Cyclopedia of Commerce, Accountancy, Business Administration, v. 02 (of 10)

by American School of Correspondence

USE OF CHARTS

The best method that has so far been devised is by the use of charts showing to scale the different unit-costs for the various days in the month. Such charts are illustrated in Figs. 7 and 8. They are from the records of the Construction Service Company. One of these (Fig. 7) indicates the cost of channeling rock. It will be seen from the line A, that during this month the number of square feet channeled varied from 75 to 375, and that the labor cost varied from a maximum of 62 cents to a minimum of 8 cents. On the 8th, the morning crew did not work, because, as it happened, of severe weather, which accounted for the low output on that day. On the 24th, the night shift allowed the pipes to freeze up. It may be mentioned that the foreman of the night shift, whose name appears in brackets on the chart, has since turned his attention to other fields of industry than channeling. On the 28th, the channeler had reached a point where the cut was frequently filled up by earth that slid in from the side and caused such a large amount of sludge as to cushion the blows of the blade; and the chart shows on that day a high cost, due to the cleaning away of this earth.

The chart illustrated in Fig. 8 is that for steam-shovel work on the same contract of the Construction Service Company. Line A indicates the approximate number of yards moved per day. Line B shows the pay-roll, ranging from $165 to $310 per day, and including a percentage for incidentals; while line C represents the values of the B quantity divided by the A quantity, and gives the unit-cost in labor per yard for excavating and moving rock. It will be noted that the Sundays are skipped. These came on the 5th, 12th, 19th, and 26th of the month. There were some men employed on each of these Sundays; but their time was so distributed over the rest of the month as not to show for the Sundays, as the steam shovels did not work on that day.

Fig. 7. Efficiency Chart Indicating Cost of Channeling Rock.

Fig. 8. Efficiency Chart Showing Costs in Connection with Steam-Shovel Work in Rock Excavation and Removal.

These charts are of a size to be filed in one of the standard loose-leaf books, and their range is from zero to about 12; thus it is possible to show any quantity to scale for any day in the month. This company has not found it of advantage to plot more than 4 lines on any one chart.

Charts such as these may be marked each morning by the time-keeper upon a tracing prepared for this purpose; and at the end of the month the lines connecting the points may be inked in, and the chart blue-printed and the blue-print filed in a convenient place for immediate reference.

There are several ways of working out the unit-cost from the figures, such for example as:

1. Performance per time unit

2. Performance per dollar;

3. Cost per unit of performance.

The first of these is not, properly speaking, a cost statement, although it is a function of a cost statement and for certain purposes is more convenient. The number of feet of rock drilled per drill hour, is a very convenient form for record.

When drilling under conditions of snow and ice, more muckers have to be employed than at other times. If the cost of mucking is included in the cost of drilling, as it frequently is, the true index of how well the drills are getting on is the number of feet per drill hour, rather than the cost of the operation to the contractor.

The second method is the reciprocal of the third. Other systems will suggest themselves by virtue of the peculiar requirements of each case in practice.

Checking by Charts. A great advantage of the chart system of cost showing, is that it acts as an automatic check upon the cost-keeping system in general. As indicated earlier in this volume, it occasionally happens that a punch-card is not turned in, or the time-keeper fails to get certain data. This is immediately discoverable by the gap on the chart, and thus the chart acts as a check on the cost-getting department. This will not entirely obviate the necessity for inspection to ascertain whether the time-cards are properly kept and the work is properly done.

The showing of costs should be made daily for the men immediately identified with the field work; they should be made weekly for the general manager, and monthly for the home office. These monthly office reports are sometimes valuable in the planning of the financial arrangements for the work. On a job involving, say, a pay-roll of $5,000 a week, with monthly estimates, early information as to performance over the month is of very great value.

Showing the men certain charts and records will serve to increase their interest in their work, but this should not be overdone. It is as well that the men should not know the actual cost of their work to the contractor in dollars and cents. If, on the contract price, the contractor is making a handsome profit, the men want more money. If the contractor is not making a handsome profit, the men are apt to think that they are on a losing job, and become discouraged accordingly. The economy of the contractor's work should be private information, since it might do him considerable damage by becoming known to competing contractors. The charts showing the performance per unit of time, however, are not subject to the restrictions above mentioned.