were so tied up in the work that he was practically bankrupt. The plan of payment provided for advancing 80 per cent of his pay roll prior to his making final supporting proof. This so far alleviated the contractor's needs that nearly all of the contractors interviewed on this subject informed the board that they considered the arrangement to be equitable. The difficulties above mentioned arose, in large measure, because few projects have been comparable in size and cost with the war construction work and contractors had but little precedent available for organizing their construction forces and small experience in operating under the accounting requirements of the Treasury Department. SECTION 34. CONTRACTORS' EQUIPMENT. In the standard Contract for Emergency Work, article 2, paragraph C provides that the * * * rental actually paid by the contractor, at rates not to exceed those mentioned in schedule of rental rates hereto attached, for construction plant in sound and workable condition, such as pumps, derricks, concrete mixers, and such other equipment as may be necessary for the proper and economical prosecution of the work. is to be included in the cost of the work. The procedure defined by the contract was: as construction plant, or parts thereof, arrived at the site, the contractor was required to file with the constructing officer a schedule setting forth the fair value, at that time, of each part of such construction plant, such valuation being deemed final unless the constructing officer took exception to the price named within five days after the machine was set up and working. An important specification of this rental arrangement was as follows: When and if the total rental paid to the contractor for any such part shall equal the valuation thereof no further rental therefor shall be paid to the contractor and title thereto shall vest in the United States. At the completion of the work the constructing officer may, at his option, purchase for the United States any part of such construction plant then owned by the contractor by paying to the contractor the difference between the valuation of such part or parts and the total rentals thereof paid therefor. As it became evident that, under these terms the Government would acquire a large amount of construction plant, a Government equipment and materials section of the building division of the Construction Division was organized, given charge of the transfer and disposal of Government owned material, equipment, tools, etc., and authorized to decide as to the exercising of options on such plant. This section kept records of plant on the various projects in order to arrange for its utilization or disposal. By definition, any machine or equipment handled by one man was classified as a tool and that operated by more than one man or driven by animal or other power was classified as equipment. The value of the Government-owned plant in the latter part of November, 1918. about $3,500,000. This included locomotives, locomotive cranes, wagons, concrete mixers, power saws, steam shovels, road rollers, etc. was A rough estimate of the plant acquired on work done by the Construction Division shows that it amounted to about one-fifth of that owned by the contractors. This estimate excludes floating plant but little of which was acquired by the Government. In renting plant the contractor was instructed to incorporate in his contract the same rental provisions as those in his own contract, with a purchase option running to the constructing officer who was instructed not to exercise it unless the Government had acquired a large equity and the plant would be serviceable. This arrangement, which was very beneficial to the Government, might have been administered to the injury of a contractor as, with equipment as difficult and expensive to secure as it was in the war period, it was impossible for him to secure a high enough valuation to protect himself against the Government's taking over his equipment, which would have ended his business. Equipment acquired by the Government was, in some cases, sold back to the contractor from whom it was originally taken on terms advantageous to the Government. Following the suspension of work on numerous projects after the armistice, released Government-owned equipment was substituted, wherever possible, for rented equipment on uncompleted projects. Most of the Government owned equipment has been concentrated at projects still under construction and the rest placed under the control of the maintenance and repair branch of the Construction Division for Army post maintenance work. It is expected that but little construction equipment will be left for sale. SECTION 35. COSTS. It is difficult to obtain accurate cost figures of work done during the early days of the war when cost accounting was subordinated to speed and accomplishment. Some projects were so unique and varied that classifications giving costs in a manner permitting comparisons between different projects were not possible. Unit costs in many instances often differed because of conditions varying from day to day. The feeling that the inauguration of detailed cost and accounting systems would cause delay, the shortage of experienced accountants and the absence of accepted standards for such work delayed the adoption of unit cost accounting for some time after the commencement of work. For these reasons cost comparisons can not be made except between certain unit items, such, for instance, as lumber in place. The total cost of cantonments are not comparable because of individual differences in site, topography, transportation, labor conditions, material costs, etc. Projects built after 1917 usually differed in character and cost much more than the original cantonments and camps. The effect of these increasing differences was found, on investigation, to offset the advantages of the better cost accounting which was later installed. It is doubtful whether it was practicable or necessary for the Construction Division to determine the details of construction costs except for the purpose of detecting lack of economy in current unit labor costs. Field determination of such costs by experienced constructors offers probably the best means of assuring efficiency in labor expenditures. The trouble with most cost accounting systems is that the data are seldom available until it is too late for their profitable use. A requisite of unit cost systems is uniformity of standards and this condition could hardly be attained until after one or two years of experience in war work. Cost accounting is of special value in a production business to determine proper selling prices. War Department emergency construction usually required that cost be subordinated to time, as quick results were essential. The cost systems of private concerns are often so uniform that cost differences reflect differences in conditions but without such a uniform classification, properly enforced, cost differences are likely to reflect principally differences in accounting. Standardization is lacking even in much cost accounting practice of concerns doing similar work, and such uniformity as occurs in statements prepared does not relate to unit costs and is due often to the requirements of those who grant credit or financial accommodation. The value of unit costs is often doubtful except to those who prepare them and are entirely familiar with the particular conditions, while to others they are frequently misleading. On some projects certain unit costs were determined daily. These proved helpful to the constructing officer and contractor in checking labor efficiency. Among these projects were: Because of wide latitude in judgment permissible in segregating costs on construction work, differences result in reported costs on similar work. For instance, both material and labor may be divided into construction plant and into permanent work, and the cost of the construction plant may be carried separately or may be distributed over the work on any basis deemed fair. The allocation of other costs is similarly subject to wide variation. After consideration of the foregoing facts and making a study of cost returns from many projects, the Board of Review concluded that cost comparisons thereon were inconclusive and that the essential questions for determination were whether, giving due regard to speed requirements, the expenditures were effectively made. The board spent considerable time endeavoring to analyze some typical items of cost of the original cantonments under war or actual conditions and also under former peace conditions. For this purpose, and because it represented average conditions, on account of its central location, the board selected Camp Zachary Taylor, near Louisville, Ky., and sent lists of materials, typical layout, and plans to a number of contractors in the Middle West, requesting them to submit unit prices for performing the necessary labor under prewar conditions. These contractors were requested to state the time which they estimated would be required to build the barracks and quarters of this camp under normal conditions and for the least cost, and also their estimate of the increase in cost if the camp had to be completed in four months. The study was confined to barracks and quarters, as this item constituted the largest single item of construction which was little influenced by local conditions such as topography and nature of the ground, and therefore offered the most reliable basi: available for making comparisons. The following statement, in which the prevailing local wage scale of June 1, 1917, has been substituted for the higher wage scales assumed for Chicago, etc., conditions by the contractors consulted, shows the results of this study and the conclusions reached by the Board of Review. Average increase in cost estimated by same contractors, if completed in 4 months, 19.2 per cent.... 171, 114 (C) Average of 6 prewar estimates if completed in 4 months.. 1,062,332 (D) Estimated excess due to war conditions and speed (A-C)... 452, 260 43 623,374 70 Assuming that the estimated percentages of excess cost of labor on barracks and quarters as above mentioned apply to all other labor, and taking the Estimated prewar cost of material (F÷1.60).. 2,305, 741 Estimated prewar cost of labor due to war conditions and speed (G÷1.43)... 2, 134, 578 K) Total estimated prewar cost due to war conditions and speed (I+J).. 4, 440, 319 Estimated excess due to war conditions and speed (H-I+J)... 2,301,314 ......per cent.. 52 H; Total cost...... 6,741, 633 I, Estimated prewar cost of material (F÷1.60).. 2,305, 741 L Estimated prewar cost of labor due to war conditions, not making allowance for speed (G÷1.70) 1,795, 557 M Total estimated prewar cost due to war conditions without allowance for speed (I+L).... 4,101,298 'L) Estimated excess due to war conditions not allowing for speed (H-I+L)........ Showing an increase of actual cost as completed in 4 months over estimated cost of same work in 1915 if completed in normal period..... |