Foreman's Report. When the making-up of the pay-roll and the distribution of cost depend upon the reports of foremen, many serious difficulties are introduced into the work. Most foremen are intelligent enough to make a satisfactory report, and even more of them are honest enough to make a correct report. It is a curious fact, however, that among men of this class, while they would use every care in accounting for money entrusted to them, there is no tendency to consider time in the same light; and in consequence the reports of time given are liable to be very lax.
Moreover, if a foreman felt so inclined, if there were no one checking him or his reports, it would be a very simple matter for him to "fudge" his accounts so as to be able to acquire considerable graft.
If the foreman is intelligent and conscientious, a report and a distribution can be obtained from him which would be very easy to work into an excellent office record. Unfortunately, the desired combination seldom obtains, and there are very few large works carried on with such a system of time-keeping.
Cost Distribution. The time having been taken in the field, it now becomes necessary to make a distribution of costs in the office. The cost is that which is paid for producing work, being the material and labor cost of production, added to the proper proportions of expense cost, the expense being incurred in carrying on the operation and so making the actual work a possibility. The distribution of the cost is necessary in order that the contractor may see whether or not any particular operation is profitable; and a detailed analysis of the distribution, such as will be given later, will indicate in what respect the work may be made cheaper and more profitable.
In all cost distribution, there are certain items which cause trouble; and their proper disposition has led to much discussion among authorities on them, and has been the source of many different arrangements for their proper apportioning to the various operations on the work. For instance, there is the time of such men as are engaged upon water-supply service, drainage systems, the blacksmith, machinists, electricians, water boy, the time of watchmen, police, etc., which may come under the heading of "general labor;" and there are such items as the transportation and distribution of coal to various parts of the work, the transportation and handling of stores, and numerous other items which, while seemingly affecting the whole work, are directly chargeable to some particular operation.
In many instances of distribution, the item of General Expenses, which includes the expense of storekeeper, time-keeper, bookkeepers, clerks, and such office force as may be required, is rather difficult of disposition. Those items which are usually monthly, may be distributed daily at a rate per day found by dividing the monthly rate by the number of days in the month, or they may be lumped at the end of the month and apportioned to the various operations. If they are distributed from day to day, it is rather difficult to tell just what proportion of them should go to each operation, as the cost of any operation is liable to vary greatly from day to day. If they are left to the end of the month, it is impossible to tell from day to day the exact cost of the work.
Overhead Expenses are another source of difficulty. Under this heading can be placed all salaries which do not ordinarily appear upon the pay-roll, such as the salary of the General Manager of the work, the Chief Engineer, and the officers of the company, and such expenses as office rent, telephone, office furniture, stationery, etc. Just where General Expenses leave off, and Overhead Expenses begin, is rather hard to determine, the line of demarcation varying in almost all cases.
One of the greatest troubles in distribution is caused by overtime of men who are on a daily and monthly basis. Under the same head might be placed Lost Foreman's Time—that is, the time which the monthly and daily men are paid for, and which produces no output.