DEFENCE WORKS

Nelson Evening Mail, Volume 77, 23 October 1942, Page 4

DEFENCE WORKS

MASTER SCHEDULE SYSTEM MINISTER EXPLAINS OPERATION Wellington. Thi Da The cot of defence construction works under the master schedule s.v ( tern a. compared with the competitive lender method was the subject of . latcment in the House yesterday afternoon by (he Minister of Public V< the master schedule had been adversely criticised from both sides of the House mainly on the ground that a ■ considerable saving could hove been made had the tender system still been followed. He would have agreed with j this in principle up till recently, blit after having watched the operation of 1 the schedule system he believed thai this method, inaugurated as a wai measure, had come to stay. There was no doubt in his mind, and those of his officers, that the tendei system would have completely failed to meet the tremendous defence programme and that costs would have' soared, continued Mr Armstrong. Ser ion competition between building firms for labour and increasing labot.; costs and the necessity for control of I limited material resources had ren dered the tender system inapplicable. He was satisfied that the schedule sys- i tern was sound, though it must be and ' was subject to constant check as costs ! became available. It became evident ' long before final payments made to building firms that the basis was, too high for certain grades of work. \ though fairly right for others in which ! a higher standard of workmanship was demanded. After conferences between the Commissioner of Defence Construe- j lion, quantity surveyors, the Master Builders’ Association, and the depart- 1 ment. an agreement was reached whereby works were graded into four groups as follows: —<1) Permanent works requiring a superior finish, for example, hospitals, for which master! schedule rates with certain approved additions would apply: <3» permanent works in which the schedule rates i would apply in full; <3» works re j quiring a moderately less standard of! construction in which schedule rates | less 7£ per cent, on the labour content would apply: '4> temporary works in which a still lower constructional j standard was required in which sched- i ule rates less 15 per cent, on the labour! content would apply. There were two sections of the mas- 1 ter schedule, namely rates for materials and for labour. The material 1 rales were fixed on ruling prices and would be the same were the tender system used. The labour rates affected | comparative costs and the schedule was adjusted on this section. Over and above that arrangement, which was as near perfect as it could be made arbit* , rarily, there was a final check on the | cost of the works after they had been completed. The purpose of this was to see that the various firms concerned did not realise more than 5 per cent, profit and 2$ per cent, overhead on ' the cost of the work. This did not mean that the organisation of the building industry either suffered or was disorganised. Actually the incentive for greater efficiency was magnified. The margin of per cent, to cover . profit and administration cost* show ed a very satisfactory return to build . ers. and a basis was provided whereby the Government was secured against an excessive profit on one contract and perhaps having representations made to it for recoupment of losses on another contract. The Minister said it must be realised. ' and the builders appreciated this fact, that the builders had a definite responsibility to divulge all information as to costs, and in the event of any building contractor having information which would prove that the rates should I he adjusted such information was sup plied and the matter taken up between i ff ie Builders’ Association and the Pub lie Works Department and the Commissioner of Defence Construction. It was by tins close co-operation between i the association and the department that : an accurate schedule of rates would bo ! secured. I There was no delay for the calling ! of tenders, all works were co-ordinal-i ed under the one head, the Comm is j sioner of Defence Construction, and the master builders themselves through executive committees in the different localities nominated firms to carry out the jobs ensuring that the firms nominated. both by reason of their plant and personnel and other works in hand, were able to carry out the work with the expedition required. A tremendous amount of time and expense was saved by allocating work on this priuciple as against the competitive tender system.—P.A.