Civil Engineering Project Management (4th Edition)
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The contractor’s site organization 85<br />
project, cost of any equipment purchased for it, hire charges for plant, insurances,<br />
etc. and such head office oncosts that the contractor currently applies to<br />
projects in hand. Head office should keep the agent informed of the figure<br />
of total expenditure to date; but this figure inevitably lags behind the actual<br />
expenditure commitment to date because of the time delay between ordering<br />
materials and entering payment for the same in the books. Hence a prudent<br />
agent may keep such an assessment going himself because of the importance<br />
of controlling the overall expenditure on the job. His system may not be exact,<br />
but his better knowledge of what expenditure is currently committed may give<br />
him a useful guide as to how the job is progressing financially.<br />
Most accounting in a contractor’s head office is now done by computer<br />
using codes for different sites and classes of expenditure. Such a system can<br />
be advantageous if it shows costs for different elements of a job or types of<br />
work, which can help in building up a record of unit costs which can act as a<br />
guide for future bids, or may be useful in formulating any claims. In practice,<br />
however, such systems seldom have sufficient definition for this purpose, but<br />
are predominantly used to show the current profit or loss on a job.<br />
7.6 Providing constructional plant and equipment<br />
A contractor will own a stock of plant and equipment which is available for<br />
loan to construction jobs the contractor has in hand. When items are loaned to<br />
site, the job account held in head office will be debited with the cost of plant<br />
delivery, plus rates per day (or per hour) according to whether the plant is<br />
working or standing idle on site. These rates are termed ‘internal hire rates’.<br />
Plant not available from stock will need to be obtained by the agent from some<br />
outside plant hirer, who will charge ‘outside hire rates’ which are usually<br />
higher than internal hire rates. An agent may also choose to use plant from a<br />
local plant hirer because the cost of delivery may be less than that from the<br />
contractor’s plant depot if the latter is remote from the site.<br />
Internal hire rates for plant will need to cover the cost of plant depreciation,<br />
running maintenance, major overhauls and renewals, plant depot and administration<br />
costs and some adequate return on the capital investment involved.<br />
The cost of working repairs to plant is high, representing some 25 per cent or<br />
more of the normal commercial outside hire rate. The frequency of repairs is<br />
particularly high for mobile plant, where tracks may need frequent attention,<br />
and tyres may need renewal at high cost every few months. Wire ropes for<br />
cranes need constant renewal and a stock of same has to be kept on site.<br />
Decision as to what plant and equipment should be owned by the contractor<br />
is a complex matter. Easily transportable equipment which can be used<br />
several times, such as temporary site offices, is commonly held in stock by<br />
a contractor. Plant with a long life and little maintenance, usable on many<br />
jobs – such as flat wheel diesel rollers – might also be held. But deciding<br />
what other major plant should be held for hiring out to sites involves many