of diplomacy, and if he is not there is usually far too much money expended on matters of this kind. Engineering Department : The man in charge of this de- partment of the work should be selected for his ability and judgment in matters pertaining to this department. The du- ties of this department should consist of making complete and detailed estimates of new work, drawing plans, if such are required, and all work pertaining to a department of this kind in connection with the making of such estimates. After quantities have been figured and all necessary data taken from plans and specifications by the engineering department, these figures should be turned over to the general manager and prices secured by his department on all materials required to enable him to make his estimates intelligently. During the progress of the work the duties of the engineering department should be the giving of lines and levels on the job and fur- nishing of plans and details from which the men are to work. They should also take all cross sections, figure quantities of work accomplished, making weekly reports of progress and carefully checking all monthly estimates allowed. This de- partment should be furnished with such assistance as is re- quired to keep this part of the work completely up to date at all times. Office: The man for this department should be selected for his ability as an accountant and for his knowledge of the proper distribution of expenses. To this department belongs the ordering and checking of all material and supplies, the keeping of time, making of payrolls and paying of same. As stated above, the ordering of materials and supplies is a duty belonging to the general manager's office; but for the benefit 14 Practical Talks on Contracting of the proper records, these orders should be referred to the office and requisitions for same should originate in that department. It should also be the duty of the office to suppl}^ the general manager's office with daily and weekly reports of expenses, to be used by him in connection with the progress reports furnished by the engineering department to keep him in constant touch with the actual progress of the work. It is also the duty of the office to keep proper detailed distributions of all labor, material and supply accounts arranged in such form that actual expenses in connection with any portion of the work can be definitely arrived at any time. General Foreman: The general foreman, local superinten- dent, or (as he is generally called) "walking boss," should be selected for his ability and experience in the management of men, handling of various classes of operations and his execu- tion. This man should be closely allied with the engineering department and office. All plans and details for the proper laying out of the work should be furnished him by the engi- neering department as needed. He should also be kept in- formed by the engineering department in detail of the progress he is making and also be furnished by the office with a complete detail of expenses incurred so that he can at any time, when advisable, make a rearrangement if the work is not progressing as it should. To this department should belong the authority for hiring and discharging gang foremen under him and also the final decision as to the hiring and discharg- ing of men under his different foremen. The general foreman should also be a man possessed of a good amount of diplomacy. It is his duty to consult with the resident engineers, inspectors and superintendents for the builder, as there are vastly different ideas as to the times when certain operations should be commenced and also as to the manner in which different things should be accomplished. It requires a considerable amount of diplomacy on the part of the man directly in charge of the field operations to secure the best results for his employers. It is often the case that the Organization IS man in charge for the builder is not a thoroughly competent man in the position, and when this is the case, he is more apt to make objections to the methods employed by reason of the fact that, not being thoroughly competent, he is afraid at all times that something will be done which will reflect on his ability and position. A diplomatic general foreman will soon find the best way in which to handle the party or foremen and will consult with them at the proper times and in the best manner to avoid any controversy and friction on the work and in this way produce the best results for all parties concerned. Foremen: The securing of men for the positions of fore- men should be based on the knowledge of the work for which they are employed, and their ability to handle machinery and men. They should be men of fair education, capable of read- ing plans and making intelligent daily reports covering the distribution of time of men under them and of quantities of work accomplished. The Men: The mechanics and laborers on a job should be hired with a view to securing the most competent men ob- tainable for the positions which they are required to fill. In many cases, however, it is advisable to hire men of the right class and train them for the positions for which they are need- ed. The results, however, obtained from the men is due almost entirely to the ability of the foremen and the general foreman. The only requirements in the hiring of men to effect a proper organization is to secure steady, sober men and, in the case of mechanics, ones who are fitted for the work which they are expected to accomplish. Uniform Wage Scale Should Be Maintained. In the hiring of men there should be a standard scale of wages in use, governed by the local conditions, location and class of employes required. There should be a fixed rate for common labor and a fixed rate for different classes of mechan- ics, and these rates should be strictly adhered to. Instead of 16 Practical Talks on Contracting changing the rate to fit one class of laborer or mechanic em- ployed, the rate should stand and men should be employed who are capable of earning the rate of wages specified in the schedule. It is a very serious mistake to employ a large number of men, all working together, and pay one man a higher rate of wages for the same class of work, and another man, who is working with him constantly, a lower rate. It is but a question of a short time until all the men on a job are familiar with the wages of their fellow employes and, where there are different rates paid for the same work, it creates dis- satisfaction and demoralizes the force. Have your fixed rate, hire your men at this rate, and if they do not come up to the standard, discharge them and hire others who do. In the hiring of heads of departments, local superinten- dents, etc., men can usually be secured for such positions with very good results by basing such employment on past experi- ence and the personality of the men ; but when it comes to the employment of gang foremen it is a more difficult problem to secure men who are thoroughly experienced in their particular line, sober and reliable, and ones who will work at all times to the interest of the management rather than to the interest of the men under them. It is, of course, not intended that the foremen should take any undue advantage of the workmen to further the interest of the management, but he should, first of all, have the interest of his employer at heart and he should be a person who is capable of controlling and handling his men in a manner that will produce the best results. It is often necessary to replace men for positions of this kind a number of times before the one possessing all the requirements neces- sary to constitute a competent man is secured. In the case of the workmen themselves, there is probably no line of business in which it is necessary to secure help from such a floating element of men as is necessary in construction work. However, if the superintendent is a man of good Judg- ment, as well as his foremen under him, the problem of secur- ing the proper class of men is minimized, it being only neces- Organization 17 sary to be on the alert for men properly fitted for that part of the work on which it is intended to use them, and above all to endeavor to secure men who are not constant or periodical "boozers" and ones who are not agitators. It is sometimes necessary to overload the gangs somewhat at the start and, by careful observation for a few days, quietly weed out the unde- sirables. In this way, in a short time, a gang of the greatest efficiency can be secured, and, if managed by a competent foreman, their efficiency can be kept up to the standard. In order, however, that the best results may be obtained it is necessar}% through the proper channels, to have every man, from the general manager down, feel that he is an important and very necessary addition to the organization and that it is the management's desire to retain him as a permanent fixture in such organization. It is not meant by this that any man, no matter what his position may be, should be led to believe that the organization would be crippled by his retirement from it ; for, in most cases, when an idea of this kind is well formed in a man's mind it crowds out his real efficiency and he be- comes "dead wood," and he should be promptly removed and replaced by a man who has brains enough to know that there never has been any position occupied by a man that could not be as well or better filled by some one else. It should, how- ever, be borne in mind that it is the duty of the management to show the proper appreciation of the efforts of the men in every capacity, and, if the proper methods are employed along these lines, the efficiency all down the line can be constantly increased and maintained. If there are any grievances, real or imaginary, they should be taken up through the proper channels and given the consid- eration they deserve and the man or men making the claims should be consulted and satisfied that his or their claims have been fully looked into. If there is a foundation for such com- plaint the trouble should be remedied promptly, if found to be beneficial to the work to do so. If the complaints are without foundation the party making them should be advised that such 18 Practical Talks on Contracting is the case, and if he cannot be thoroughly satisfied that his troubles are imaginary he should be quietly and speedily dropped out and his place filled by some one who is not likely to be a disturbing element. The Matter of Complaints. All complaints, suggestions and recommendations should be made through the proper channels. If the men themselves have any matters to take up they should do it directly through their foreman and if the matter is of such a nature that it is not possible for him to decide it definitely he should then put it up to the general foreman, who, if unable to make a deci- sion, should carry it to the general manager, and so on until it has reached the department in which it can be finally and definitely decided. The workmen themselves should be directly responsible in all things to the foreman under whom they are working. The general foreman should not, at any time, issue his instructions directly to the men, but should issue them through the fore- men. The general manager should not issue his instructions to the foremen, but should do so through the general foreman and through him the instructions should go to the foremen when necessary. Matters with the engineering department and office per- taining to the outside should be taken up by them with the general foreman and through him conveyed to his foremen when it is necessary that this be done. In order that the greatest efficiency can be attained and maintained all departments should co-operate in all things and no departments should exceed their authority by taking matters up with departments who come directly under the jurisdiction of an intermediate department. All departments, including the foremen, general foreman, engineering department, office, and general manager (when he is located so as to make it practical) should meet in conven- tion at regular intervals and discuss ways and means, thor- Organization 19 oughly digest past performances, profit by showings of prog- ress and expenses, arrange schedules for future progress, out- line plans as far in advance as practical and generally have every one in the organization kept at all times thoroughly posted as to the actual progress being made and what future progress is necessary to be made to make the work a success. Every man who has acquitted himself creditably, from the lowest position to the highest, should be given to understand that his efforts are appreciated and any who has not filled all requirements should be informed of his shortcomings and given an opportunity to bring his department of the work up to the standard. Every department when thoroughly organized and run- ning smoothly should be maintained, as far as possible, and this can only be done by proper treatment of every one concerned, thereby creating a desire to excel; and so long as a contractor keeps himself surrounded with an organization of this kind, wherein there is a feeling in each individual that he is a part of the machine, there is very little chance that such a contractor will not be a success. 20 Practical Talks on Contracting BETWEEN PEOFIT AND LOSS. BY E. S. HANSON. AN OVEE- ABUNDANCE of red tape in the contracting ^A business is an abomination, but the man who tries to "^ -^ do away with it entirely is simply making overtures to bankruptcy. Unless, of course, he be an individual of much more than ordinary capabilities. There are contractors, it is said, who can walk down the survey of a line of railroad, noting a stake here and making a mental calculation there, and tell you as they go along how much the Avork of construc- tion will cost. More than likely they will get the job, too — and make money on it. But the practice is not one to be encouraged. In fact, few men could do it. Others would either make a price so high as to give the work to their competitors, or so low as to ruin themselves — putting them out of the game in either case. The quality of mind to do this successfully is abnor- mal — like the ability which a few men possess of passing hurriedly down a long line of box cars and afterward writing down correctly the number of each car in its proper order. But for the most part the contractor is a normal man — strong, well rounded, well disciplined. He cannot ordinarily do things by a stroke of genius, but he can accomplish won- ders by careful thought and hard work, which is infinitely better. He is determined to accomplish things — for it is only by "something attempted, something done,'' that he manages to keep his bank account in a healthy condition. On this account he is apt to balk at red tape. Tt appeals to him as mere bunches of ribbon for the idle and the frivolous. He insists on production as the main thing — as almost the only thing — even though its results are sometimes largely dissi- pated because of a lack of red tape to properly bind them together. Profit and Loss 21 Didn't Preserve the Data. For instance: The contractor is called upon to estimate on a piece of railroad construction in Missouri. He runs over the profile and specifications and sees that the work includes features similar to work he did in West Virginia a number of years ago^ on which he lost a large sum of money. He can tell you the exact amount by referring to his books^ for the fact was apparently of large importance in his business. Yet in reality it was not half so important as other things of which he has kept no record. He has nothing which will tell him the price per yard he bid on the work, and no data from which he can compute what the work actually cost him. These things would be of inesti- mable value to him now. He knows in a general way, of course, what it was that made the work so expensive before, and he will no doubt make a safer bid than he did then, but in the absence of definite data on the work he may place his "factor of safety'^ so large as to make him the high bidder and give the job to the other fellow. Suppose, however, that he has preserved the bare state- ment that the work cost him 22 cents per yard, whereas his bid was 19 cents. He is little better off. For he has no rec- ord of the conditions under which the work was done. Were wages high or low at the time? Was the work hindered by inability to get men ? What equipment was used in doing the job? Was it more, or less, efficient than the equipment I have to work with now? These are some of the things that the contractor would give a good deal to have at his finger ends just now, but his abhorrence of red tape has caused him to neglect the collection of any such valuable data. As a mathematical problem, then, he cannot figure out to a certainty whether 22 cents is the proper price to ask at the present time or not. Of course, with this in mind, and a knowledge of general conditions, he will be able to arrive at a figure which he feels justified in putting in as a bid, but it 22 Practical Talks on Contracting will not have about it the certainty of being built on definite knowledge which it might otherwise have. Men Must Make Good. The writer of these somewhat rambling remarks stood one morning in a contractor's shanty and watched the "boss" send- ing the various gangs out to work, distributing tools, explo- sives and other requisites among them with seeming disregard of their value. He would probably explain his action by say- ing that he had confidence in the men, but this lack-of-system way of doing things is not calculated to give the men confi- dence in him. Men must be made to feel responsibility, and this, aside from the value of the data collected, is one of the valuable re- sults of keeping detailed records of all work done. The indus- trial world is outgrowing the old system of setting a man to work at a job, allowing him to do much or little according to his ability or inclination, and paying him his wage without question at the end of the week. That is being thrown off, like the method creameries formerly employed of buying milk by the pound. In the old days "milk was milk," whether it was blue or yellow. Now every day's delivery goes on record, and it has to produce cream in order to figure in a check on the bank at the end of the month. Prices are being made too close these days to stand the strain of lazy and indifferent workmen. Eecords should show what each gang, each machine, and, so far as possible, each man, has done during any given day. This will act as a spur to the men, and will engender healthy rivalry among the fore- men of the different gangs. If a particular gang makes a poor showing during several consecutive days it means one of two things : either that the foreman is incompetent or that the gang contains several men who are lazy or otherwise unfit. A careful study of this particular gang for a day or two will usually reveal the cause of the poor showing. Many men will resort to a hundred and one little expedi- Profit and Loss 23 ents to avoid or prolong work if the foreman is not watchful or is willing to "stand for" that kind of thing. And if he allows it to continue it will show up in the report. If the foreman cannot stop it he is incompetent and should give way to some one better fitted for the place. Record of a Machine's WorTc. The record of the work done by a piece of machinery is also necessary to maintain efficiency. The men who work in construction gangs have little thought beyond their pay en- velopes. So long as their pay is not dependent directly on the output of a machine they care little whether it is working close to its maximum capacity, doing a fair and remunerative day^s work, or merely keeping the wheels going. The daily report will here work a double advantage, making the men give more attention to the machine^s output, and sounding a warning at headquarters the moment that there is a falling off in efficiency. This will avoid unnecessary delays, beside the advantage to the machine itself of making repairs just as soon as they become necessary. What Mtist a Cost System Comprise? Some little time ago Mr. C. E. Knoeppel wrote an article under the head of "Cost Reduction Through Comparison," for the Engineering Magazine, which goes so directly to the point in many matters of cost that a large part of it is here given. He wrote: "Inasmuch as the value of any system of costs is in pro- portion to the results obtained by it, the next question that suggests itself is. What must such a system accomplish in order that it may be pronounced successful ? This can best be answered by reducing any system of costs into its fundamental elements, as follows : ''Cost Securing: The gathering of the many details through the instrumentality of shop orders, material requisi- tions, time cards, etc. 24 Practical Talks on Contracting "Cost Compiling : The entering of the details secured upon forms and reports provided for the purpose. ''Cost Comparison: The placing of the latest information ajid data under or beside other information and data of like nature. "Cost Analysis: The thought and deduction applied to the cost comparisons. "This will show that in order to reduce a cost it must be analyzed by comparison; this depends upon proper compila- tion, and all again depends upon accuracy in securing the cost data. "No doubt every person who reads this article will know of one instance, perhaps several, where a cost system had been devised and installed, allowed to run for a time, and finally thrown out on account of its failure to cut costs; the result being that the mere mention of the word system has about the same ejffect on that manufacturer as would the flaunting of a red flag in the eyes of a bull. In other cases systems have been pronounced failures but yet allowed to run on as best they could. A consideration, therefore, of the reasons why so many systems have failed to accomplish results would be next in order. The truth of the matter is that when systems have been thrown out or pronounced unsuccessful on account of their inability to perform their proper functions, their expen- siveness, or other objections, an investigation would show, in the majority of cases, that the man himself and not the S3^s- tem was to blame. This may be due to one or more of a num- ber of reasons, the most important one perhaps being business procrastination — or the inability on the part of the man to give more than passing attention to the points that vitally affect his business success; or, to put it another way, he is so engrossed by the consideration of details that must be at- tended to that the details that should be attended to are left to a more convenient season. In his leisure moments — if he has any — he may pick up a magazine that contains some valu- able suggestions; at his convention he listens to a paper and Profit and Loss 25 discussion that appeals to him; but in his endeavor to secure business, to meet his obligations, to collect amounts due him, etc., the application of short cuts, better methods and sugges- tions is lost sight of for the time being. As a result, while the costs may be found and recorded, no practical use is made of the compilations. The system may be an excellent one, per- haps installed by a systematizer and capable of giving maxi- mum results; but the best cost keeper in the world will soon lose heart when he realizes that his work does no real good. It may be, owing to the inability of the management, that several people have something to say about the costing, and unless they can all agreee on a uniform policy (something quite unusual) the matter of using the cost compilations is out of the question, as the statements are bound to be mis- leading. Co-operation Necessary to Efficiency. "Another course which leads to disappointment with cost- keeping efforts is taken by some manufacturers who think that by putting in a few loose-leaf books, some cards with cases, and a few clerks to look after the records, they should obtain the desired results. A system in itself can do nothing, even with a bright clerk in charge, unless the co-operation of all concerned can be secured — a point oftentimes lost sight of. If A tells B to do a piece of work, and B is dependent upon C for his information, it is impossible for B to force co-oper- ation from C unless A has told C that the instructions of B are to be carried out. Another reason for the failure of a sys- tem to give results is sometimes found in the fact that it is experimented with — patched and altered every time a new man takes charge. It is impossible for a concern to get re- sults from a system radically changed from time to time, owing to the inability to compare items of like nature. "To recapitulate, the causes of failure can be classed under the following headings : 26 Practical Talks on Contracting "The application of systems that do not cover the condi- tions as they should. "Inability on the part of the management to give the sys- tems and their workings the attention that they should. "Lack of co-operation among the heads of departments. "Too many changes. "Inefficient organization. "The question therefore suggests itself, How can these de- fects be obviated and how can the work be so handled as to result in maximum efficiency? After careful consideration I am of the opinion that the answer of this question should be the introduction of what may be called a 'Department of Cost Eeduction/ in charge of a competent man who has super- vision over and gives his whole time and attention to the se- curing, compilation, comparison and analysis of costs, along with such other information as affects the success or failure of the enterprise. Before proceeding to elaborate upon the possibilities of this department, it is advisable to devote a few words to the qualifications and the authority of the man in charge, and to suggestions as to where he can get his informa- tion, with a brief list of possible compilations. Department of Cost Reduction. "The chief qualification necessary in the man who is to manage this Department of Cost Reduction is the ability to take whatever information and data come to him and so to arrange and compile them as to enable him to use the data to advantage. Information is valuable in proportion to the facility of its comparison with information of a like nature, so that an important faculty in this man would be his ability to dissect the information and data he received as a surgeon would dissect a body, and then to reduce it in about the same manner as a mathematician would reduce a row of figures to a common denominator. Once dissected and reduced, it is an easy matter (provided the man in charge has some ability as a statistician) to draft statements that will aid in reducing Profit and Loss 27 costs. The ability to compile and to analyze should be accom- panied by fearlessness in submitting his results; and if he is a gentleman in his dealings with his fellow men, the success of a department along the lines suggested will be productive of the desired ends. The truth sometimes hurts, but if made known in a gentlemanly manner the sting is often removed. "To secure maximum results the manager of this impor- tant department should be independent of every one with the exception of the president or general manager, in order that his suggestions and the results of his analysis may be properly taken care of. He should have full supervision over the com- piling of all the available data as well as over the methods for securing these data. He should have the authority to secure any data of special nature from any department of the busi- ness. He should have the right to lay the results of his inves- tigations before the proper persons, and to expect that these results will be properly considered; and lastly, it should be understood that while he is to have no authority over any one excepting the clerks who secure, compile and classify the in- formation he desires, his requests should be complied with; for in the exercise of his duties he deals with effects and re- sults, and he must depend upon the co-operation of all in his attempt to find the underlying causes — the means whereby costs can be reduced. If the management will give these di- rections, no one will attempt to antagonize the man in charge of this department, except one who might be afraid to have the results of his work known." Application of the System. From this point the author diverges into a field of no in- terest to the contractor, applying his system to a large manu- facturing business. The application can, however, be made by each man for himself, varying with the extent of his busi- ness, and the classes of work which he is doing. Not every contractor can have a separately organized department of cost reduction. In fact, there are comparatively few contracting 28 Practical Talks on Contracting organizations which are large enough to make such a separate department necessary. The question, however, is not one of the machinery of organization, but of efficiency of management. The impor- tant thing is that some one shall have the time, and be charged with the responsibility of securing and analyzing the data which affect the cost of every piece of work done. In a large organization this can manifestly be done more efficiently by a department specially charged with the accomplishment of that particular thing; but even in a "one man" organization it should not be neglected. The old idea was that the man who went into a business with "main strength/' doing as nearly as possible all the work himself, was the man who was destined to succeed. That may have been true in former times, but it certainly is not so any more. The successful business man of the present day is he who reserves for himself sufficient leisure to conservatively estimate every job, carefully plan its execution, and then minutely chart the shoals of unprofitable prices, that they may be avoided in the future. A Few Things About Machinery. Almost every new machine which comes on to the market increases the possibilities of the contractor. If it is designed by a practical man it has about it new phases of adaptability which will make it a money saver. And of the vast lot of in- ventions which go through the patent office, few indeed of the impractical ones get so far as the salesroom. The market is controlled by practical people — men who can "size up'' a ma- chine and view impartially its advantages and its limitations with a cold eye single to its profit-bringing capabilities; and this quality depends entirely upon its usefulness for the pur- pose for which it is intended. Men who put money into the manufacture and marketing of a new contrivance have little regard for the aspirations of inventors; they are not in busi- ness to gratify a whim, and unless they can be satisfied that a Profit and Loss 29 device fills at least to some degree the proverbial "long felt want/^ they will have nothing to do with it. Of course they occasionally misjudge the popular demand, but not often. It may be taken for granted, therefore, that the machines and devices which are on the market, especially the ones which are extensively and continuously advertised, have real merit to recommend them. The contractor can usually rely thus far upon the reputable manufacturer; but at this point he must take up the investigation for himself. He must know the par- ticular advantages of every piece of equipment which the market affords, with its peculiar adaptability to certain classes of work. All excavating buckets on the market may be good — good for something. But one make may be especially adapted to handling dry sand, while another will work at its maximum efficiency in clay, and another under water. The man who guards closely the line between profit and loss will want to know these things. The multiplication of labor saving machinery gives him a large field to watch, but it also increases his possibilities. How does it happen that two men, equally conservative, will often put in widely vary- ing bids on the same piece of work ? One has not attempted to get an exorbitant profit, nor has the other run too close to the danger line. It will, in many instances, be found to be simply because one man. knows just the kind of equipment which will do the work at least cost, and either has it or knows where he can get it, while the other has based his esti- mate on the use of a sort of general purpose equipment, which will do this or several other classes of work equally well, but which will not get down to record making on any of them. Perhaps the substitution of one class of hoisting apparatus for another, the use of a traction engine instead of teams to make a haul, or the correct dipper equipment of a steam shovel, might very materially change the complexion of a bid. But the man who doesn't keep himself posted on these things cannot take advantage of them. 30 Practical Talks on Contracting Catalogues and Advertisements of Much Value. The manufacturer's catalogue, and the advertising pages of the technical and trade papers, are more than a mere bid for patronage. They are a part of the education of every man in the business. Very often they contain actual infor- mation which is of large value; but when nothing more, they act as a stimulus to inspire and a guide to direct individual investigation. And such investigation is coming to be more and more a part of the work of every successful contracting organization. Back in the time when the building of a railroad was almost entirely a question of men, teams and drag scrapers, there was little latitude for choice of means. Then the man who won out was he who could handle his laborers most effi- ciently. But the complexities and the specialization of mod- ern industrial methods have made the study of ways and means one of the chief tasks of the man who successfully car- ries out constructive work. In an organization of any size and scope, this work should not be allowed to rest entirely upon one individual. No one man knows it all. A conference will almost always bring out new and valuable points. Nearly every man has a field of his own in which he has from choice or necessity gleaned a larger share of information and experience. In fact, a bid on a job of any size and importance should never be the work of one man alone. Not to mention the disasters which sometimes occur from this course, by the overlooking of some vital item of cost, another member of the staff, whose experience has been gained at a little different angle, or whose study has been especially intensive in some particular direction, may be able to offer a suggestion which will at once change the whole plan of procedure. The ability of men along this line should, then, be one of the main things taken into consideration by the contractor in building up his staff. Profit and Loss 31 A mistake is sometimes made of making an estimate on a pieces of work, on a basis of using a certain equipment, when such equipment is not in sight. The contractor will trust to luck to pick up the machinery at second hand in case the con- tract should come his way. Failing to find the kind of equip- ment he had in mind, he will make shift with something else which he happens to have; and if he were to watch his work closely he might discover that the money he doesn't make by this method would go far toward buying a new machine — so far, in fact, that he could get the machine, use it, sell it at sec- ond hand after he used it, and still have something ^^to the good'^ over the other method. A word of warning needs perhaps to be sounded here as to the estimate of the selHng price to be deducted from the cost of a machine in charging its net cost to a job. Do not figure too high. New Machine Should Be Tried Out First. It is an invariable rule among the best contractors that, no matter how much faith they have in a new device to cut down the cost of work, no allowance for this saving shall be made in the estimate until after the device has been tested and has "made good." In other words, the contractor puts in his bid as low as the most efficient of tried means will permit ; if the new invention proves to be a money-saver, he is that much ahead. But it may be, on the other hand, that some unfore- seen difficulty may arise in its operation, and he will be obliged to revert to the old system. There are said to be contractors who will occasionally take a small job at no profit, or sometimes at an actual loss, just to try out a new machine. This is not good business, and ought not to be encouraged. It tends to demoralize prices, in addi- tion to raising in the minds of others a distrust of the business acumen of the man who will do it. It is far better to watch the experiments of some other fellow until a convenient sea- son offers itself when the machine can be tried without any 32 Practical Talks on Contracting sacrifice of money or prestige. Of course, some men will justify themselves in a course of this kind by saying that a small loss incurred in this way will possibly save a large loss later on. But it is the opinion of this writer that each job should be made to pay a profit, or at least no deliberate loss should ever be incurred. The estimating of depreciation in machinery, and interest on the money invested in it, is one place where many a man fails to judge correctly. "Ever since graduating from a technical college I have tried to keep a close watch on the financial part of my work, at first because it was absolutely necessary to husband every pen- ny, and later because the lessons to be learned from cost sheets have been most illuminating,'^ said a contractor recently in discussing this subject. "The habit of keeping detailed cost sheets on all work has enabled me to see just where an organi- zation or a certain class of equipment was strong or weak for a certain kind of work, and to change it if it was poor until something better was discovered, and the detailed figures have shown repeatedly that without making a proper allowance for depreciation of equipment, certain classes of contract work become mere gambles. "This is particularly true of work done under conditions which require a large plant that cannot possibly be kept work- ing all the time, as in making extensions or alterations in a large railway yard or in a street where traffic cannot be wholly kept away. I have seen work trains and the shovels supplying them held up for long periods in a busy yard, the delay cost- ing the contractor more than his profits for several days' steady prosecution of such work. Many people have probably seen expensive trench machines at work in streets on small jobs which could be more economically, although less rapidly, completed without their use. All such equipment represents a large initial expense and unless the contractor is able to estimate how much it will cost to keep it in repair and what it will sell for when the work is done, how is he to know very Profit and Loss 33 much about his profits ? To my mind the feature of estimat- ing on which most contractors are weakest relates to plants for they do not allow for its enormous fixed charges and de- preciation. Depreciation Should Not Be Underestimated. "All contracts for works which are difficult to execute on account of complicating conditions differ greatly from those where all the contractor has to do is to supply a suitable num- ber of men and teams, work trains, a shovel or two, and some camps. Where it is necessary to denude a good bit of timber land to supply the beams and sheathing needed for difficult excavations, to install an electric plant for power and light- ing, put in compressors, derricks and drills, and to resort to all kinds of measures to keep the work from disturbing travel or injuring neighboring buildings, the bills for materials and equipment mount up rapidly, and it is vital in times of sharp competition to avoid underestimating the depreciation charges which should be made against such items. During the last year I have cleaned up two contracts for bonding companies on both of which I originally figured, and had the satisfaction of learning in each case that my estimates of the cost of the work were right. The unsuccessful contractors neglected in both cases to allow for delays with their attendant interest charges, for depreciation in plant, and for the increase in price of good labor.'' Each piece of the equipment of the average contractor will probably not be used over one-third of the time during the year; the fixed charges should therefore be trebled for the actual time of operation in order to obtain the proper amount to be charged against any job for this item. The fact must also never be lost sight of that the rapidity of invention is likely at any time to render obsolete many a piece of other- wise good equipment. If, for instance, your equipment does a certain class of work at 16 cents a yard, and a new device is put on the market which will accomplish the same result 34 Practical Talks on Contracting for 8 cents, with no greater initial cost, and with increased ease of handling, your machine is manifestly a likely candi- date for the scrap pile, even though you bought it but yes- terday. This makes it sometimes advisable for a contractor to rent a machine for which he has only widely scattered use. But as a general proposition he should own his own plant ; for if the man who rents machinery to others can make money at the business, the contractor should have the advantage of this profit for himself. Knowing Where to Get What You Want. T^ext to knowing what material and equipment to buy for any given class of work, the contractor, or some member of his organization, must know how, when, where and at what price all these things should be bought. The successful buyer — the man who has his finger on the market, who knows what goods are worth, where they can be secured, and gets them a little below his competitor — is the man who is in demand in mercantile lines. And he should be just as valuable in con- structive and engineering work. The contractor is buying to sell again at a profit, just as really as though he turned the machine or material directly over to his client. If a machine is entirely worn out on a certain job, the amount apportioned to machinery must be sufficient to cover its cost, plus at least 10 per cent for profit on the transaction. This latter is some- thing which is sometimes not taken into account. The con- tractor acts as a purchasing agent for his client, and is enti- tled to a commisison on purchases made, just as much as he is entitled to a fee or percentage for his services in executing the work. In a work of any importance these different items should be figured separately. If a man takes the actual cost of labor, equipment, material, etc., and adds to the total a guess at what the job will stand for incidentals and profit, he is very apt to err in favor of the other fellow. Each item should have added to it in the estimate the percentage of profit which it ought to bring; and then to this total should Profit and Loss 35 be added such an amount as is deemed necessary or practica- ble for risk of loss, unforeseen delays and contingencies, and any added profit which the contractor feels justified in ex- pecting. Get the ''Cream" and Keep It. Of two men who are bidding on a piece of work, the one who knows where a good piece of machinery can be picked up at an unusually low price, and which is just fitted to do the work economically, is manifestly at a decided advantage. He can put in a lower bid than the man who has to buy a new machine, and still make a larger profit. He is apt, however, to fall into the error of making his price too low on that ac- count. The time and thought which his knowledge of the market has cost him is worth something to him. Because he is fortunate enough to buy low is no reason why he should sell proportionately low — unless the competition would appear to make it necessary. The client should not be given the advan- tage of every shrewd deal which the contractor's organization is able to make. The added profit from these is the "cream" which the contractor is entitled to for his extra watchfulness. It is strange that so many business men give little atten- tion to the material which is handled by their employes. While a bonded cashier is employed to handle the money, giving strict account for every cent which passes through his hands, material, which represents a large expenditure of money, is often allowed to come and go with little or no accounting. Sheet piling, for instance, is bought for cofferdam work. The contractor knows from the bill when the piling is pur- chased how many pieces there are. Presumably this all goes on to the job for which it was intended. When the work is completed and the sheeting removed, the presumption is again that it all goes back to the storage yards or on to the next job, but nobody knows to a certainty. It has not been counted, as money would have been had it heen sent out onto a piece of work to pay for labor or supplies. And so, by the time the 36 Practical Talks on Contracting piling gets to the second or third job, it is found not to be sufficient for the needs of the occasion, and more has to be purchased. Material Should Be Accounted For. Material should be kept as strictly in account as money, so that the amount on hand of any given thing can be determined practically as certainly as the amount of money in the bank. Little confidence would be placed in the man who would be satisfied to know that his bank balance was ah out so many dollars. He would be pretty sure to suffer the humiliation sooner or later of having his check returned with that odious statement, "Not sufficient funds," stamped across its face. Some one will ask who is to look after all these details. It is the old story of everybody being too busy trying to earn money to have time for a thought of saving it. But whether a contractor has a large or a small organization, some one should be charged with this responsibility. The small con- tractor usually overdoes the "one-man" idea, attempting to be his own engineer, estimator, bookkeeper and entire office staff, in addition to taking active command of the forces in the field. Naturally, he does not get time for all the things which one would think had to be done, to say nothing of working out a system which may appeal to him as more or less dreamy and impractical. The large contractor, on the other hand, even if he gives the matter a thought, does not want to in- crease the size of a staff which seems to him already a heavy drain on his income; but he, too, has many things to think about, and will not stop to give thought to what he considers a matter of simply a few shovels or crowbars. The Care of Machinery. A contractor must not only get the right equipment, at right prices, in order to succeed, but it must be kept in right condition. Many a fireman will consume every day as much coal as his da5r's wages amount to more than the actual de- mands of his furnace require. This may be because of igno- Profit and Loss 37 ranee or laziness. In either case, he is a hard proposition to deal with, and should be either instructed or instilled with more energy. If there is not immediate improvement his suc- cessor should be looked for at once. Many a man will also put a machine away for a long period with bearings and exposed parts dry and subject to rust, or will run them with insufficient oil to minimize the wear and give them the greatest working efficiency. Or a boiler will be allowed to run almost dry, or a derrick rope will be allowed to wear itself out in friction instead of being properly greased. The contractor cannot attend personally to all these things, to be sure. But they must all be thought of in the selection of men to build up the organization. Dealing with the Sub-Contractor. The relation between the general contractor and the sub- contractor is one of the most prolific sources of annoyance and possible loss to one or both parties. The contractor him- self — the man who enters into a bonded agreement with the railroad company or other party having work done — is a per- son of responsibility, competent to enter into such a contract, and with a business and personal reputation to maintain. He has signed an agreement to get the work done at a certain time, and even if there is no penalty for failure to do so, he feels that he is under obligations to have it completed at that time. The sub-contractor, on the other hand, is too often a far different person. In many cases he is a recent graduate from shovel and scraper, and he has not thrown off the nomadic, irresponsible habits which are the usual accompaniments of life on the dump. The general contractor exacts little from him in the way of a contract, as he feels that such would be of little value. "In a great many cases it works out after this fashion," said a general contractor to the writer some time ago. "The sub-contractor comes to us and wants five miles of a certain 38 Practical Talks on Contracting job on which we are about to start. We ask him where he has been working, and he tells ns. " *Did you finish on time ?' we ask him. " 'Sure — plenty of time/ he replies. " 'Did you make some money T " 'Sure — make money.' " 'How much ?' " 'Oh— plenty.' " 'Can you finish this job in six months?' " 'Sure — four months.' "And so a price is agreed upon, and the man is told to go to work. He goes back to his headquarters and loads his outfit onto the cars, and in due course of time it gets to the site of the work. At this point the 'sub' comes in and says we will have to advance him the money to pay his freight bill before he can get his stuff and go to work. We remember about that job on which he made money, and ask him about it; but the final estimate has not been made up, pending which time his condition is one of extreme financial embarrassment. "Of course we advance him the money. We have signed a document which remarks very carefully that 'time is of the es- sence of this contract,' and we believe that one man on the job will get more work done than a half dozen several miles away. He gets his outfit off the cars and exposes it to view — a few broken down scrapers, a dozen mules which give symp- toms of total collapse — and that's about all. "He starts to work — or is supposed to. But his camp is a long time in getting established, he has trouble in getting men, his harnesses break, his mules fatigue easily. And the up-shot of it all is that at the end of the month his payroll is about four times the amount due him on work accomplished. He is, however, still minus the amount due him on his former job, and we cash up his payroll — of course. "So it goes on. A while before the work should be com- pleted we check up what he has done. He is hopelessly behind where he should be, with no possibility of catching up. There Profit and Loss 39 is but one course open to us; we take over the work, put our own men on the job, keep a close record of the cost, and if there is anything in it above that we turn it over to the ^sub.' But more often we have to put on our books a loss of several thousand dollars on account of this section of the work." "Don't you investigate the standing of these men before giving them the work ?" the contractor was asked. "We aim to, of course," he replied. "And they should be required to show adequate capital and give a bond, the same as we do. But as a matter of fact it is often a case of taking such as we can get. Then, too, these men have their ups and downs. There are ^subs' now w^orking for us with a few mules and scrapers w^ho could at one time have written their checks for thousands of dollars. They lose it by not knowing the business of handling a job. They imagine the taking of a con- tract places them in an exalted position. They engage rooms in the best hotel at the nearest town, where they spend their time in society, possibly driving out once a day to ask the foreman how the job is going. Of course, he replies, *^A11 right/ and so it is for him. And in the end we have to com- plete the work." The sub-contractor is improving, however, so far as moral qualities and responsibility are concerned, just as the general contractor has raised himself from a place of suspicion to a position of confidence and trust. Relations With the Engineer. The element of personality in handling subordinates has been touched upon previously, but it is a factor just as vital to success or failure in dealing with the men higher up. This is crystallized in the oft repeated saying that the con- tractor who knows the engineer has the advantage in bid- ding on a job. And it is not necessary to the truth of the statement that the word "knows" should be put in quotation marks and given a significance savoring of graft and unpro- fessional conduct. The relations between contractor and en- 40 Practical Talks on Contracting gineer may (as they -usually are) be on grounds conforming strictly to ethical codes, and yet may be so influenced by the personal bias of the engineer as to make bidding little more than a gamble for the contractor who is new to the field. The uncertainty attached to bidding under the specifica- tions of an unknown engineer may arise from two causes : First: The care or lack of care with which borings, soundings and computations have been made. Second: Whether or not the specifications are to be en- forced in a spirit of fairness, looking to the proper progress of the work and the interests of both parties, or whether they are to be enforced to the exact letter, irrespective of modifying conditions or unforeseen circumstances which may arise. The trial of a Philadelphia engineer for fraud in connec- tion with a large filtration plant were based on a lot of clauses in the specifications which an alleged set of reformers thought should be interpreted to ruin the contractor. For instance, the borings for a filter gallery covering a large territory showed that the material was all clay and gravel. The engineer un- thinkingly put in the clause relating to excavation that the contractor was to excavate to the prescribed line for the con- crete foundation, and that if any soft material was encoun- tered below this line it was to be excavated and refilled with concrete at the contractor's expense. The contractor gave a lump sum bid on this work, and as the borings showed hard ground he naturally made no allowance for excavation and refilling with concrete below grade. After the work was com- pleted, an area of over an acre was discovered which contained muck running as much as 15 feet below grade. This meant about $200,000 worth of work, to be done by the contractor at his own expense. He naturally objected to doing this work without compensation, and had a hearing before the proper authorities, who decided that in view of the fact that such a large amount of extra work was not contemplated by the original specifications he should not be obliged to fill the excavation with concrete. Profit and Loss 41 Engineer Both Judge and Jury. "Not only are we obliged to accept the engineer as referee/' said an experienced contractor, "but in addition must agree that our methods, men and materials shall be acceptable to him, and that he shall finally decide whether or not we are entitled to any compensation, and if so, what amount. Can you not imagine that under these conditions the personality of the engineer will enter largely into our estimates of costs ? Some engineers we do not care to work for under any circum- stances. Some require that we add a large percentage to our figures to provide for their close and arbitrary dealings and interpretations, while still others are known to us as fair and liberal-minded men with whom we feel justified in taking chances and have confidence in obtaining a square deal. Some engineers accept a contract in the same spirit that they would the gospel, as something inviolate, any deviation from the let- ter of which would condemn them to perdition for heresy, while others are willing to look upon it as a purely business agreement, to be carried out for the best mutual advantage of the two parties. Is it difficult to guess which engineer will obtain the lowest prices on his work? "As contractors, we naturally expect to assume certain risks. We admit that we must be expected to gamble on the labor conditions and prices, upon the fluctuation in cost of materials, upon the effect of weather changes, upon errors of judgment in making our estimates, upon freight delays, upon the possibility of serious accidents to persons or property and other features of like nature; but worst of all is the gamble we take on the uncertainties imposed upon us by the contracts and specifications, when we assume responsibility for all de- lays caused us by the owners, for all errors or inaccuracies in studies or plans, for all oversights on the part of the engineer, and not infrequently for the. correctness of the engineer's lines and grades. "Added to this is the uncertainty of the disposition of the 42 Practical Talks on Contracting particular engineer and inspector assigned to supervise our work and upon whom we must depend for the interpretations of the ver}^ elastic wording of the specifications." The stor}^ is told of a young engineer who got his friend to bid on a contract, and he made all kinds of absurd conditions and inserted them in the specifications and said to his friend : "Why, that is all right. I just want to make a good contract, so that they will know tliat I have attended to m}^ duty. There will be no trouble about the work, because I don't intend to enforce any of these conditions." His friend took the con- tract and the young engineer died. Another man came along and enforced the conditions. So the contractor cannot be sure that the man who draws the contract is the man who is going to construe it. This whole subject was discussed at some length at a meet- ing of engineers by Mr. E. S. Larned, of Boston, who spoke especially of the directing engineer and inspector. Interference hy Inspectors. "On some work it has been found that inspectors who were intrusted with passing upon the quality of materials and work- manship do not stop with that, but in their zeal and inter- est they go further," he said. "They attempt to direct the work. If the contractor is a man who is disposed to resist the dictation of that sort of an inspector, he may, under some con- ditions, claim that it is interference, and under the strict in- terpretation of the meaning of the act the inspector is inter- fering. And in just so far as he does that he is doing the contractor a very great injustice. The contractor, on the other hand, realizes that it is policy for him to be reasonable, amiable and walling, and he oftentimes does things that he knows are causing him a very serious loss in the performance of the work. But he does it as a matter of policy. In my experience I have seen a very great change in just that feature of engineering work. I think. there has been a distinct prog- ress. Things are very much better now than in times past. Profit and Loss 43 Chief engineers have come to appreciate that they must look after their engineering assistants a little bit more closely, and that is a feature I would like to call attention to. Oftentimes contractors are not so much afraid of the interpretation of the engineer who draws the specification, or the man who is really in charge of the work, as they are of the assistant who is put in control of the work. Oftentimes the chief engineer is far removed from the source of the trouble. He may be fifty miles or even much further away, and it takes a long time to bring in a question of arbitration. A contractor is reluctant to resort to that. He knows it is policy for him to conform in every way to the desires of the assistant in charge of the work, and naturally refrains from reporting to the chief en- gineer that he thinks things are being done that to him are an injustice. This is a very important feature. And in con- nection with that I have often seen the importance of having a more intimate association between the chief and his engi- neering assistants. It would be a very helpful thing if chief engineers could bring their assistants together at stated inter- vals and have an exchange of ideas, a sort of question box proposition, and let the young engineers or inspectors, who are the men directly in charge of the work, bring up questions of doubt or in dispute so the chief may discuss and explain the same, and in this way educate and broaden the men intrusted with the carrying out of his ideas. There is no question but every young engineer needs broadening, and if he has found his experience on one work alone it is to be presumed that it will be years before he will be able to take a specification and interpret it rationally. You will find a difference between the interpretations of engineers in different parts of the country. New York is one thing, Boston another, and the middle west and the far west another. Experienced contractors take these things into account when bidding on work. It is not that the quality of the work is better in one case than it is in the other. 44 Practical Talks on Contracting Doubtful Points Reduced to Writing. "Specifications at best are general in describing work. Plans in many instances can only be general, and there may be many details to add. And if, upon the development of the work, conditions arise that result in very material change, and the engineer is disposed to confine himself to the most economical design originally suggested on the basis of as- sumed conditions, irrespective of the contractor's rights and interests, then the contractor must, for his own protection, formally and by letter state his position. I know of success- ful contractors today who make a practice of doing that even where there is no occasion for doing so. It is a matter of pol- icy with them. The moment they feel in doubt in the slight- est degree about conditions or results, they write a letter to the engineer that puts him and them on record, and if it comes to a judicial adjudication of the case they have established their case in advance and fortified themselves very materially. From the standpoint of the contractor it is a pretty good policy to follow. The question of the intent of specifications and plans is a very broad one. One might take exception to many varia- tions we find in interpretations of that nature. And it all comes back to a question of personality. The reasonable en- gineer is as explicit as can be under the conditions, and in the enforcement of contracts he is still reasonable and still prac- tical. And if he is all that, he is all the contractor can expect. One great trouble with many engineers is the fact that they are not practical. Their ideas are very good ; their judgment as to results can't be challenged ; but their judgment as to the method of getting those results is sometimes very open to question. If an engineer lends himself to controlling the con- tractor in his methods, he makes a very great mistake, in my judgment. He would better let the contractor take his own way, when possible, and then pass upon the results." In one instance an owner and his engineer each called in a favorite contractor to estimate on a piece of work. The result Profit and Loss 45 was that the contractor who had been named by the owner bid in the neighborhood of $10,000, while the other's bid was about half that figure. Presumably the two were equally com- petent and equally conservative in estimating. But the former had never done work under this engineer, and was obliged to take the specifications at their face value, making allowance for any hardships which a strict interpretation of them might cause him to undergo; the other had worked with the engi- neer before, knew his methods of work, and had confidence in the accuracy of his estimates as well as the fairness of his intentions. And it made a difference of 50 per cent in the cost of the work. "We contractors all know perfectly well that the person- ality of the engineer can make or break us," says James W. Eollins, Jr., of Boston, "and the writer leaves out in this state- ment any question of actual honesty or dishonesty ; that is, in plain words, if an engineer demands in full every and all con- ditions of the specifications to be carried out the job is a fail- ure financially. Opinions are expressed in the discussion that such a contractor should fail, that he has agreed to do certain work and that he should be made to do it, made to do perfect work. Are engineers perfect? Can perfection be obtained in many things — in anything? Perfection is exact compliance with specifications; but, may I ask, Is the work better or stronger because a joint is exactly one-half inch or the color is the exact shade called for, especially as most masonry is dis- colored in six months after being laid? But as long as we have engineers we shall have the exact ones, who will have their pearl gray color and their one-half inch joints, their measurements to a thousandth, with perhaps their feet wrong. They are surely the 'stewards^ who will get their 100 cents on a dollar and the pound of white sugar they ask for; and what else? — a reputation among contractors, and the honest ones, too, so that after having been ^ed once to the slaughter' they refuse to bid on any more work to be done under such engi- 46 Practical Talks on Contracting neers, or bid so high that they will not get the work. The writer knows of such engineers — perfectly honest, but not just and fair — men for whom contractors will not work at any price, and whose reputation even among their fellow engineers and their superiors is that of a ^grandma.' Details Should Be Left to Contractor. "Certain engineers seem called upon to assume all respon- sibility of design of temporary work, and then disclaim respon- sibility in results. Hasn't the time about come for such men to realize that among the contractors are engineers who know their own business, and who, knowing it, will be thoroughly able to protect their own interests; or who, if they are not themselves technical men, are good enough business men to get an engineer to figure out for them anything necessary? Why is it necessary to furnish plans of centering, ventilation, etc., of tunnels, which matters, in the judgment of the writer, can best be provided for by the contractors, who make such work a specialt}^, all done upon the ground of safety to men; and leave out of their plans the handling of explosives? As far as the writer has knowledge, the underground work in the New York subways and tunnels, in the Pennsylvania railroad work, also the subway work in Boston, has all been done by the contractors — they making their own plans of temporary work and being responsible therefor. In the years of work done by the writer on railroads, where certainly the danger of loss of life is greatest, the railroad engineers do not pretend to say how a contractor shall do his work, in its temporary nature. Any engineer has every right to stop a contractor when he goes wrong ; so why entail a lot of ill-feeling, disputes and trouble, and also do a great injustice, by prescribing all details of temporary work, and then holding the contractor responsible for it, design and all ? It's not a square deal ; we contractors can stand on our own feet, do what is necessary, and be responsible for it." Profit and Loss 47 The Pitfall of Specified Prices. There is a growing tendency among men who write con- tracts to specify prices for certain items. These are places where the contractor needs to exercise increased vigilance if he would conserve his profits. Such a provision as this is usually in the interest solely of the man who pays the bills. In writ- ing such a contract the engineer forces the contractor to agree to a definite price (usually too low), while not binding him- self or his principal to any definite quantity. A general scrutiny of the project may reveal little or no work under a classification which is restricted in this way, and the contractor may either disregard it entirely or allow for a few dollars of possible loss. As the work progresses, however, contingencies may arise which will alter the entire aspect of the job and throw a large amount of work under the classifica- tion in question. A Boston contractor who has had sufficient experience along this line to have a decided opinion upon the subject re- lates this experience : "On a certain contract executed by our firm, a price of $13.00 per thousand was stipulated for sheeting left in place. No estimate was given of the probable quantity to be used, but it seemed likely that the amount would be inconsiderable. On the contrary, there were 150,000 board feet so left in place, costing us for the lumber alone $22.00 per thousand, and rep- resenting a loss to us of $1,350 outside the labor cost. A pro- test to the engineer against this arbitrary allowance on so large an amount was met by the argument that we should have taken it into account in making up our bid. But how could it be considered in the bid when the amount to be used was ab- solutely unknown? We were then reminded by him that we should not have bid on the work if we did not like the specifi- cation." Interest on the Part of Worhmen Is Profitable. It is well recognized that the tendency of modern Indus- 48 Practical Talks on Contracting trial methods is to destroy the individuality of the workman and reduce all to a dead level of mediocrity. And with the stifling of individuality goes usually the loss of that enthusi- asm which is essential to effective "team work" and the high- est efficiency. It is well known that the reason some contrac- tors fail is because they cannot hold men together and inspire them with enthusiasm which will lead them to carry the work on to successful completion. In this connection we might well consider some things told by a writer in the Saturday Evening Post. He says: "While managers are unanimous in their complaints of the shortage of good men, they, by the adoption (perhaps, quite necessarily) of systems of almost military discipline and subordination, either stifle individualism or place it all behind such a heavy screen of foremen, sub-foremen, red-tapism and repression that they themselves, and the officials immediately under them, are unable to discover any indication of it. "They then complain of lack of interest on the part of the men; but the men are not wholly to blame. Very frequently that apparent lack of interest is due, largely, to the policy observed by officials of most large manufacturing and con- tracting companies of withholding from their men all infor- mation regarding their work which could excite keen interest in it. A shop order will be sent out accompanied, perhaps, by drawings of various parts. The workman on any one of those parts does not know, nor does the sub-foreman often know, what it is for — what it will, ultimately, become a portion of. What interest can a man work up under such conditions? What pride can he feel in a few pounds, or a few hundred pounds, of metal, be it never so well finished, which has no significance of form or destiny ? "This secretiveness about business details, which is highly necessary and highly commendable in officials who understand perfectly what matters are private and what are inconsequen- tial, becomes ridiculous when extended to the most trifling oc- Profit and Loss 49 currences, as it often is, by the clerks and juniors in every department. "The sub-foreman is the man who, above all others, is close to the men. He is with them on the job continually. He knows the personal peculiarities and capabilities of each man. Although the superintendent and chief foreman lay out the work, so placing their orders that the operation of one small gang dovetails in properly with the operation of other gangs, it is the sub-foreman who must be relied upon to carry the work of his particular gang along so as to have no conflict — either in time, tools or completion of work. Yet this man, upon whom almost altogether depends the speed and eorrect- ness of detailed work, is very seldom treated with any more consideration than one of his men. In outdoor operations it is very seldom he is shown any plan of the whole work. It is considered amply sufficient to give him a curt order to ^Cut that grade down to twelve inches below^ the stakes ;' or, ^Hustle your gang, Joe ! That pile of rock's got to be hauled out of there before night.' "The interest and incentive which any man feels in know- ing the special object of the work he is doing is, under such treatment, entirely lacking — both in the gang foreman and in his men. ^ "It is discipline, of course, of a character on w^hich super- intendents and head- foremen often pride themselves; but the human element of interest in the whole job. pride of gang work, and individualism are repressed and stifled. The sub- foreman is almost invariably selected for his qualifications as a driver of men — and for that alone. He is generally so little informed as to other phases of the job he is on, or, if in a fac- tory, as to the general business of that factory, that any ques- tions put to him on any matters not absolutely under his con- trol mortify him on account of his inability to answer them." 50 Practical Talks on Contracting OFFICE SYSTEM FOE CONSTEUCTION WORK. BY A. 0. DAVISON. IN CONNECTION with an office system for construction work, one of the most important things is a simple and concise system of timekeeping — a system with which can be secured a practical daily distribution of labor expenses with the minimum of office labor. With this object in view, the following system is given, it being the author's opinion that it is better adapted to all classes of construction work than any other that could be installed. The first step in the installation of a system of this kind is to furnish metal numbers or badges for each workman on the job. These badges should be about the size of a half dol- lar, well nickeled, with a large, plain figure etched and filled with black, to make them easy to distinguish when the time- keeper is making his rounds to check the men on the work. The badges should be supplied with heavy safety pins sd they can be worn on the blouse or hat. A daily time book (sheet of which is shown by plate No. 1 ) must be provided for the timekeeper's use only. This time book is numbered to correspond with the metal numbers worn by the workmen. It is absolutely essential that the timekeeper see every workman on the job when he makes his rounds in the morn- ing and afternoon. He must not be permitted to go to the foreman of a gang of men and take his word for any work- man being on the job without seeing such workman person- ally. The workmen, of course, are known only in checking in this daily time book by the numbers of the badges they wear, and it is only necessary for the timekeeper to see these numbers and note the class of work the men are engaged in. This makes it unnecessary for him to disturb the men in their work further than to see the numbers on their badges. In Office System 51 the space provided in this time book under the heading "Kind of Work," the timekeeper enters, opposite the number cor- responding to that worn by the man, the class of work he finds WORKMAN'S NO. 200 HOURS WORHEO KINO OF WORK -f-0- AM PM ^ loX^/l^rCgfy He^> ^ ZOl AM PM 202 AM PM 203 / 10 AM -■)CC\^ 207 v^ AM jQerT..^ \ PM i .^ ^ -i-Q- AM - X C^4-v-tCtX ^x q PM 209 -h&- AM PM (jbUK- t">A to 40 H ^ 207 10 10 20 15 345 10 10 4o 16 2^10 5 S 1 o zs 17 18 19 to z\ Total H.i 30 20 30 zo /o /5 /O 10 5 10 i6o Amount 6 01 5 50 .^ 6 00 2 OO 3 25 / CO 2 iS 1 eo 1 IS 40.75 Summary il DESCRIPTION QF W0«(^ DONE No.M n Hrs, ^ate Amsunt II / 10 ./O / 00 1 10 ./7i / 75 20 Wo-vtL^ tA.rtJk. xY-c-o.t\s.A tJLv«-\js.v.t a>.^jjlJl / 10 25 2 So • 1 '6 /<30 4c A Plate 2— Foreman's Daily Time Sheet. The accompanying plates, No. 1, representing sheet from daily time book, and No. 2, representing foreman's daily re- port, have been made out as they will appear. No. 1 is shown after the timekeeper's check, both morning and afternoon, and 54 Practical Talks on Contracting after the time has been entered therein from the foreman's daily reports. No. 2 is made out, extended and balanced com- plete, as it will appear after being turned in by the foremen and figured by the timekeeper. The check marks appearing before "Employees' Num- bers/' on plate No. 2, correspond with the numbers on plate No. 1, where hours are entered. This check mark is made on the foremen's reports to indicate that the hours have been transferred therefrom into daily time book, preparatory to being entered from the daily time book into the monthly time book. The check mark appearing after "Workman's Numbers," is an indication that the hours have been entered from the daily time book into the monthly time book. After all foremen's reports have been extended and bal- anced, and total hours transferred therefrom to the daily time book, the timekeeper then makes up a summary sheet (Plate No. 3) from all foremen's reports, which gives him the total daily labor expenditure distributed in totals under the various classifications for the day. This summar}^ sheet is merely a recapitulation of all foremen's reports and does not carry with it anything except totals in dollars and cents in each classifi- cation reported by the different foremen. For instance, two or three foremen may have their men engaged in the same kind of work, and in all cases this summary sheet gives the grand totals of each distribution of labor expense for the day. The total of each foreman's report is carried out on this sum- mary sheet under the heading provided for that purpose, and the gi'and total of such totals is checked against the totals of the various distributions, which makes an absolute check on daily labor expenditures. After the daily time book has been checked up to see that each man is reported, and that none are reported which the timekeeper did not check on the work, he then enters from this daily time book the total hours in his monthly time book (sheet of which is shown by Plate No. 4), opposite the corre- Office System 55 sponding number, which number carries with it in the monthly time book the name of the workman. The monthly time book should be so arranged and metal DAILY Contra ft TIME SHEET SUMMARY Date 190 _ 1 -\ REPORT TOTALS 1 — Plate 3— Timekeeper's Summary Sheet. numbers so distributed that a given block of numbers repre- sents a given rate per hour. For example, 100 to 125 may rep- resent a rate of 10 cents per hour; numbers 126 to 150, a rate of 15 cents per hour; 151 to 175, a rate of 17-i cents per hour; numbers 176 to 250, a rate of 20 cents per hour, etc. 56 Practical Talks on Contracting After the time on any day has been transferred from the daily to the monthly time book^ the blocks of numbers in the monthly time book representing each different rate are totaled MONTHLY Time BOOi^ MONTH EnDINS 190_- Ho.! NAME Jl e *• 4 s 6 7 a 9 10 n 12 SS i; 15 1£ 17 18 19 Zo 21 ii 23 it iS IS 27 ze 19 3a 31 TOTAi. MRS RW ««T.| r~ 1 1 i 1 1 — i-i " _ 1 , 1 1 _ _ _ LJ Plate 4— Monthlj' Time Book. for that day, which gives the total number of hours for each given rate for the day. These total hours extended in dollars and cents and totaled (Plate No. 5) must check with the total amount shown on the summary of all foremen's reports for the corresponding day. This gives the timekeeper an absolute Office System 57 check on his hours and extensions each day and prevents any errors in hours or money when the pay roll is made up on pay roll dates. TOTAL DAtLY HOURS ANJ) AMOUNT FROM MONTHLV TJME BOOK TOTAL Hoofts RATE AHdUNT Plate 5— Totals for Checking. Pay Roll Distributions. For the purpose of pay roll distributions, a loose-leaf binder should be provided to accommodate sheets 14x17 inches. The first sheet (Plate No. 6), the full size of the binder, is designed to take care of the dates and daily totals of labor distribution, . as well as headings for detailed distributions, sufficient sheets without side headings (Plate No. 7) being 58 Practical Talks on Contracting added to accommodate all headings required for a complete distribution of all classifications of the work. One complete set of these sheets will take care of two months' labor distribu- tions, as shown by plates. After this a sheet is inserted (Plate No. 8) to take care of additional dates and totals and sufficient sheets (Plate No. 9) to take care of following dis- tributions. The pay roll distribution book, when supplied with suffi- cient sheets Nos. 6 and 7 — No. 6 to take care of dates and daily totals in the side heading, and No. 7 to accommodate all headings required for a complete distribution of the work — makes the pay roll distribution book complete to take care of two months' labor distribution, as explained. At the ex- piration of this time one additional sheet to take care of addi- tional dates and totals is inserted and sufficient sheets (Plate No. 9) added, which makes this record complete to take care of an additional two months' distribution. This operation to be repeated at the end of each two months during the term of the work for which the distribution is made. This record is entered up daily, taken from the summary- totals as made up from the foremen's daily reports. At the end of the month, or at pay roll dates, this distribution book is balanced against its own totals, the monthly time book is extended and figured into dollars and cents and balanced against the totals of this labor distribution for the correspond- ing month. The totals thus secured, when balanced, give the gross amount of pay roll. The detail from the labor distribu- tion book secured from this balance makes the proper credit entry for the pay roll account in the individual ledger. As being directly in connection with the keeping of time, it might be well to mention here that items such as "Black- smith Shop," "Barn," "Lumber Supplies," etc., should be carried under their individual headings and all labor ex- penses in connection therewith be so charged, monthly distri- butions being made giving such accounts the proper credit and charging them out to various parts of the work on which they Office System 59 apply. For example, everything in connection with the black- smith shop should be charged to it under the proper headings, such as "Labor," "Material," "Coal," etc. The blacksmith ! 1 « T rd .— - - ( 1 ^„-— ^ ._/ ^^ / y / y -^ J— -^ y X^ ^==> CH ^ / / :^ ^ — — ^ / / y" ) / y y > j y y Plate 6 Plate 7. \ On / ..^ /"^ y- ■^ / ^ y^ ? ^ ^^^ ^"^ / / ' / M ' T [ 1 r^ ^,,-^ y' 1 ^ —/ / , / / 7 >■ ^^ 1 / _y' ^ z^ V Plate 8. Plate 9. should keep a book distributing the hours of himself and helper each day on the work done for any particular part of the job, weighing out and charging up the number of pounds of material used, together with the time. At the end of the 60 Practical Talks on Contracting month this book is to be figured in dollars and cents at a rate per hour to cover time of blacksmith and helper, together with coal consumed, material to be figured at the proper prices per pound, all of which is to be charged to the part of the work on which it applies, and the blacksmith account credited. If the proper figures are used in making this distribution the balance at the end of each month on blacksmith account should represent practically material on hand. The same thing would apply to "Lumber Distribution," "Pile Distribu- tion," etc. Distribution of Time of Plant. The time of each piece of machinery on a job should be kept and reported each day by the foreman, the same as he reports his men, showing number of hours each machine is engaged on different classifications of work, time idle for re- pairs, etc. All expense in connection with the operation of any piece of machinery, such as "Derrick No. 1," "Cableway No. 1," "Cableway No. 2," etc., should be charged to operation of such machine daily. At the end of the month the total ex- pense of operating any given piece of machinery must be arrived at and figiired into an hourly rate, and this amount charged to the part of the work to which it properly belongs by taking the total number of hours in which the machine was engaged on any particular class of work during the month and multiplying it by the rate per hour arrived at from the total monthly expense of such operation. Pay Rolls, Deductions, Etc. After the monthly time book and labor distributions have been properly balanced, the amount thus secured represents the gross total of the pay roll, which should then be made out in the following manner : Each workman's number and name to be entered on the roll (Plate No. 10) in space provided for this purpose, the total hours, occupation, rate and gross amount following his name in the space provided. After all Office System 61 names and gross amounts have been entered on the pay roll sheets^ each sheet is to be totaled, such totals being carried to the summary sheet and footed to see that all gross amounts have been properly transferred from the time book. When this balance is proven, the next thing to be done is to make all deductions under the proper headings, after which the deductions are all to be cross-footed and totaled in column headed "Total Deductions/^ After this is done the total de- duction column is taken from the column representing the gross amount, which amount gives the net amount due each man, which is carried into the column under the heading "Net." Each sheet is then balanced individually, the foot- ings of all deductions checking out with the total column headed "Total Deductions." The total of the "Total Deduc- tion" column and "Net Amount" column will balance with the total of the "Gross Amount" column. After each sheet is thus balanced individually, all footings thereon are carried to the summary sheet, under their proper headings. This sum- mary sheet is made out as follows : Your next pay roll sheet in the binder following the last sheet of the pay roll is used for this purpose. On the first line of this sheet, in the space provided for workman's name, should be written "Sheet No. 1," all totals from sheet to be carried under proper headings. This to be followed in the next line with "Sheet No. 2," all totals of this sheet entered under proper headings. This to be followed by "Sheet No. 3," etc. This summary sheet is then balanced in the same manner in which each individual sheet has been balanced. After the roll has been balanced, the next thing in order is to take from the cash book any items paid prior to the making up of the pay roll. Any deductions made from the roll for which checks are not to be issued must be charged to the individual pay roll account by journal entry, and credited to whatever expense on the work to which they properly apply. After this journal entry, if any, is made the amount covered by it must be de- ducted from the gross amount of pay roll, and the total of 62 Practical Talks on Contracting 1 1 1 o 1 1 1 I 1 1 1 1 1 1 ■f T z < O U o Z I ■ 1 "1 ^1 _ 2 1 " . 1 ►^4 _^ h "~ i 1 1 1 .. 1 — j— —1— 1 — ] »&. _ , . ... i r- h- 1 i " J ^ A 1 k ^ o Z Ul «S < z> Q Z D Z «r lU z o z Z < z: Z J H o 1— ul o w « 7 o »- Ul 7 <■ ^ D or O 7 o ^ -^ "^ ■^ — _ „■ 1 ^ J- Plate 15. this sheet in which to carry quantities and units both for the earnings and the expense ends. After the current month has been entered on these sheets and totaled with the previous month's expense, the amount ■ 1 M""f. Mesx / 3'.'. o* ToT,(. 0*'* T„„. L". 1 woo / >-A, ./ fcr**4. y*^ To 7 A.. \ 1 1 1 1 1 1 1 \ ^^ 1 0-| / ^,...^-^ Y ^ X f y ■L-^ ^ } ,)' ^ \^ L— J ^ U' J ^ — ' Plate 16. 72 Practical Talks on Contracting thus arrived at is the balance as shown by the corresponding expense account in the General ledger, and thus gives a com- plete detailed distribution of the various expenses of each and every part of the work. Accounts Receivable Ledger. A special ruled sheet for accounts receivable ledger is shown (Plate No. 18). This sheet contemplates entering in detail all bills, and carries with it a column showing the ac- count to which proper credit belongs. This ledger is prac- tically the same as the accounts payable ledger with the ex- ception that the special ruling is reversed ; in other words the credit side of the Accounts Payable carries the special ruling, while the debit side of the Accounts Eeceivable has the special ruling. Filing System. The following is suggested as a complete and accessible method for filing invoices, bills and letters. A tag-board file back 8 J inches by 11 inches is used, and, for invoice filing, they are numbered consecutively, all invoices being attached in date order, later dates on top. An index for this file is arranged alphabetically, the firm name appearing thereon, together with the number of the file. These invoices are then filed in boxes or cabinets securely attached to their respective file backs and are located by reference to the alphabetical index when wanted. All bills are filed in the same manner and indexed in the same way. All letters are similary attached to file backs and indexed according to firm names on an alphabetical index, and in addi- tion are cross-indexed under subjects. For example: The firm of Smith & Co. may be indexed under the letter "S" as letter file No. 50. The various correspondence with this concern may have reference to a dozen or more different subjects. In such case the firm name of Smith & Co., together with their file No. 50, would appear under a subject index alphabetically ar- Office System 72, ranged, under as many different subjects as are referred to in the correspondence. It will thus be seen that in order to get out correspondence it is not always necessary to know from what firm the letters were received; but if it is known what subject is to be looked up all letters pertaining to such subject can be found by reference to this subject index. It is, of ()«,«, 1 lAsoa ^-^ 3J", ^0* Tom. 0''* Tor^i. •H'' iAeoH / i.„iu. y~' Tor,,. 0''' ToI'M-l f^ — C-| ^y^ :hz JL-' / } L J--' / ^ / y ^ ^ i t y y Plate 17. course, only necessary to file any one firm's correspondence in one file and index it in as many different places as is necessary to cover all subjects referred to in the complete correspond- ence. Progress Reports of Work Accomplished. In order to make daily and weekly comparisons of earn- ings and expenses, it is suggested that a progress sheet be ruled up with proper headings to take care of each classifica- tion of work which is paid for at unit prices, this sheet to be so arranged that it will take care of one month's progress re- 74 Practical Talks on Contracting ports by dates. The information. for keeping this record com- plete should be obtained from the Engineering Department and from the Foremen's daily reports showing quantities done. The report should carry, in case of river work, a column to show the stage of the river, a column to show the weather conditions, and sufficient columns to show various quantities, such as "Yardage of Excavation," "Yardage of Concrete," 10 Fii F Hn rotio USIO foR r Credit Folio ,V y y ^ / y yy i^- >*^ ^ ' y^ _^.-^' ^ ^ Plate 18. "Number of Piles Driven," "Feet Board Measure" in perma- nent work and, in fact, each classification under a separate heading for which estimates are allowed. Such progress re- ports, when compared with labor expenses for the correspond- ing day, together with a daily estimated expense for material and supplies, make a very convenient and reliable record for keeping in close touch with the daily progress of the work. For the use of the Superintendent in charge of the work it is very valuable and convenient to keep a combination rec- ord showing a daily report of labor expenses and quantities secured. This can be done and arranged in very convenient Office System 75 form by using a sheet on which can be shown each day the total labor expenses, number of men, under headings of "Com- mon Labor," "Teamsters,'^ "Foremen," "Engineers," etc., this total daily labor expenditure being distributed according to the summary of the foremen's reports for the corresponding day, under the various classifications of work, together with the quantity of each kind of work done. This report can be quickly made up from the timekeeper's records and the engi- neer's progress report in the evening and referred to the Su- perintendent the next morning, from which he can see exactly what was accomplishd on the previous day. Such record allows the Superintendent to keep in close touch with each branch of the work, so that if he finds some part of it making losses he can remedy such defects, unless there is good reason for it, without allowing such expense to go on to exceed one day. The principal benefit to be derived from such a detailed distribution of material and labor expenses is apparent. When handled in this way the expenses are so divided that they can be used in estimating new work regardless of location and local conditions. The parts of such expenses which have been kept on any job of work which would not apply to location or con- ditions of new work to be figured can be eliminated and that part of the expense which would apply to such locations and conditions can be used in making such estimates. 76 Practical Talks on Contracting LIABILITY INSURANCE FOR CONTRACTORS. BY C. ARTHUR WORDEX. LIABILITY insurance, sometimes called indemnity in- surance, is written under various heads, but those of the most importance to the contractor are: Em- ployers' liability, public liability and team insurance. In employers' liability insurance, the insurer agrees to in- demnify the assured against "loss by reason of liability im- posed by law upon him for damages on account of bodily in- juries, including death, at any time resulting therefrom, acci- dentally suffered by reason of the prosecution of the work, at the places described in the policy, and under the classifications coA'ered by an employe or employes of the assured." Public liability insurance differs from the above in so far as it insures only against injuries sustained by parties not in the employ of the assured, or, in other words, the public. These policies are written at a lower rate than the employers' policies. Team insurance covers the owner's liability to his driver and to the public, for damages on account of bodily injuries caused by means of draught or driving animals or vehicles in the service of the assured and the use thereof and while in the charge of the assured or his employes. Liability insurance policies are usually written for what are termed $5,000 and $10,000 limits. This means that in case of an injury or loss of life to one person, the insurer will indemnify the assured to the extent of $5,000 ; and where an accident has resulted in the injury or death of more than one person, the indemnity will be increased to $10,000. Excess limits, such as $10,000 for one person and $20,000 for more than one person, are written at a slight increase over the regu- lar rates. Liability Insurance 77 Liability insurance premiums are based upon tlie amount of pay rolls, i. e., in taking out a policy an estimate is made of the probable amount of pay rolls which will be expended during the policy term, and a certain percentage of this amount is charged as premium. This percentage, or rate, will vary according to the hazard involved in the contractor's work. The ordinary rate is about 1^ per cent of pay roll, but, as in the case of a contractor engaged in wrecking or demolition of buildings, the rate may run as high as 5 or 6 per cent. In case a contractor is engaged in several classes of work, involving various hazards, he can be covered by one policy, but must subdivide the amount of pay roll on these hazards. At the end of the policy term the insurance company re- serves the right to audit the pay roll of the assured in order to ascertain the exact amount expended for labor during that period. How Premiums Are Figured, A contractor's policy is written in all companies for a mini- mum premium of $50 per annum. To explain the method of adjustment, we will go into detail: A contractor engaged in work upon which a 1^ per cent rate is charged has based his estimated pay roll for the policy term at, say $10,000. This would make the initial cost of his policy $150. Now, we will asume that at the end of the year it develops that he has actually expended $15,000, or $5,000 in excess of his estimate when taking out the policy. The insurance company, in this case, is entitled to an excess premium of IJ per cent of $5,000, or $75. Had it been found at the end of the policy year that the actual pay rolls amounted to only $5,000 the contractor would be entitled to a return premium of $75, or IJ per cent of the excess $5,000 estimated. The minimum premium of $50 applies in cases where the actual pay roll ex- penditures multiplied by the rate per cent makes a premium of less than $50. The insurance company would then retain the minimum premium. 78 Practical Talks on Contracting In figuring up the pay roll accounts, it must be borne in mind that where the contractor runs a commissary and issues store certificates, etc., in lieu of cash, the value of these credits must be included in the actual or estimated pay rolls as com- pensation. Policies may be written for terms of less than one year upon payment of premiums amounting to a certain percentage of what the annual premium would be. A separate policy may be written for each contract which is carried on by the contractor in different towns, or at differ- ent places in the same town. When this is done it would be well to come to some agreement with the insurer, so that a minimum premium of $50 would not apply on each policy thus written. It often occurs that the assured does not know what he is insured against, and this, together with unfamiliarity with policy conditions, causes many misunderstandings upon tak- ing out a policy. The assured should study the contract thor- oughly and acquaint himself with all of the conditions set forth in the contract. Many claims are made against the insurer which are not covered by the policy. Not infrequently are claims filed by parties who have been employed in violation of the law; for example, employes working on machinery which is not pro- tected in accordance with the laws ; minors who are employed in violation of the child labor laws of certain states ; convicts ; any person or persons whose wages are not included in the actual or estimated pay rolls — (they are, however, covered by the public liability, but not by the employer) ; any person or persons employed in other occupations than those set down in the insurance contract, etc. The insurer specifies that such cases are not insured against, and will not, under any circum- stances, deviate from the contract in this respect; it remains for the contractor to defend any suits and pay costs himself. Liability Insurance 79 The Handling of Accidents. One of the most important things is for the assured to understand the handling of accidents. The insurance com- pany furnishes the assured with a supply of forms called "accident blanks," which are used in reporting accidents. These forms should be given to the foreman or superintendent in charge of each contract, with instructions to answer all questions on this form in case of an accident, giving full and comprehensive answers. The report should be mailed to the contractor's home office immediately. If the injury should prove to be serious, report should be made by telephone or tele- graph, followed by a written report on the form above re- ferred to. Should it be impossible to obtain all of the facts on the day of the accident, as much information as possible should be given on the report and more complete details sent later. The accident report should be copied at the home office and then forwarded directly to the insurance company. Upon the occurrence of an accident, the assured or his representa- tives should not, under any circumstances, commit themselves to the injured party. The terms of the policy, however, per- mit the assured to obtain whatever first surgical aid is neces- sary; but beyond that he must not, voluntarily, assume any liability, expense, or settle any claim except at his own cost. It will be understood that the accident report is the only rec- ord the insurance company has of the accident. They em- ploy a Gorps of attorneys trained to the highest degree in negligence cases; and from this report they render to the as- sured a decision as to whether he is liable or not for damages. In case of liability, more questions may be asked and it is the duty of the assured to co-operate in every possible way with the company, as their interests are truly mutual. Now, as an example, we will assume that an accident has occurred and the assured is held liable. The injured party has obtained counsel and papers; a summons and complaint are 80 Practical Talks on Contracting drawn up, bringing suit against the assured and in his name. These papers are immediately turned over to the insurance company, who, at their own expense and with their corps of attorneys, defend such suit in the name of the assured and on his behalf. The company may endeavor to settle suit outside of the courts, and if such be the case, the assured should not interfere with any negotiations for settlement or legal pro- ceedings, unless authorized by them so to do. Should the case be decided against the assured, the insurer will pay dam- ages and costs of suit, if the damages do not exceed the limits named in the policy. Should they exceed, all in excess of the stipulated limits is to be paid by the assured. It must be borne in mind that even in cases of non-liabil- ity, all papers served upon the assured are to be forwarded immediately to the insurer, who will take such action as is deemed best. Considerations in Estimating 81 IMPOETANT THINGS TO CONSIDER IN ESTIMATING. BY A. 0. DAVISON. COMPARISON of estimates on all, or nearly all, con- tracts of sufficient importance to attract the atten- tion of a number of bidders usually shows a very great difference between the high and low bidder. In fact this difference is so great in many instances that it is neces- sary to reject all bids and readvertise the work. There can be a number of reasons for this variation, but it usually de- velops that the low bidders are contractors who have decided to enter a new line of work. In other words, they are bid- ding on a class of work, and under conditions, with which they are not thoroughly familiar, and on which they have not suf- ficient reliable data to base an intelligent bid. It is, also, too frequently the case that the contractor does not have his ex- penses properly distributed and so arranged that he can profit by showings on previous jobs and apply such expense items when making his estimate on additional work. It is a well known fact that a job of construction work, which is of sufficient size to require from eighteen months to two years or more to complete, as a rule, will utilize all, or nearly all the service that can be secured from a new plant equipment. It is, therefore, usually necessary to figure a com- plete new equipment of machinery when the job is of sufficient size to warrant such an installation and, as so much better results can be accomplished from the use of a complete new plant, it is, as a rule, more profitable to make such an installa- tion than it is to put in important machinery which has been in hard service on previous jobs, making repair bills and loss from delays so great that the final cost of such installation will be far in excess of a new installation. The first and most essential thing to be considered in mak- 82 Practical Talks on Contracting ing an estimate on a piece of work is to determine the style of plant which is best adapted to the class and location of the work to be done. If the contractor has such plant available and the condition of it is such that he will be justified in using it on the job, he is, of course, in position to figure his plant valuation, which should be done by determining the de- preciation for previous service, allowing credit to the job from which such plant is removed and figuring same in making his estimate, adding the cost of transportation, labor and mate- rials required for putting same in position ready for operation at the new location. In either case, whether he finds it neces- sary to purchase a new plant complete or install something he already has on hand, by obtaining prices, if new machinery is to be purchased, and freight rates in either case to the loca- tion where such plant is to be installed, and cost of hauling from railroad station, he is in position to determine what his installation for plant for the complete handling of the job will cost him, having, of course, first determined the best and most economical plant in every department for handling such work with the greatest rapidity and at the lowest initial and operating cost. After the expense of plant has been carefully figured, the next thing is to determine, from the specifications and plans, the amounts and kinds of materials required in the construc- tion, and secure prices thereon, together with all freights, hauling, etc., which will give him all material costs for every- thing entering into the work laid down at the location. If the contractor has had previous work of a similar class and has kept accurate expense distributions it is a very easy mat- ter to apply such expense items, making proportionate addi- tions to or deductions from same to fit them to the particular job, bearing in mind whether he has made or lost money on the job from which such figures have been taken. The follow- ing arrangement for listing the items of plant, "overhead" expense, etc., necessary to preparing an intelligent estimate is suggested in the following tabulated list. Considerations in Estimating 83 Arrangement for Plant and Expense Items in Making Estimates, If crushed stone is used and the quarry is operated by the contractor, this will include: 1st : Proper equipment for stripping quarry and disposing of same, which, according to location, local conditions and the contractor's idea of economical handling may consist of : Scrapers — drag or wheeled (purchased or hired). Dump wagons (purchased or hired). Teams (purchased or hired). Carts (purchased or hired). Harness and barn equipment, or Narrow gauge railroad (purchased or leased). Dump cars (probably purchased). Locomotive (probably purchased). Teams in lieu of locomotive (purchased or hired). If the narrow gauge road is used and same is purchased instead of being leased, the figures must include cost of rails, splices, spikes, etc., with freight and hauling charges added, ties delivered on the right-of-way, all expense of grading, filling, etc., or, in other words, must cover the cost of road completely installed. 2nd: Proper equipment for quarrying and delivering stone to crusher plant, probably consisting of: Eock drills. Boilers for steam supply. Tracks, cars and locomotives. Carts, horses and harness. Hoisting engines, cables, drums, etc. (if gravity tram is used). ^rd: Crushing and mixing plant. Crusher. Mixer. Boilers and engines. Elevators and screens. Storage and supply bins. Erection of bins and buildings. Installation of machinery. 4:th: Equipment for delivering and placing concrete. Cableways or derricks. Tracks and cars. Hand carts or wheelbarrows. ^th: Additional concrete materials. 84 Practical Talks on Contracting Cement. Sand. Gravel (if used). Freight and hauling. If sand is not purchased but secured from a pit or stream, proper plant equipment for this operation should be figured in addition to the above. If gravel is used instead of crushed rock, plant is to be figured for this purpose and the quarr}^ plant eliminated. ^th: Excavating equipment. If the quantity of excavation is sufficient, or is required to be done at a time or under conditions which will not permit the use of the concrete handling plant for this purpose, it will then be necessary to figure additional equipment for handling the excavation which may consist of: Derricks. Engines and boilers. Scrapers — wheeled or drag. Tracks and cars. Locomotives or teams. '7th: Backfilling. It is seldom if ever necessary to figure extra equipment for this purpose as the backfilling is usually handled with the excavating or the concrete handling plant. ^tli : Pile driving plant. Boilers and engines. Hammers and followers. Lines, blocks, etc. (original installation). Materials for leads, frames, etc. Scows (if floating plant). Wheels and axles, rails, rollers or skids. ^th: Pumping plant (where cofferdam work is required). Pumps. Stocks. Boilers and engines. Steam and water lines. 10th: Water supply. Pumps. Pipe and connections. Wells (if necessary). Wth: Lights. Torches (if used). Wiring (if electric). D}Tiamos (if furnish own lights). Considerations in Estimating 85 Price from lighting company (if light furnished by light- ing company). IWi: Blacksmith shop. Building. Tools and equipment. IMli: Office equipment. Building. Furniture, typewriters, books, etc. Engineers' instiiiments. l-^itli: Miscellaneous buildings. Warehouse. Cook camp and dining-room (if furnished). Sleeping quarters (if furnished). Closets. Cement sheds. Ibtli: Barn (unless teams are hired). Wagons. Harness. Horses and mules. IQth: Fixed or "overhead" expense. Superintendent, office force, civil engineers (to be figured by month covering term of job). Watchman (to be figured by month covering term of Job). Water-boys (to be figured by month covering term of job). Traveling expense (to be estimated by month covering term of job) . Telegrams and telephones (to be estimated by month cov- ering term of job). Office supplies (to be estimated by month covering term of job). Fire insurance (to be figured from rate on amount car- ried). Liability insurance (to be estimated from rate on probable amount of payroll). Interest (if working on borrowed capital). The actual amount of producing labor should be carefully considered and figured, which can best be done by determin- ing the average amount of each classification of work, for which returns are received, which it is necessary to accom- plish each working day during the term of the job. When this is done it is easy to determine the number of men re- quired to accomplish the work, and, figuring at the prevailing 86 Practical Talks on Contracting rate of wages in the locality, the labor cost of each classifica- tion of work can be arrived at. The contractor should bear in mind that the greatest economy that can be practiced on construction work is to push it to rapid completion and, in this way, relieve himself as soon as possible of the "fixed or overhead expense,'' which remains the same whether his work is progressing rapidly or dragging. With this object in view he should make his schedule of men required as large as he can possibly work to advantage, being especially sure to see that his gang is large enough to work his plant to its full capacity. Properly watched and carried out this is the best economy on a job. In estimating the time required for the completion of a job it is, as a rule, best to figure that all work will be done in daylight. Unless the arrangement is ideal there is very little chance of figuring a profit on night work. If any work is to be accomplished at a profit at night, it is necessary to have the job perfectly lighted, and the superintendence must be of the best or all expenditures for labor on night work are without proper returns. In addition to this there is much greater chance for damage to machinery at night, which oftentimes causes long delays for repairs during the day, and if anything has been accomplished during the night it is more than offset by delays caused by damage to plant. It is, therefore, usually best to make the estimate based on day work only, and if at any time the conditions are right for night work, whatever is accomplished by working at night can be utilized as an offset for any extreme weather condition which may arise to shorten the time figured in the original estimate. Night work, as a rule, does not pay and in most cases should be eliminated from estimates and done only as a means of keeping up to schedule time. In making up schedules for arriving at labor costs the same arrangement should be followed as outlined above. For example, the contractor should figure how many yards of ex- cavation will be required to be done each day to complete this Considerations in Estimating 87 part of the work in a given time. After this is determined he can figure on the proper number of men and foremen for his excavating gangs to accomplish the required amount of yard- age each day. These he should figure at the prevailing rate of wages, which will show him what his labor expense will be on this part of the work, which amount he can reduce to a unit basis; this will give him the cost per yard for labor. This same method should be followed out in each classification of the work. The following detailed arrangement for method of keep- ing cost of plant and operating expense is taken from actual headings used on work now in progress and will show, with variations necessary to fit it to any particular job, the head- ings that should be used for keeping the proper distribution of such expenses. The same headings should be used in mak- ing the estimate and then followed out in keeping the plant and operating expense on the job, so that proper comparison can be made as the work progresses, showing whether or not the work is being handled in accordance with the estimate made. Plant Expense, PLANT EXPENSE Derricks — Pile Driver — (If used — If not. substitute Hammers and followers. kind of plant). Timbers. Timber and castings. Engines and boilers. Cost of derricks. VH^"^ ^^^^^^P^' ^ . - , -, , T Labor changing. Freight and hauling. ^i^.e company team hauling. Engines and boilers. Labor erecting No, 1. Labor erecting No. 2. Building— carpenters. Labor erecting No. 3. ^^^^ ^"^"^?^ ^^^ ^ail«- T , 4.- -KT A Cost machinery. Labor erecting No. 4. ^^,^.^^^ ^^^ j^^^jj Labor erecting No. 5. install machinery. Labor changing No. 1. Time company teams hauling. Labor changing No. 2. Buildings— Labor changing No. 3. q^^^ Labor changing No. 4. ^ost lumber and nails. Labor changing No. 5. Cost furniture and equip- Time company team hauling. ment. 88 Practical Talks on Contracting Sleeping Camps. Cost lumber and nails. Furniture and equipment. Cook Camp. Mixer — Building — carpenters. Cost timber. Iron and nails. Cost machinery. Freight and hauling. Install machinery. Time company teams hauling. Gravel Plant — Tracks. Cost rails, bolts and spikes. Freight and hauling. Cost tires. Labor, clearing and grading. Cost screens. Cost timbers. Screen and bins — carpenters. Labor laying track. Cost engine and boilers. Freight and hauling. Install machinery. Time company teams hauling. Cost lumber and nails. Cost outfit. Commissary. Cost lumber and nails. Cost outfit. Barn. Cost lumber and nails. Cost wagons, harness, carts, etc. Blacksmith Shop. Cost lumber and nails. Machinery and tools. Tool House. Cost lumber and nails. Closets. Cost lumber and nails. OPERATING EXPENSE. GruJ)Mng and Clearing — Labor. Tools. Lock Cofferdams — Round Files. Driving and cutting off. Cost piles. Freight and hauling. Tools. Waling. Cost timber. Freight and hauling. Tools. Carpenters. Sheeting. Cost timber. Freight and hauling. Tools. Making. Driving. Fuel and oils. Filling and Banking. Labor. Tools. Time of plant. Time of company teams. Cofferdam — Round piles. Driving and cutting off. Cost piles. Freight and hauling. Tools. Waling. Cost timber. Freight and hauling. Tools. Carpenters. Sheeting. Cost timber. Freight and hauling. Tools. Making. Driving. Fuels and oils. Filing and banking. Labor. Tools. Time of plant. Time of company teams. Sand and Gravel — Tracks. Repairs and changing. Tools. Labor, digging and loading. Operating cars. Repairs to cars. Tools. Fuels and oils. Time company horses. Considerations in Estimating 89 Concrete — Materials. Cement. Cost. Freight. Hauling. Sand and gravel. Royalty. Making. Operating mixer. Repairing mixer. Fuel and oils. Tools. Operating cars. Repairing cars. Handling cement. Placing. Labor. Tools. Time plant. Forms — Lumber. Nails and iron. Tools. Labor building, placing and removing. Time of plant. Excavation — (If derrick used — If not, sub- stitute kind of plant). Labor. Tools. Time of derricks. Operating derricks. Operating No. 1. Operating No. 2. Operating No. 3. Operating No. 4. Operating No. 5. Repairs No. 1. Repairs No. 2. Repairs No. 3. Repairs No. 4. Repairs No. 5. Oil and fuel. Backfilling — Labor. Tools. Time plant. GENERAL Ground rent. Liability insurance. Fire insurance. Telephone and telegraph. Main Boiler Plant — Labor. Repairs. Tools. Fuel and oils. Pile Driver — Labor, driving and cutting oflf. Operating engine. Tools. Lines, blocks and supplies. Blacksmith — Material. Coal. Tools. B. and H. labor. Credits. Barn — Repairs wagons, carts, bug- gies and harness. Feed and bedding. Hostlers. Credits. Pumping Cofferdam — Fuel and oil. Operating pumps and boilers. Repairing pumps and boilers. Time plant handling. Lights — Labor. Oils. Lanterns and lamps. Water Line — Labor laying and changing. Tools. Lumher Supply Account — Cost. Freight and hauling. Handling and unloading. Time company teams. Time plant. Credits. Sawmill — Fuel and oils. Tools. Labor. Time company teams. Repairs. EXPENSE. Traveling expenses. Livery. Office supplies. Bond. 90 Practical Talks on Contracting MISCELLANEOUS. Cook and flunkies. * Floods. Camp. Helping engineers. Handling supplies for com- Office salaries and superin- missary. tendents. Watchman. Water boys. Pick up tools. After a complete list of requirements for plant, warehouse and buildings of various descriptions has been listed and priced and the approximate number of foremen and men fig- ured to handle and complete the work within a required time, the material and labor expenses should then be definitely arrived at, proportioned under each classification of work re- quired to be done and in this way a reliable operating expense covering the complete quantities of the work can be arrived at. This should then be reduced to a unit price, which will give actual operating expenses per yard, feet board measure and any other unit prices which are required to be figured on the work. After all of the operating expenses have been taken care of in this manner and reduced to a unit basis, the complete plant should be gone over and reduced to a unit basis and added to the unit price for the operating expense. To this amount should then be added all overhead expense, pro- portioned in accordance with the quantities of the various classifications. In figuring operating expenses it is very im- portant to take into consideration the small tools and supplies needed for each division of the work. In quarry operations it is essential to figure powder, d}Tia- mite, fuel and oil for engine and machinery, feed and care of horses and mules, if used, etc. In the case of a crusher plant it is also necessary to figure fuel, oil, repairs, etc. In the placing of concrete should be figured small tools, repairs, etc. If sand and gravel is used from pits where it is necessary to pay royalties, this item of expense should be figured in with the concrete materials. Considerations in Estimating 91 Forms for concrete should be very carefully figured, in- cluding sufficient lumber, iron, nails, etc. Expense for setting, removing and resetting should be included, also a proper allowance for at least 25 per cent of the forms having to be rebuilt, owing to some being destroyed in removing, handling, etc. In case of pile-driver operations, fuel, oil and repairs should be figured in the operating expenses and cost and quantity of piles delivered on the ground, making a reason- able allowance for culled piling. In pumping-plant operation, allowance must be made for fuel, oil and repairs. Water supply operating expenses should also include fuel, oil and repairs. The operation of lighting plant, where oils and gasolines are used most, include proper allowance for such oils and gasolines. After all allowances have been made for materials, labor, plant, tools, repairs, etc., and reduced to a unit price basis, a proper amount for profits should then be added and an extra allowance made for taking care of things that can not be fore- seen when figuring the estimate and these figures used in making the estimate. When an estimate on a job of work has been properly made up and the quantities arrived at which it is necessary to accomplish each day, the contractor will find it profitable to have "foremen's meetings" at least once a week, at which meetings the foremen are advised as to the progress of that part of the work of which they are in charge. All foremen should be given to understand that they are personally respon- sible for the amount of work accomplished by their men ; they should be furnished with a schedule showing the amount nec- essary for them to accomplish each day, and a good plan is to offer a bonus monthly for accomplishment of certain per- centages over the schedule. At the weekly meetings these matters should be taken up and discussed, the schedules 92 Practical Talks on Contracting changed if delays have occurred which require a change in the schedule, and proper credit given the foreman and his men for all work done in excess of the schedule. If a bonus plan is adopted it should extend to the men as well as the foremen. The foremen should be advised that they have an interest in the economical handling of the work and made to feel that they are a part of the organization. They should be consulted on methods and changes necessary to facilitate the work and allowed to express their ideas, which, if found beneficial, should be adopted. In this way the foremen and men are kept enthused, they feel that they are a part of the organization, a competitive feeling is aroused and the work is highly benefited. In another article the method of handling and distribut- ing in detail the items of plant, expense, etc., is given and fully illustrated with plates, showing a convenient manner of arranging same to enable the contractor to have a full de- tailed distribution of all such expenses. A system of this kind, if properl}^ carried out at the termination of the job will have all expenses so distributed and arranged that they can be taken and applied on estimating new work with very little rearranging, the only thing necessary being additions or de- ductions to fit them to the differences in locations and local conditions, which may exist between the two jobs. All items of plant, material and expense, when properly kept and dis- tributed at the completion of a job will be arranged in a man- ner as outlined in this article from which it will be seen that the matter of their application to new work is merely a ques- tion of the differences between the conditions of the two jobs after the proper allowance has been made for the profit or loss, which may be shown by such figures taken from the job previously completed. Purchasing Records 93 PUECHASING EECOEDS FOE CONTEACTOES. BY C. ARTHUR WORDEN. OXE of the essentials of contracting, and yet a point which is often overlooked, is that of purchasing material and supplies. It is a science the same as engineering or any of the other kindred professions. It is as important for the contractor to know the science of purchasing as it is for him to figure correctly and intelligently the costs and quantities in his estimates. The one is not complete without the other — he cannot hope to obtain success, even though an experienced contractor, unless he has a thorough knowledge of purchasing. It is one thing to get a contract and then another to "make good" on it. The ability to "make good" depends to a great degree upon the quality a contractor exercises as a purchaser. CEMENT NEW YORK, R. Y. Edison Portland Cement C o. D-47 1133 Broadway ■ J i az a r e th Cement C o. C« 5 209 Fourth Ave. Fig. 1— Manufacturers' and Dealers' Record. To obtain the best results, the purchaser should be a reader of human nature. This, coupled with common sense, a knowledge of the market and system in his work, form the 94 Practical Talks on Contracting essentials of good purchasing. The reading of human nature is a point in which very few people qualify. It will be found that the field in which the purchaser works affords a great opportunity to exercise this art. He must know his man and use tact in his dealings with him. Every salesman has a store of information which will prove of value to the one who has the duties of the purchasing agent, and this may be obtained C^^y,^j^.g.t^^<^%»',^uu.:^ 1 MTC N « M C ORICI ocLivenv •CMAUK* / fn Ay?^^JM iu(/0Y 7(4/ CCA^. ADDRESS M^ ^Ziie ORDERED ^auifi CORRESPONPgWT MATERIAL r^^On "1^t^!tr^^Jtjt^y ytj^-^l^rTy^ C^l'f'r^..aci^ '^i'^^etyy^^C^ WUOWEOUPJ^^t;?^ "^^ML :^^ DATE ACKNOWIEDGMENT SLIP m f HEIGHT- EXPRESS SHIPMENT ASKED FOR . PROMISED tT^Ls^ "T-i^^C COBPIETE fttM»AWMt-. ^ ^V^ OATEOE SHIPMENT SHIP'G PAPERS £:fo. ^/^oi DUE AT DESTINATION, REQUEST fOR TRACER -^^/I>E fOA MHOOtNOuH Fig. 7- Follow-up Card. knowledgment of order should be received. If not acknowl- edged promptly, a follow-up letter or post card is mailed. On receipt of the acknowledgment, date of same and also date of promised shipment is noted on the card. The card is then filed under date shipment should be made, when, if the "complete shipment" stub is not received, another follow- up inquiry should be mailed. The date of all "follow-ups" should be noted on the card as an aid in case of any future controversy. 102 Practical Talks on Contracting TOOL AND EQUIPMENT EECORDS. BY C. ARTHUR WORDEN. THE problem of keeping correct records of tools and equipment and their value is a serious one in con- tracting where the tools are scattered among many contracts. The writer has asked many contractors for a satisfactory method of keeping such records^ and the response, in each case, has been that they had no fixed system, or that they knew of no system. When asked how depreciation should be calculated, the answer, in a majority of cases, was "about 10 per cent should be taken off annually." Some English author- ities have fixed the standard at 2 per cent, which is entirely too low. Upon investigation, it will be seen that the deprecia- tion of some tools will run as high as 50 to 100 per cent per annum. In figuring depreciation, it must be taken into account that the care exercised in handling tools and the wear vary greatly among the different gangs of men employed ; this would naturally tend to vary the amount of depreciation. Some writers consider it wise, when considering machines which are continually being brought to a higher rate of effi- ciency through improvements, to determine the approximate life of such machine and to calculate a certain amount as depreciation per annum which will extinguish the cost at the estimated period. This is all very well, but as circum- stances will vary from year to year, and from job to job for that matter, this rule can hardly be taken as a standard. In the writer's opinion, the best way to ascertain the de- preciation chargeable is to make an accounting upon comple- tion of each contract. The value of this is shown as follows : Tools and equipment are either charged to "Tools and Equipment Account^' in the general ledger, or to the various Tool and Equipment Records 103 contracts. In the first case, if a periodical and accurate ac- counting is not made, this account will continue to increase until it is out of all proportion to the actual value of the tools possessed — or in other words, losses will be carried as assets. In the latter case, the contracts themselves will show a higher cost than is actually true, and future business is seriously affected, due to higher estimates being made on account of past experiences. In either case, the result eventually reverts back to the ^Trofit and Loss i^ccount/^ and that account, therefore, is seriously affected. Upon careful study, the writer believes that a system sim- ilar to that shown in the accompanying figure would not only give an accurate listing of the various tools and equipment, but would eliminate, to a great degree, the uncertainty met with in calculating depreciation. It may be the claim of some that the system would be too elaborate, but that is hardly true. The labor involved in keeping such a system up to stand- ard would be more than repaid by the results obtained. The object would be to give each tool a number, and a card in the home office bearing the same number, together with a "his- tory" of the tool. If this was thought unnecessary, due to many tools being in use, a certain number of any one kind could be treated collectively and shipped from contract to contract together. As a matter of illustration, we will consider a wheelbarrow and see how the system operates. We will also assume that the tools are to be charged to the contracts as in the second case cited above : On January 24 a wheelbarrow costing $4.00 was purchased for use on contract No. 730. The home office will assign to this barrow the number "45," and that number will be branded on the equipment. Where a branding iron can not be used a cold cut or a stencil can be substituted. The home office will note in the proper column, as shown, the number of the contract upon which the barrow is located, date of purchase. 104 Practical Talks on Contracting and original cost. In this case, the initial cost will be charged against contract No. 730, and may be considered as a tempo- rary charge only, as there will be salvage when the contract is completed. Upon completion of this contract, the barrow is ordered shipped \vith other tools to contract No, 740, and the superintendent will report that shipment has been made; that the barrow is in good condition and worth at least, we will say, $3.00. We will therefore credit No. 730 with the $3.00 present value, leaving $1.00 against the contract as a ^ jy? //apec^ /o Z>

Va/^ue C^n:/-r7^^/ A/9 jSn ^ ?^/ ? f ^^^^^> ^ oo gJt. '/o^ />^r>rtJ J OO -4^ 4^.rju ^^/oY /2^o-i ^ So ■ * ]^' ^//ju(U- / /c^ ^(Z/L, - z f* 5 d 2 2 r 1 umotn ^^ § \^ k % * )^ C\ ^ «« ^^ t - ^m ^li •liAOM TVJjOj, ^ .^ ^ ■ ' M x™ox««« - - V ■dxt -«xc .™..o. <^ . OO'Ij S't ^ ,.0.,^^ MVO« «1XJ iw»c* mu* z X - H X I /v\ t S A ' ' ■■ 1 I n St X « S E ^ o ii D I 5 K d 3 " O V' w o M ■ z 1 n r 1 N & - - 1 d t / =s^^%-t a i^/ ^j'/. o 5 oa'pi 1 e >l ooL V -^ oj-'oj AVO-Ol do 1 S3tM3iiX2 a>V9 * s B k £ i> ->> i o ft O P. 108 Practical Talks on Contracting Job. No. 744 Dptp July 2, 1908 PROGRESS REPORT. NUMBER OF MEN EMPLOYED ON THIS DATE. Carpenters, Laborers, 17 Mechanics, Helpers, WHAT PARTS OF CONTRACT ARE UNDER CONSTRUCTION AT PRESENT? Earth and rock excavation ; laying concrete near old building. WHAT PARTS WERE COMPLETED SINCE LAST REPORT? Form work near old building. WHAT PARTS WILL BE STARTED WITHIN NEXT 24 HOURS? Cutting and framing timber for bents Nos. /, 2,3 and 4; removal of forms and continuance of excavation work near upper end of building site. IF WORK IS BEING DELAYED, STATE CAUSE AND EX'lENT OF DELAY. Was delayed this morning because architects'' engineer had not laid out stakes near betits 10 and 11. WHAT MATERIAL IS PARTICULARLY NEEDED AT THIS TIME? (State order number and date of requisiton.) Will need yellow pine for superstructure by the 6th. Please rush. I Have Ordered the Following Material Today: MATERIAL FROM WHOM ORDERED charge to price Vz doz. square point shovels. Strong Hdw. Co. Plant Sj.oo Do not report above the purchase of any material you have paid for, but note same under "Cash Expenses" on other side. the following material RECEIVED TODAY: Vj doz. shovels, noted above. Remarks:— The work is proceeding very nicely at present, but if material is not rushed through to us there will be danger of a tie-up. J. D. cox. Foreman. Fig. 2— Backof Daily Report. Daily Reporting System 109 B, Eock Excavation. C, Concrete, D, Forms, E, Concrete Sidewalks, etc. It will be readily seen that this system meets the require- ments of any contract. On the accompanying form, the alphabetic system has been adopted, and a description of its operation follows: On July 2, Contract No. 744, 10 men were employed at the rate of 19 4-9 cents per hour, their time being distributed as follows: 54 hours on A (earth excavation), and 36 hours on B (rock excavation) ; making a total of 90 hours at a cost of $17.50. The men receiving different rates appear in the same manner, and we find that the total labor cost on that date amounted to $35.50. The expenses are noted at the bot- tom of the sheet, and distributed according to class of work, the same as labor. On this date, the foreman purchased nails for use on forms and same appears on report as an expense charge against item D, which, together with general expenses, brought the grand total up to $43.25 for the day. The vertical columns are then footed up so as to show the total cost of each item for the day. The total of these columns should check with the first total already found, namely $43.25. The various sub-totals thus found are charged, when the report is received at the home office, to the cost data covering this contract, according to the various sub-divisions. On the reverse side of this report, Figure 2, appears the progress report. The object in having this form arranged as shown is to remind the foreman or timekeeper each day of the facts which the home office are in need of to intelligently understand the conditions on the job. 110 Practical Talks on Contracting EAETHWOKK EECOEDS. BY C. ARTHUR WORDEN. THE accompanying figures show systems used for re- cording costs on earthwork contracts, which have met with very satisfactory results on both straight and cost-plus-percentage contract work. On account of their simplicity, very little need be said in describing them. It was originally intended that Figure 1 be used as a weekly report in conjunction with a daily report previously described; however, it may be used in conjunc- tion with any daily reporting system. In instances where an engineering force is with the excavating gangs, so that meas- urements can be taken daily, this report may be used as a daily report. It will be noted at the top of the sheet, spaces are pro- vided for a record of the quantities entering into the work. These quantities, together with the "Labor and Cost Account," should be kept very accurately, for they, naturally, affect the cost data. In the cross section shown in the upper right hand comer under "Ditch No." should be sketched the material found, giving approximate thickness of strata. In the center of the sheet, at the left, appears the labor cost, including team hire for each class of work, as noted under "Quantities." In case of sheet piling, or other material charges entering into the work, the columns at the right would be used. In road building or canal work, where the contractor op- erates a quarry and stone crushing plant in connection with the excavation contract, Figure 2 would be made an inde- pendent report. This form has been used by large quarry op- erators in the east. Earthwork Records 111 Week Endinc_-^'C^^^»-^^ :2"?'-/iC/\Qo^ SUONTITltS 1 wecK PHtViOUS TOTAL CONTRACT paicc DITCH No Grubhina i. CUarlAa fo-jfSii, /crj/So \ / 7ca loo \ / sun Earth STATION No. Character of Land 7?'£es ih if-y Complated LABOR AND COST ACCOUNT Foroman 1 CLilSSIFtCATION | HOUBS MEN B.T. -ST --I HATE COST MATERIAL HATt COOT TOTAL COST C^^J^-i<^ irr »4 36,7/ m ^4 (oi3^\ ^ ^i ^;> ,0 / /^ ^7? li.f-] ^f'?.3^ y-U, ^f ^e.t^ i-ri^ H^i Z3',tf3 'W A^'Jri^'^/7 _ . ^'t A ^7 <^y / %-y ^^, f'^ I ;?i ^4 /r1 [ nfi^ f^^ It /fe/.fT 1 1 f'^ f^ /fv ^33 6^ J -^.a^^d^t^ajlc . /Ji ^3^ H^ < 1 MLy /7^i '^^ Sl^.l-y/ (i: . : , 11 . REMARKS. /^^^ .PPBOVE* ^-V:Z ■ ^^^^^^^^^-^^^^^^^ j^ ^ Fig. 1— Weekly Excavation Report, 112 Practical Talks on Contracting DAILY REPORT FROM QUARRY I«o. Weather - ., Paterson, 3^. ^.. .190 Operated atr plant ; Hrs- •' No. 1 Crusher •• " xo.2 •' ; " Blasted ....Bench holes: o'clock .Vo. 1 Dnll Feet. .. A'o. S " .... " Blastetl Block holes. Mrs. .o'clock Quarrying and Mitlins: . y iscellaneous Oceupadon .\o Hjj Halt Amount To at . Orcupatfon Ko. Jlis. Itirt' Amanut ■Jolat ... .... — I'.: Carts Hauling Dirt . Drivers ". *' Men ■ '" . . ", Zlachme btk drlrs .. Hand " — Baring .-.". Sleduinfi Carts StocK'g Stone. Drivers " " 3Ien " '." Carts reUiad'g Htone Drivers . " " Men " . . 'V Corts loading cms Drivers " ■• " . . Men - V " . -■••• '.... ■"••" .::. -•■ .... .-.^ Loading ■••- Horses havliny cars, liriters " Caiis haufy to mill Drivers " , " f. ,.■.■..■ .... '•• .— . ..... ...... BlockKinith " Helper . Impr/tvements. . :' .". . ... ■'"■ .... .... Cost Quarrying. ... :..■; .... fjngineer. ■ ■feeders . C'lrl.t un Caul ..'. ■ ' .;;■ H'/iler boy 'Wntchniftn Ciiit Mi.iielUuie<>us. Total Coal ::;: ■..., ' ' '■ CW .M.lliug 1 . Q„ar III Mill, .: Olhernise Kinplnyed, Total So. OUTPUT handed • • ■ C'ais . . STORAGE a l.a Put 111 stock piles ions ill .lJ.t " •' ...; " I '■' .. Scr. 3.* Scr. ^.. ll>y.' . Clil/SHEl) •. J. i.. Quarry i:um ..... ,;■....■ C'